By the end of 2020, China’s car market will exceed 20 million units. In 2013 there were 17.9 million. The largest increase in growth has been in the premium segment.  “Today it’s valued at 9 percent of the total, and over the next few years that number will be 12 – 13 percent”, explained Luca De Meo — member of the Board of management for Sales and Marketing Audi AG — at the Beijing Motor Show. All told, the premium market in China will account for about 2.5 million cars.  Of these, “… 35 to 40 percent will be SUVs“, says De Meo. This figure amounts to about one million units.

None of this is a big surprise. The news is something else: “Much of the growth will be attributed to the compact versions. The smaller premium vehicles sales will account for 25 percent of the total.” This is a similar trend that is happening in Europe (and partly in the U.S.), but for different reasons: in the Western world, the economic crisis has pushed individuals and companies to “downsize”, but in China the increase in sales is for first-time car buyers who decide that they want their first car to be a “premium”. For Audi this data translates into A3 and Q3 sales. “We’re well-positioned in China in the compact market. In just a few months the Q3 has accounted for 50 percent of the sales in the segment.”

There is also another reason that should be mentioned: “The second-car market in China hasn’t developed yet. There will be more and more customers who will buy an A6 to do business during the week and an A3 or a Q3 to be used on the weekend.”  It’s a trend that isn’t yet a reality, but is foreseen to happen just as it has in all the mature markets.

All the more so because today there are 5 million families with an annual buying power of between $35 to $40 thousand dollars a year—“a level that, according to international standards, indicates the possibility to purchase a premium compact car.” In the coming years, it’s predicted that the number of families with this kind of spending capacity will grow to 10 million. Consequently, the “joy ride” for the premium car industry in China is destined to last for a very long time.

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