Ferrari drops agent as China’s luxury car market shrinks; With its sales in China dropping by one third to 554 cars in 2013, Ferrari has recently terminated a franchise agreement with a Chinese agent
June 16, 2014 Leave a comment
Ferrari drops agent as China’s luxury car market shrinks
Staff Reporter
2014-06-11
With its sales in China dropping by one third to 554 cars in 2013, Ferrari has recently terminated a franchise agreement with a Chinese agent which owns two stores, out of more than 20 in the nation, a reflection of China’s shrinking luxury car market, reports the Chinese-language Beijing Business Today.
A company source told the paper that Ferrari decide to back out of the franchise following allegations that the agent was also selling rival brands at the same time, but market players attributed the move to the shrinkage of China’s top luxury car market.
Figures show that Bentley sales in China dropped 3% to 2,191 cars last year, compared with a 19% global sales growth and a far cry from the growth rates in China of 23% and 100% in 2012 and 2011 respectively. Lamborghini sales also declined 16.7% to 267 cars last year, while Ferrari suffered the steepest drop, by one third to 554, decreasing the share of the Chinese market in its global sales to 8%, down from 10.7% in 2012.
In the wake of the slowdown in China’s car market, top luxury car brands have suffered from their excessive expansion during the period of rapid growth in previous years. The slowdown has especially affected the top end of the market due to its limited capacity, according to Jia Xinguang, an auto industry analyst.
“The curbing of high-end consumption by the government has put a damper on the consumption of expensive dining and luxury cars,” Jia said, adding that sales of luxury cars will remain flat this year.
Market players told the paper that retail prices of some luxury cars have been on the brink of collapse, while Beijing’s corruption crackdown and ongoing frugality drive have led to a drop in sales.
Stephan Winkelmann, president and CEO of Lamborghini, said that the company will strengthen training of agents in the hope of augmenting service quality and customer satisfaction.
Meanwhile, Jia noted that excessive expansion of sales network in the past has overstrained the capacity of luxury brands, leading to inadequate management of their local agents and lower service quality.
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