China to Pass Germany As No. 2 Porsche Market

Porsche SE said China may pass Germany as its second-biggest market within three years on rising wages and demand for the $260,000 Panamera sports sedan.

 

"All premier manufacturers are showing good results" in China, Helmut Broeker, Porsche's China head, said in a June 12 interview in Shanghai. The country was Porsche's third-biggest market last year, up from about 15th in 2006.

 

Porsche plans to add more dealers in China and shift its local office to Shanghai, the country's financial capital, to help boost sales. Audi AG, Jaguar Land Rover and Daimler AG's Mercedes-Benz are also aiming to offset tumbling demand in Europe and the U.S. by selling more cars in China, home to 825,000 people worth 10 million yuan ($1.5 million) or more.

 

"China is the hope for luxury carmakers like Porsche," said Han Weiqi, an analyst with CSC Securities HK Ltd. in Shanghai. "Even during the current financial crisis, China's rich are obviously less affected than those in U.S. and Europe."

 

Porsche has secured more than 100 orders for the Panamera, its first new model line in seven years, in mainland China and another 100 in Hong Kong, said Broeker. Hong Kong orders could reach as many as 200 before the car enters the market in September, he added. Mainland orders my hit 600 by the time deliveries begin in December or January, he said.

 

The family-size Panamera costs from 1.8 million yuan in China. Porsche unveiled the car at the Shanghai auto show in April, the first time it debuted a new model outside of Europe or North America.

 

China Sales

 

Chinese vehicle sales have surged 14 percent this year, compared with a 37 drop in the U.S., as a 4 trillion yuan stimulus package revives growth in the world's third-biggest economy. Porsche boosted sales 3 percent in the first five months to 3,174. That included 900 vehicles in May, a 44 percent increase from a year earlier.

 

Full-year sales will likely be "similar" to 2008, after a tax increase damped demand late last year and earlier this year, Broeker said. The Stuttgart, Germany-based carmaker sold 8,371 vehicles in China last year, compared with about 14,000 in Germany. Sales in the U.S., the company's biggest market, were about 35,000.

 

This year, the company's U.S. sales fell 27 percent in the first quarter, and U.K. sales sank 36 percent, as the global recession and credit crunch triggered job losses in banking and other industries.

 

In China, Daimler posted a 30 percent increase in Mercedes car sales in the first quarter, while BMW's sales rose 14 percent. Other luxury-goods makers including Gianni Versace SpA and LVMH Moet Hennessy Louis Vuitton SA have also boosted sales in China, where the economy will likely grow 7.8 percent this year, according to the median of 10 analyst estimates compiled by Bloomberg.

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