Chinese slowdown haunts premium carmakers at Paris show

Thu Sep 27, 2012 4:38am EDT
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By Andreas Cremer

(Reuters) - Luxury auto giants BMW, Audi and Mercedes have been enjoying robust demand in China for almost three years as they vie to be the world's biggest premium car manufacturer. That could be about to change.

While carmakers will use this week's Paris auto show to display models such as Audi's updated $146,600 top-of-the-line R8 coupe and Porsche's $126,000 four-wheel drive 911, the fate of the vehicles will be decided thousands of miles away in China, where premium-car buyers are showing signs of saturation.

Effects of a slowdown in the world's second-largest economy, where BMW, Audi and Mercedes account for about three quarters of luxury car sales, have already made themselves felt.

There is much at stake for the European carmakers, which have invested in local factories with Chinese partners to sidestep hefty duties on imported cars.

Daimler warned on September 20 that profit at its Mercedes division would slip this year, citing heightened competition in China and the crisis in austerity-hit Europe.

"We're bracing for a challenging environment," chief executive Dieter Zetsche said.

The day before, Porsche said it would cut output and spending next year to offset lower sales.


A worker prepares a car for display at the Citroen exhibition area on the eve of a media preview at the upcoming Paris Car Show September 26, 2012. REUTERS/Jacky Naegelen