Maturing southern market beckons luxury brands

New trends

In addition to Guangzhou, markets in other cities in South China, especially in the prosperous Pearl River Delta, have matured in recent years, attracting a number of super luxury brands to open operations.

Rolls-Royce, Ferrari, Maserati and Porsche have all expanded their dealer networks to smaller cities in the region.

Foshan, a city neighboring Guangzhou, is now a major target.

Bentley opened a showroom in the city's Chancheng district early this year, while Porsche's 50th outlet in China opened in Foshan's Nanhai district.

Maserati will also soon have a dealership in Foshan, said Zhu Jiaxiu, marketing head at Maserati China.

Dongguan, a city between the metropolises of Guangzhou and Shenzhen, also saw top-of-the-line brands open dealer outlets in the first half of the year.

Southern strategy

The South China market, with the Pearl River Delta at its core, was long dominated by Japanese brands.

Most of their production facilities are located in the region.

But more international automakers based in other regions in China, especially German brands, have formulated southern market strategies in recent years to compete with Toyota and Honda.

Most of Volkswagen sales traditionally come from North China, but it became one of the first mainstream automakers to make a push to the south.

Since it announced its southern strategy at the 2009 Guangzhou Auto Show, Volkswagen's share of the southern market has risen to almost 20 percent, a rise of 6 percentage points since 2009, according to company statistics.

To consolidate its position, Volkswagen and its joint venture FAW began production in Foshan on Sept 25 this year.

The fourth production facility for FAW-Volkswagen, the Foshan plant will have an annual production capacity of 600,000 units when its second phase becomes operational in 2015, boosting the joint venture's total capacity to 1.8 million vehicles a year.

The Golf 7 built at the plant will make its world premiere at the ongoing Guangzhou Auto Show.

Just before the Shenzhen Auto Show in June, British luxury automaker Jaguar Land Rover announced its own southern strategy.

Bob Grace, president of Jaguar Land Rover's China operations, said the south is a relatively mature market for luxury vehicles and also among the most strategic markets for the company.

Its sales in the southern market in the first five months of 2013 increased 24 percent, 7 percentage points higher than its overall sales growth in the country.

Jaguar Land Rover said it will add another 10 dealerships in South China to the existing 28 outlets, with 34 operational by the end of the year.

The carmaker opened a new regional office in Guangzhou in June to strengthen its marketing activities in South China.