Maturing southern market beckons luxury brands

China's auto market registered higher sales growth of 13.5 percent in the first 10 months of the year, giving a boost to the Guangzhou Auto Show that opens today.

In the host city, the market has been affected by restrictions on new car licenses plates - but the impact has not been all negative.

The lottery policy is actually driving sales of more expensive cars.

A year after plate limits took effect, demand for luxury cars in Guangzhou and nearby markets is still running high.

Analysts said difficulties in getting car plates have pushed consumers to upgrade when they replace their existing cars -usually to luxury brands.

The highly automated Foshan plant is FAW-Volkswagen's fourth production facility in China and key to the automaker's southern expansion efforts. [Photo / China Daily]

And those who actually get a car plate through the lottery also tend to increase their budget.

"It's too difficult to get a plate - why not buy a better car once for all?" asked a Guangzhou resident surnamed Huang.

"A cheap car may be cheaper than the plate."

According to local statistics, sales of luxury nameplates BMW, Audi, Mercedes-Benz and Lexus all increased substantially since Guangzhou's restrictions took effect in July 2012.

"The policy is a great bonus for us," said an executive at a local Audi dealership.

"Buyers who replace their old cars with a new Audi account for about 30 percent of our total sales. We expect this proportion will continue to increase by 8 to 10 percent in the near future," he said.

Studies found that a similar plate lottery policy in Beijing also stimulated sales of luxury brands.

Analysts said both Guangzhou and Beijing are maturing markets with a large number of car owners, consumers that are often buyers of up-market brands when replacing their cars.