Bloomberg News

Porsche Only in China Has $220,000 Entry-Level Club Model: Cars

June 08, 2011

June 8 (Bloomberg) -- At the Beijing Sports Car Club, a $220,000 Porsche SE 911 counts as an entry-level model. Members are competing with counterparts who race $3.9 million Tramontanas and $4.3 million Bugatti Veyron 16.4s.

The number of millionaires in China jumped 31 percent last year to more than 1.1 million, and with an average age of 39, they are 15 years younger than their U.S. and European peers. Car clubs, nonexistent in the country two years ago, provide enthusiasts with a venue to demonstrate their vehicles and carmakers an opportunity to win more converts.

“The car culture is developing in China very fast,” said Jose Cremades, the local distributor for Spanish brand a.d. Tramontana. “The older generation still thinks about saving. The new generation thinks about spending.”

China’s appetite for supercars has been stimulated by economic expansion of 9.7 percent, rising property prices and a strengthening yuan. The country’s 1.1 million millionaire households rank third behind the U.S. and Japan, according to the Boston Consulting Group. Deliveries of high-end cars may rise 35 percent this year in the world’s fastest-growing major economy, consultants Bain & Co. said.

Zhang Kuan, who drives a lime-green Lamborghini SpA LP640, founded the Beijing club, China’s first, in 2009. The first 12 members met through mutual friends and an Internet forum, said Zhang, who works in the finance industry.

250 Members

The club now has more than 250 members from ages 18 to 60, with women comprising about 10 percent. Other groups formed in the city of Chongqing and the provinces of Yunnan, Zhejiang and Fujian. Activities include dinners; driving days at circuits in Beijing, Chengdu, and Qingdao; and community service.

“Many Chinese have not yet embraced the idea of fast cars,” said Zhang, 32. “We need them to understand what fast cars are about. They are a work of art.”

Wang Yuling, 28, a Yunnan Sports Car Club member, owns two Porsches, including a black Cayman S. Wang, who bought her first sports car in 2008 while running a modeling and events agency, said joining the club helped her understand how the machine works.

“When we are together, it’s like a big family,” said the entrepreneur from Kunming. “I’ve learned a lot from the members in the group.”

City Clubs

China’s car clubs differ from overseas counterparts like the Ferrari Club of America and Germany’s Porsche Club Hohensyburg in that they are organized by location, not marque.

Mainland club members also are younger and more active, said Tania Cremades, head of China business development at Tramontana, based in Girona, Spain. The automaker sold 13 in China last year, all to customers between 25 and 28 years old.

“In Europe, you often go to a basement where someone has his whole collection,” Cremades said through blaring techno music at the Formula One track. “It’s like a museum. Here, people are young, they want to use the car, try the power.”

Most of the rich are in Beijing, Shanghai and Guangdong, with an average age 15 years younger than their global counterparts, according to the Hurun Research Institute’s wealth report released April 12.

Bugatti, maker of the world’s fastest production car, sold its first car in China in 2008. The company, owned by Volkswagen AG, has boosted marketing at the Beijing and Shanghai car shows and sponsored test drives.

Promising Market

“We cannot overlook such a promising market,” said David Hu, Bugatti sales manager at Beijing Mei He Zhen Yong Motors Trading Ltd., the brand’s official dealership. “Entering into China is a natural step.”

Aston Martin, maker of the One-77, at $6 million the world’s most-expensive car by sticker price, sold five allocated for China before they reached the showroom, said Matthew Bennett, Asia Pacific director at Aston Martin Lagonda Ltd.

Only 77 of the models, which accelerate to 100 kilometers (62 miles) per hour in 3.7 seconds, are sold worldwide.

“We can really see the potential here,” said Bennett, who expects overall sales to more than double from about 100 cars last year. “Younger people are being attracted to the brand. I’d be very surprised if China’s not Aston’s No. 1 Asian market this year.”

Chinese buyers of Stuttgart, Germany-based Porsche and Sant’Agata Bolognese, Italy-based Lamborghini brands typically are 25-35 years old, about a decade younger than North American and European buyers, the manufacturers said.

Porsche’s Target

Porsche targets record China sales this year of more than 20,000 vehicles after boosting 2010 deliveries by 63 percent.

“The economy started to develop extremely fast in China over the last 10 years, which gave people the opportunity to make a fortune much faster and earlier,” said Helmut Broeker, Porsche’s head of China.

Porsche’s preferred shares fell as much as 95 cents, or 2 percent, to 46.15 euros and were down 1 percent as of 3:55 p.m. in Frankfurt trading. The stock has dropped 9 percent this year, valuing the carmaker at 14.2 billion euros ($20.8 billion). VW dropped as much as 2 percent to 120.65 euros and was down 0.3 percent.

China will overtake the U.S. to become Lamborghini’s biggest market this year, the company said in April. Lamborghini, another Volkswagen unit, aims to boost sales by 46 percent to more than 300 cars this year, partly from demand for its $1 million Aventador LP 700-4.

Andy Wong, 27-year-old president of the Shanghai Super Car Club, owns four sports cars, including pink and white Lamborghinis. Club members celebrate birthdays, take drives at the Shanghai racetrack on weekends and meet every two weeks for a meal.

“Men like exciting things,” said Wong, who works in the real-estate industry. “If I have a bad day at work, or if I’m feeling upset at night, I take my car out for a spin and I feel better.”

--Liza Lin in Shanghai, with assistance from Tian Ying in Beijing, Andreas Cremer in Berlin, Tommaso Ebhardt in Milan. Editors: Kevin Orland, Jamie Butters.

To contact the reporter on this story: Liza Lin in Shanghai at llin15@bloomberg.net.

To contact the editors responsible for this story: Kae Inoue at kinoue@bloomberg.net;


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