Luxury carmakers adjust to China slowdown

Carmakers are adapting to waning sales by focusing on their most successful lines.

Adapting for the next generation

Adapting for the next generation Image: Audi AG

In September 2014, the main problem facing Audi, BMW and Mercedes was how to beat each others' double-digit growth.

One year on, amidst rapidly declining sales and a countrywide purge on conspicuous consumption, luxury automakers are having to adjust their China strategies.

Sales of Audi and BMW brand vehicles have increased just 0.8% and 0.9% to 361,316 and 301,529 units, respectively, in the first eight months of 2015.

Mercedes, though smaller than its domestic rivals, has fared much better, with sales increasing 28% to 227,624 units in the same period. In August, sales of Audi and BMW cars actually dropped.

In response to the market slowdown, the focus is on the increasingly popular and highly profitable SUV market, which surged 46% in August.

BMW is ramping up production on its X3 compact crossovers to cater for an increasing demand from China and the US. Meanwhile, Audi has committed to introducing at least 10 new models in China by the middle of next year. Mercedes recently launched its C-class sedan and GLA crossover in China, claiming it is on course to hit its sales target of 300,000 vehicles this year.

With a volatile stockmarket crimping personal wealth, Chinese carmakers able to manufacture cheap SUVs could be the unlikely winners during the downturn.