Localization fuels Infiniti surge in premium segment

Roland Krueger, president of Infiniti. [Photo/China Daily]

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An up-and-coming premium car brand in China, Infiniti just recorded its best May ever in the nation, with 50 percent year-on-year growth in sales volume.

Globally it experienced its best May as well, with 17,462 cars sold, an increase of 11 percent from the same period last year.

"China is one of the most important growth markets in the world－we will continue to invest in this market," said Roland Krueger, president of Infiniti, in an interview with China Daily on the sidelines of the Global Automotive Forum in Chongqing on Tuesday.

Krueger was the only speaker from the premium segment invited to the opening plenary of the Global Automotive Forum, where he shared with panelists and audience members his insights into the trends of the car industry, especially the premium segment.

"Under the theme of the 'new normal', the growth rates (of China's car market) are expected to slightly decline. But clearly, growth rates of 5 to 6 percent for the total market and 10 percent for the premium market would be considered extremely healthy anywhere in this world," he said.

"Mirroring the global trend, the premium market in China is expected to grow faster than the overall market and make up for 9 percent of the total market－fully in line with the global average," he said, citing estimates by global information company IHS.

IHS also forecast that sales of premium cars in China would reach 2 million units this year, up 11 percent from around 1.8 million in 2014.

Localization

One day before attending the opening of the Global Automotive Forum on Tuesday, Krueger visited Infiniti's plant in Xiangyang, Hubei province.

"It (the plant) is an outstanding achievement," Krueger said. "I had a very good trip and good discussion with the management team. The quality of the production site is great."

Last September, Infiniti established a joint venture with Dongfeng Motor Corp and started local production.

To ensure that the local products are of excellent quality, the plant named 24 master technicians or Jujiang last year to lead the production process and control quality. Today, the number of master technicians at the Xiangyang plant has increased to 36.

At the end of 2014, Infiniti started production of the Q50 long-wheelbase model at the plant. In January, the QX50 was added to the local lineup. The 50 series have achieved encouraging results in the market. In April, sales of Infiniti's locally made products accounted for more than half of its China sales for the first time.

"In terms of body styles, most premium customers in China will continue to purchase sedans for now, but the demand for SUVs will grow even more quickly and eventually catch up with sedan sales," Krueger said.

He said China, now Infiniti's second-largest market worldwide, is expected to be the largest in the not-too-distant future.

"With pronounced consumer preferences for premium brands, there is significant growth opportunity and, in line with that, localization of production will fuel this market growth even further and at the same time add to the economic growth of the country," he said.

Changing dynamics

China's premium car market is currently dominated by three German brands but the scenario is changing as the so called "second-echelon" premium brands rise to grab more market share.

"Their stress on the Chinese market has led to very good results and their sales in 2014 increased by a large margin," said Xu Changming, a senior auto analyst with the State Information Center.