General Motors Company (GM), Daimler AG (USA) (DDAIF): Mercedes Emulates Audi in China’s Booming Luxury Cars Market

Interestingly, when it comes to luxury cars, the slowdown in the Chinese economy is having an adverse impact on sales of some of the premium luxury cars, such as Ferrari and Lamborghini. On the other hand, the affordable luxury car makers, such as Volkswagen, have been witnessing an increase in sales . The luxury car space is usually dominated by European manufacturers ; in China, Volkswagen’s Audi leads in terms of sales.

Last year, Audi sold 407,738 cars in China, nearly doubling Mercedes Benz’s sales. By the end of this past July, Audi had sold 269,905 cars in China year to date, and it looks well-positioned to achieve its target of selling 450,000 vehicles in 2013. The company is now gearing up to open its second assembly plant in China, which will eventually increase the carmaker’s capacity there to 700,000 units per year .

General Motors Company (NYSE:GM) is the biggest non-Chinese vehicle manufacturer in China, but it is a small player in the country’s luxury car market . But General Motors Company (NYSE:GM) is planning to take the three German manufacturers — BMW, Volkswagen and Daimler — head-on by increasing its focus on the luxury car market. America’s leading car manufacturer will launch at least six new or upgraded cars in the U.S and China in the next 30 months. It aims to aggressively expand its Cadillac brand through new premium crossover cars . The competition in China’s luxury car market will certainly heat up as Mercedes Benz’s expansion plans coincide with Cadillac’s aggressive push.

Conclusion

Daimler AG (USA) (OTCMKTS:DDAIF)’s ambitious plans for expansion in China will come on the back of $2.67 billion investment over the next two years . The company hopes these efforts will increase its Mercedes Benz sales by one-third, to more than 300,000 vehicles a year, by 2015. If this happens, then China will become Mercedes Benz’s biggest market — larger even than its home turf in Germany.

Daimler has realized that its rivals have outperformed the company in China through superior infrastructure. Companies like Volkswagen, BMW and General Motors Company (NYSE:GM) have spent billions on production plants and have a vast network of dealerships. Keep an eye on the company’s Chinese sales to see whether Daimler can emultate those rivals’ successes.

The article Mercedes Emulates Audi in China’s Booming Luxury Cars Market originally appeared on Fool.com and is written by Sarfaraz Khan.

Sarfaraz Khan has no position in any stocks mentioned. The Motley Fool recommends General Motors.

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