As the demand for luxury cars in China simmers down, car dealers such as BMW, Daimler and Audi are offering big discounts to maintain sales. According to cheshi.com (a pricing guide that monitors over 3,000 dealers in China), BMW dealerships in Beijing are offering markdowns of up to 19% on a 3-series car.
Meanwhile, several Mercedes dealers have cut 20% off the price of the C-class Elegance model. The three largest luxury carmakers -- BMW, Daimler and Audi – are expecting sales growth to slow down. They also anticipate that prices in the world’s biggest automobile market will drop.
Several cities in China are imposing driving curbs and the central bank is tightening lending, says Bloomberg. Researcher J.D. Power & Associates said that the demand for high-end vehicles has fallen to 29% for January to August of 2011 from having 48% in 2010.
Scott Laprise, a Beijing-based analyst at CLSA Asia Pacific Markets, said that the market is “in a cycle of dropping prices.” Dealers are concerned that sales will slow down and they are selectively making reductions in the luxury segment.
Due to this anticipation of what the overall market will experience, the dealers want to take preventive measures so that their sales could be maintained. Laprise said that "aspirational" buyers like those in the mid- to upper-level management jobs may rethink or postpone luxury purchases.
The central bank in China increased interest rates five times in the past year to reduce inflation. In addition, Beijing has started to limit the number of license plates available since January as a move to lessen pollution and congestion.