China doesn’t have old money. Indeed, some of the wealthiest people in China are entrepreneurs under 40 years old. They buy expensive cars and want to personalize those cars. They are a prime market for products that enhance performance, comfort or appearance.
SEMA members can find out how to reach them through face-to-face meetings with distributors in China at a groundbreaking event. The SEMA CIAPE China business development conference, held September 23–26, 2010, in Beijing, will pair auto parts manufacturers with relevant Chinese buyers in up to a dozen private, pre-scheduled meetings.
The 2009 Hurun China Rich List had 94 people under the age of 40 on it. But such rich young entrepreneurs aren’t the only group in China that will spend money on their cars. According to a study by European investment bank Credit Suisse, income growth in the 20- to 29-year-old age group was the strongest of all age groups in China over the past three years. Those twenty-somethings expect their income to continue to grow strongly over the next three years, the study found.
That may be why young people are more willing to spend that money than in the past. A study by the Hong Kong Trade Development Council (HKTDC) found that mainland China has a “relaxed attitude towards spending and little concern about price.”
In the HKTDC study, 34% of respondents aged 20–24 and 32% of those 25–44 were not in the habit of saving. “They are moving beyond the basic necessities. Many of them are going for big-ticket items and branded products,” said Billy Wong, a senior economist with the HKTDC.
Spending by rich entrepreneurs is helping fuel growth in China’s luxury car segment, which grew 29% in 2009 to 310,000 units, according to J.D. Power and Associates.
Meanwhile, spending by the under-40 group is helping fuel growth in the two fastest-growing segments in China, the subcompact and compact car segments in China. In 2009, they accounted for a combined 62% of the passenger-car market, which totaled 8.7 million units, according to J.D. Power and Associates.
“What is the attraction?” said Tim Dunne, director of Asia Pacific market intelligence at J.D. Power and Associates: “First-time buyers can easily afford them.”
China is the world’s fastest-growing vehicle market. Sales of passenger vehicles, which includes SUVs, are expected to reach 13.6 million units in 2015, according to J.D. Power and Associates.
The subcompact and compacts segments include models such as the Volkswagen Polo and Jetta, Chevy Aveo, Honda Fit and Civic and Ford Fiesta—all popular models to modify. Each has a large, avid online fan group.
Of course, the urge to be cool wasn’t limited to the under-40s, found the HKTDC study. A majority of respondents, regardless of age, “would like to try out new things and own trendy or novel things and products, as well as share the latest fads and experiences with friends,” said Wong.