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EDITORIAL  FULL ARTICLE 
BMW fears lashing from storm brewing in China
Matthias Schmidt | Assistant Editor

Published: Fri, 19th June 2015 09:14:29 GMT
 

BMW 7-Series launch Harald Krüger BMW CEO

Open quote signDuring a classical orchestra overture and the glitzy backdrop of laser lights focused on BMW’s all-new 7-Series, Harald Krüger patiently waited in the wings to make one of his first official appearances as BMW’s new Chief Executive. Either Mr. Krüger is blessed with a poker face, or, conceivably one of his data experts – unwilling to dampen the party spirit – didn’t dare show him China’s May premium car sales figures. 

Latest AID compiled World May sales figures for the top three premium car manufactures BMW, Mercedes and Audi showed a sudden and dramatic slowing in China’s appetite for top-notch cars. 

In China, which of late has evolved as the world’s most significant market for both Audi and BMW, and their biggest profit generating engine, both marques have lurched into reverse. 

News of this sudden chill, likely to bring their previously speeding Chinese bandwagon to a sudden shuddering halt, is virtually guaranteed to send tremors through the headquarters of Europe’s prestige sector headquarters. 

Not only for the proud Chinese owners of their top-notch cars, but also for Germany’s prestige car makers no less, doing business in China in recent years has been a life of luxury. 

A case in point, Mercedes relies on China for around 20 to 25 per cent of its profits, rising to between 35 to 40 per cent for BMW. 

The potential ill effects of China’s sudden chill and the potential impact on their bottom line cannot be over emphasised. 

After years of near exponential Chinese car sales growth, both segment leading Audi and BMW have suddenly lurched into reverse. It’s far from certain, but latest developments still suggest that for the likes of Audi and BMW the milk and honey days in China could be drawing to a close. 

And the reasons are easily spotted. 

This May, following a distinct slowing in sales pace since the start of this year, both BMW and Audi were presented by an unfamiliar picture. 

Audi’s Chinese sales in May fell 1.6 per cent, followed by a 4.2 per cent drop in BMW sales. 

Making it three out of three, Jaguar Land Rover, the latest arrival on the scene, took a headlong dive of almost a third, thus bringing its Chinese sales losses to date to a sobering 23 per cent.

Latest developments in China’s luxury car sector, which also ranks as the world’s biggest arena for flagship cars like Mercedes’ latest S-Class and BMW’s 7-Series for instance, contain all the toxic ingredients to cause restless and sleepless nights among Europe’s senior prestige sector executives.

While Daimler’s well-seasoned and fortunate CEO Dieter Zetsche, at the launch of Mercedes’ latest S-Class flagship, was blessed by ideal trade winds filling Daimler’s sails, this week’s unveiling of BMW’s all-new 7-Series appears potentially to coincide with the unseasonal start of the hurricane season. 

Let’s hope BMW’s new man at the helm is a seasoned sailor and doesn’t succumb easily to a prolonged bout of sea-sickness
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