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When you begin typing ‘luxury car market’ into a search engine, you will find that ‘luxury car market China’ is the third or fourth suggestion and the first country mentioned. That says a lot.

It seems that, everywhere you look, it is China that represents the future – of economics and industry. While Europe and North America (the traditional West) were dealt a crushing blow by the economic crisis that began in 2008, the Chinese economy has kept on growing at breakneck pace.

Although China’s economy outgrew the Japanese in 2011 and its exports far outstrip those of the USA, its per capita income is below the world average. As is common in developing countries, there are lots of very rich people, many more very poor people and not much in between. Such is the size of the country’s population (with the world’s biggest labour force, estimated at 780 million) that the richest 5% or even 1% represent markets far greater than those of the stagnant West.

In 2010 car sales were up 45% on the previous year and overtook the 10.5m cars sold in the US over the same period. Now these sales are not solely the first purchases of the newly wealthy – they are luxury purchases of the world’s most desirable vehicles. Rolls-Royce, perhaps the ultimate symbol of wealth, reported an increase in sales of 300% at the start of 2010.

One country that has lost out while others have been making millions from China’s new car-craving generation is Japan. The country’s car production is completely based within its own borders and, as a result, suffered terribly when the huge earthquake struck in March 2011, ceasing production completely at some plants. Toyota (parent company of Lexus), Honda and Nissan shut all their facilities, denting further Japan’s chances of taking a hold of the luxury car market across the sea. Goldman Sachs estimated that stopping production for one day would cost Toyota $73.3 million in lost profits.

The 5 best-selling luxury cars in the US (May 2011)

  1. BMW 3-Series
  2. Mercedes-Benz E-Class
  3. Mercedes-Benz C-Class
  4. Buick LaCrosse
  5. Cadillac CTS

India is another emerging economic superpower with a rapidly growing interest in the crème de la crème of luxurious motoring. With the second largest population (after you know who) in the world it is another market on manufacturers’ wish lists. It will be interesting to see which makes and models make the Chinese or Indian best-selling lists – as things stand, the immensely powerful European brands seem to be holding their own.

India does outstrip its rival in one aspect, although it is not something it would wish to dwell on for too long. In 2005 the World Bank estimated that 41.6% of India’s population lives below the international poverty line of $1.25 a day. Even more staggering perhaps is the estimate that a third of the world’s poor are Indian. Though the percentage of Indians living in poverty is steadily dropping, the numbers involved remain startling and horrifying.

Lamborghini driving may be all the rage in the upper echelons of the developing world, but the slowing of the luxury car market in the West looks certain to change the face of the automobile manufacturing industry. If current trends continue unabated, then associated industries could likewise attempt to break into the new New World, while the track days UK and US companies run could become the only chance for all but the super rich in the West to get behind the wheel of luxury cars.

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