Supercar makers chase China's superrich motorheads
MACAU—China's superrich want supercars.
That's what the makers of world's most exotic and expensive sports cars are hoping as they gather in Macau this week for the first Asian edition of Monaco's annual Top Marques show that began eight years ago.
The supercar companies are chasing growth in China, which is churning out scores of new millionaires each year and is home to the world's biggest auto market.
Ferraris and Lamborghinis sat alongside rare and beautiful automotive works of art from lesser known marques like Italy's Pagani, West Richland, Wash.-based SSC and Sweden's Koenigsegg. They drew admiring looks from wealthy auto enthusiasts from China and other Asian countries.
Sales staff were hoping to sign deals with some of the 20,000 expected visitors. One of them was Steve Chen, who built his fortune in China with a motivational speaking business. He was admiring the Pagani Huayra, an euro849,000 ($1.1 million) street rocket sheathed in carbon fiber and titanium with gull wing doors and a V-12 engine churning out 700 horsepower.
Chen was thinking of buying a Pagani or a Bugatti Veyron Grand Sport to add to his collection of 15 to 16 high-end cars, which he divides between his bases in Taiwan and Shanghai.
"I go to a lot of auto shows in China. I've loved cars since I was a kid and I have been collecting many different car brands," said Chen, who opened his leather satchel to reveal keys for a Ferrari, a Lamborghini and a Rolls-Royce, careful not to display them too ostentatiously.
Chen, who visited the Bugatti factory in France for a test drive, said he admired the Veyron's top speed of more than 400 km/h (250 mph) though he did wonder aloud to the sales staff why the car, which has a list price of 39 million yuan ($6.1 million) in China, was so expensive.
China's billionaire ranks, boosted by the country's fast-growing economy, swelled to 271 in 2011, 82 more than last year, according to the Hurun Report, China's version of the Forbes rich list. The number of millionaires grew by 85,000 in 2011 to 960,000. Rising wealth levels are reflected across Asia, which had 3.3 million millionaires last year, surpassing Europe for the first time and closing in on North America's top spot, according to a study by Merrill Lynch and Capgemini.
With so much wealth being created, "there's a fair bit of competition and these companies will now have to establish their brands and see if their brands will get a following," said Amar Gill, who authored a recent CLSA Asia-Pacific Markets report on Asia's wealthy.
China's vast expanses, linked by an extensive network of newly built of freeways, could help business for supercar makers.
"Given that you've got these long stretches you can drive on, having a nice car is a bigger attraction than being in a city-state where it's just a status symbol," said Gill, who is based in Singapore.
Organizers of the four-day show, which ends Sunday, expected about 60 percent of visitors to be from mainland China, with another 20 percent from Hong Kong and the same amount from Japan, South Korea, Taiwan and Southeast Asia.
"The growth in China has been exponential and the various manufacturers who are represented here today have all noticed that their biggest market is China," said show organizer John Hardyment.
China's supercar "market is growing rapidly, growing a lot faster than the entire car market," said Wilson Lee, Lamborghini SpA's Beijing-based head of China operations.
To be sure, the supercar market is a small portion of China's overall auto sales, which rose 32 percent last year to 18 million vehicles. Sales have slowed this year and analysts forecast growth of less than 10 percent.
Lamborghini, owned by Volkswagen AG, expects to sell about 350 cars in China this year, 70 percent more than last year, Lee said.
China overtook the U.S. this year to become Lamborghini's biggest market and Lee predicted similar sales growth for "another two years before it levels down a little bit." The company opened five dealerships in China this year, adding to 14 existing ones. When the 20th opens next year, China will have a sixth of the company's 120 dealerships worldwide.
Most Chinese Lamborghini buyers are worth at least 100 million renminbi ($16 million) and nine in 10 pay in cash, Lee said. About two-thirds are younger people aged 20 to 32 from wealthy families while 10-20 percent are older auto enthusiasts who drive their supercars mainly at the track on weekends. The remaining 10 percent don't drive them at all.
"We call them collectors. They just put it at home like a fine painting or piece of art or sculpture. They have huge houses and they will have their whole collection of luxury cars on display," Lee said. "Some of these cars don't have a single kilometer on them. They basically forklift it and put it down at home because they don't want to put any miles on the car."
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