McLaren steps on China’s market

The sport and luxury car-producer McLaren Automotives wants to gain from the worlds second largest economy, as it targets the Chinese upper social class. The British car manufacturer opens its showroom doors in China on Monday as it races to catch up with global rivals in Asian car market.

Chinas expanding economy is delivering some 30,000 millionaires annually, according to the latest study by market-research firm Hurun Report, and their demand for luxury goods including automobiles has made the country a favorable market for the worlds most expensive brands.

China is an important step in McLarens plan to become a company making 1 billion pounds ($1.56 billion) in revenue six years from now, compared with expected sales of 290 million pounds in 2012, Mr. Flewitt CEO of the company said. The country could eventually contribute 10% of the companys global revenue, and the Asian-Pacific region one-third, he said.

McLarens shift toward China is the latest evidence of the central role Chinese demand is playing in the market for luxury goods, even at the very high-end products.

“China is one of the most exciting and dynamic markets in the world where we will make every effort to be well received,” said to Financial Times Ron Dennis, McLaren chairman. “Our entry into China . . . represents a significant milestone in the development of the company.” he added.

Indeed, many owners are not driving their luxury automobiles, Mr. Flewitt said. Some of the companys cars come up for resale with just 1,500 miles on the odometer, and buyers often simply park their cars with their collection of other top-end vehicles to show to their friends and business partners. “They are bought for emotional reasons, either for driving pleasure or simply as an association with a famous brand. In a way, they are fashion products,” he said. “It is what you might call ostentatious consumption.”

As European car demand is hit by the continent’s economic hardship, China and some emerging markets such as Russia and India have become targets for high-end car brands focusing on the freshly rich.

Ferrari, which entered mainland China in 2004, sold around 350 cars in the country in the first six months of the year which constitutes about 10% of its global deliveries. China is Lamborghini’s second-largest market, after the US.

According to McLarens CEO the profitability of the supercar manufacturer is aimed to jump from the current level of break-even as the company strives for increasing sales worldwide. Similar to its competitors, McLaren expects China to eventually become its second-biggest market after the US, and expects to sell about 150 cars there next year.