China Plush

In China, German Automaker BMW Sees Profit Surge Amid Wave of Luxury Consumption

BMW Expands Greer Plant
Production and sales are surging for German automakers such as BMW.
  • Why it matters

    Why it matters

    Chinese consumers are spending more money on luxury goods, including German BMW and Mercedes cars, a trend which stands to benefit Germany’s and Europe’s economy at large.

  • Facts

    Facts

    • BMW profit rose 27 percent to €1.8 billion ($2.4 billion) in the second quarter.
    • BMW unit car sales rose 21 percent in China vs. 5 percent overall.
    • Audi and Porsche have also seen sales rise thanks to China.
  • Audio

    Audio

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Consumers in China are shifting into high gear, more specifically, the precision higher gears found in German luxury cars Mercedes, Audi, Porsche and BMW. Demand appears to be so strong that the motor of Germany’s auto industry now lies in China, experts said, where consumers have moved on from buying the bare necessities to the pricey status symbols long favored in the West.

The trend, experts said, was confirmed again on Tuesday, when BMW reported a greater-than-expected rise in second-quarter earnings and sales on the back of its booming business in China. The success of the Bavarian automaker mirrored that of VW and Mercedes-Benz maker Daimler.

BMW said profit rose 27.2 percent to €1.8 billion ($2.4 billion) in the second quarter as sales rose 1.8 percent to €19.9 billion. BMW said it sold 533,187 BMW, Mini and Rolls-Royce cars in the period, up 5.3 percent.

While lining up for German autos, Chinese consumers are not stopping there. Overall luxury consumption is on the rise in the world’s most populous market.

“There are calculations that predict that 50 percent of luxury consumption worldwide comes from Chinese people,” said Moritz Rudolf, economic expert at the Mercator Institute for China Studies in Berlin.

Other premium brands are also benefiting from that trend of rising affluence in the socialist country. “The macro trend points in the direction of more consumption in China,” said Mr. Rudolf.

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