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April 20, 2017

Pricey cars making China comeback

Four years after China’s president Xi Jinping started cracking down on corruption and conspicuous consumption, the most extravagant fast cars are making a comeback, according to a media report.

Four years after China's president Xi Jinping started cracking down on corruption and conspicuous consumption, the most extravagant fast cars are making a comeback, according to a media report.

Chinese sales at Ferrari and Aston Martin are approaching their 2013 peaks, following falls of as much as 20% in 2014, according to data compiled by Bloomberg Intelligence.

Maserati, McLaren and Porsche enjoyed their best year ever in 2016. Lamborghini is also on the up after deliveries plunged by more than half from 2013.

"The outlook is looking pretty good for us here in the China market," Reid Bigland, head of Fiat Chrysler Automobiles' Maserati and Alfa Romeo divisions, said in a Bloomberg Television interview at the Shanghai auto show. "With us, we just haven't felt it," he said, referring to the consumption crackdown.

Maserati's sales have surged 119% year to date, added Bigland, who is planning to increase the number of outlets for the Maserati and Alfa Romeo brands in China by 50% to as many as 75 by the end of the year.

Bloomberg said the number of Chinese millionaires rose 10% last year and is expected to more than double to over 1.7m by 2026, according to research by Johannesburg-based consultancy New World Wealth. Consumer confidence is the highest since the global financial crisis amid a strengthening Chinese economy.

"Business owners are coming back into the market to snap up these vehicles," Bloomberg Intelligence analyst Steve Man said. "The improvement is very encouraging for China. It could point to a potential improvement in the entire luxury auto market."

The report noted a 10% "super luxury" tax announced by the ministry of finance in December on cars costing more than CNY1.3m (US$189,000) to "guide reasonable consumption" and cut emissions hadn't damped the lust for the sports vehicles.

"Yesterday I received another 60 orders for our Mulsanne extended wheelbase, it's our flagship model, it's the most exclusive and expensive model on the stand," Wolfgang Durheimer, Bentley chairman and chief executive officer, told Bloomberg at the Shanghai show. "And obviously the Chinese customers that still like to be driven really go for this model."

Durheimer said he expected to set a new sales record for the Bentayga SUV in China this year.

McLaren Automotive Ltd. is expecting to sell 300 cars this year in China, after almost doubling sales to 235 in 2016, as a culture of motor sports starts to develop, sales chief Jolyon Nash told Bloomberg.

Ferrari Greater China maintains a pivotal position in the carmaker's global strategy, Ferrari said in a statement.

"China is the fastest growing luxury market" and driving global luxury trends, Andy Palmer, Aston Martin's chief executive officer told Bloomberg. The luxury SUV is a market that was "originally driven by the Chinese. That's a perfect example of why China is important."

Aston Martin has a full order book for 2017 for its DB11 coupe, added Palmer, who was "pretty confident" the carmaker would hit its target of selling 270 cars this year – up from 170 in 2016 – and plans to "stretch the team" to win more orders.

China "is going to be the largest luxury market within a year or two," Kumar Galhotra, chief of Ford's Lincoln division, told Bloomberg. It entered the country about two years ago.

See also: China premium car market to grow by 50% next decade – Audi

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