Burgeoning Chinese middle class

September 13, 2013 11:46 am No Comments

(CNN) — The world’s car giants go head-to-head as the Frankfurt Motor Show opens to the public. Flaunting the latest releases, the show is a tapestry of hybrid and concept designs from some of the most illustrious marques.

But while the German city plays host to glitz and glamor, manufacturers are eyeing a burgeoning class of car buyers more than 6,000 miles away in China, where 200 million cars now run on the country’s ever-congested roads.

The world’s largest car market, China is the major battleground for European companies in the 21st century, as premium brands look to exploit a growing population of 1.3 billion people.

With European sales in decline and the U.S. market only slowly recovering, China represents a beacon of steady growth at a time of economic uncertainty.

Read more: China on verge of worst economic crisis in decades

High domestic demand and rising wages are fueling a boom in the world’s second biggest economy, with car sales increasing 11% in August year on year, according to the state-backed China Association of Automobile Manufacturers.

World Bank statistics show that China’s GDP per capita — an indicator used to measure the standard of living in a country — had risen 436% between 2002 and 2012, from $1,135 to $6,091.

Watch more: European production for Chinese cars

China’s car market will almost match the combined size of the U.S. and western European market by 2019 with sales set to double from current levels, according to a report by consultancy PricewaterhouseCoopers.

And where once Chinese motorists were content to buy dated, home-grown vehicles — or at best pale imitations of Western designs such as Mercedes-Benz and BMW — now they want the real McCoy, according to analysts.

Read more: China pushes for indigenous car brands

“You see the same with the massive rise of the middle class in India,” said Andrew Marsh, director of independent consultancy AutoIndustryInsider.com. “Those who can afford it don’t want the domestically produced tat. They want to have the Western names, vehicles built elsewhere.”

U.S. auto giants Ford and General Motors have reported record sales increases in China for the month of August. The two Detroit-based companies reported a 46% and 11.2% rise respectively, with Ford citing strong demand for the Focus while GM-owned marque Buick sales for August are up 17.7% compared to the same month in 2012.

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