BMW and Porsche in China joy ride

Chinese sales have driven profits at BMW and Porsche - but it's been a bumpy road for Toyota.

by Dave Waller
Last Updated: 06 Nov 2012
The car market may appear to be sitting on bricks half the time these days, but the latest round of results show it still has plenty of poke: German carmakers BMW and Porsche are benefiting from heading for the lucrative Chinese market, where car ownership is becoming an obsession.

BMW managed to flog 63,300 cars there in the second quarter, up 52% on last year. And given that it only shifted 80,300 at home in Germany in the same period, it may not be long before its Chinese total surges past in a brash display of highly symbolic overtaking. Overall BMW sold a record number of cars – 450,608, up 18.5% on last year. Net profit for the second quarter rose to 1.8bn euros, up from 834m euros in the same period last year. Vroom vroom.

The Chinese also helped fellow German manufacturer Porsche shift 56,272 vehicles in the first six months of the year, as turnover rose 19% to €5.2bn. And it’s not all about sporty excess: the Chinese seem to be especially turned on by the monster Cayenne SUV, which accounted for nearly half of its 11,712 sales there. The super wealthy in China rely on being driven around, which suits Porsche’s more sensible models.

That said, Porsche has become especially canny in courting far-east punters, who resemble Americans in the 1970s in their desire to show off. Expect to find a Porsche in China to be kitted out with enough glitzy accessories and faux chrome to fill a whole series of Pimp My Ride. No surprise then that China has now become the second-largest market for Porsche worldwide.

The Chinese say that car ownership is part of the third consumer revolution – its first was bicycles, followed by electronic goods in the 90s. And we all know how ubiquitous both of those items became. Other car brands are now setting off on the far eastern convoy too: fellow Germans Audi and Mercedes have benefited from Chinese demand; Lamborghini’s sales in China tripled last year, to 247 cars; and even oh-so British Aston Martin declared its desire to crack the Chinese car market by suggesting it could wind up floating in Hong Kong.

The only snag may be the growing concerns over Chinese air pollution: these car makers may find their destination isn’t the oasis they’d hoped, if bureaucratic Beijing winds up clamping down on new vehicle registrations.??But amid such a flow of traffic spare a thought for sputtering Toyota. Quarterly profits at the Japanese carmaker plunged a disastrous 99% – thanks to the impact of the tsunami in March and its subsequent effect on Japan’s supply chain. Toyota reported a Y108bn operating loss for the first quarter, its first deficit in two years (a tax rebate lifted it to a narrow Y1.1bn profit). The weak yen hasn’t helped either: the company based its forecasts on an exchange rate of 82 yen to the US dollar, and it’s currently about 77.3 yen to the dollar – not good for a company that makes twice as many of its cars in Japan as do its rivals Nissan and Honda.

The good news is that Toyota’s said it was recovering from the tsunami faster than expected, helped by the employment of 4,000 temp workers. It even raised its full-year forecast for net profit from 280bn yen to 390bn yen. The next step is to stick a champagne bar in the back of the Yaris and flog it to the Chinese.

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