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Low Gear Year for Luxury Car Market

German luxury carmakers Audi and Mercedes-Benz reported a mild growth in sales in China last year.


Audi, part of the Volkswagen group, said that it sold 64,018 cars in China in 2004, up only 0.8 percent from the previous year.


Growth plunged from more than 70 percent in 2003.


Sales of Audi A6 and A4, made at Volkswagen's joint venture with First Automotive Works Corp (FAW) - China's top vehicle producer - amounted to 46,177 units and 15,841 units last year.


Audi also exported 2,000 cars to the Chinese mainland and Hong Kong last year, including 1,089 larger Audi A8s, the company said.


Mercedes-Benz, owned by DaimlerChrysler, said that its combined sales in the mainland and Hong Kong rose by 5 percent year-on-year to 11,500 units in 2004.


Its S Class sedans accounted for more than 50 percent of the sales.


Both luxury car makers failed to fulfill their sales targets in China last year, Audi having planned to sell 80,000 units and Mercedez-Benz between 13,000 and 14,000 units.


The news comes after another German luxury car producer, BMW, said last month that its sales in China tumbled by 16 percent to 15,500 units last year from 2003.


Fifty-five percent of its sales came from the 3 and 5 Series sedans built at BMW's joint venture with Brilliance China Auto, the Hong Kong-listed van maker in Northeast China's Liaoning Province.


In 2003, BMW's sales in China skyrocketed by 176 percent from 2002.


"These luxury car makers' weak performances in China were largely the result of a sharp deceleration in the overall domestic car market last year," said Jia Xinguang, chief analyst of China Automotive Industry Consulting and Development Corp.


Sales of China-made cars climbed by 15.17 percent to 2.33 million units last year over 2003.


The growth was down from 75 percent in 2003.


China's luxury car market is expected to rebound this year with the arrival of many new models - to be produced in and exported to China - and the nation's recent removal of the vehicle import quota, Jia said.


"However, competition will be very fierce this year with new strong rivals," he added.


Mercedes-Benz will start to assemble its E and C Class sedans at DaimlerChrysler's joint venture with Beijing Automotive Industry Holdings Corp.


The venture has an annual manufacturing capacity of 25,000 cars.


Meanwhile, Audi will produce an all-new Audi A6 at the VW-FAW joint venture later this year, and BMW will introduce its new 3 Series sedans - to debut at the upcoming Geneva motor show next month - into its joint venture during the third quarter of 2005.


General Motors will begin production of the Cadillac CTS and SRX at its joint venture in Shanghai during the first half of this year.


Next month Toyota Motor Corp's joint venture with FAW's affiliate in North China's Tianjin Municipality will release its first batch of the Crown model.


Volvo Car Corp launched its new S40 sedan in China as imports last month and expect the model to boost its sales significantly.


(China Daily February 7, 2005)


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