High prices fail to dampen Chinese obsession with Range Rover

PUBLISHED : Thursday, 15 August, 2013, 6:00pm
UPDATED : Thursday, 15 August, 2013, 6:14pm

Chinese enthusiasm for Jaguar Land Rover vehicles shows no signs of abating as retail prices in China soar, with certain models priced at over three times more than in overseas markets.

Numerous private retailers in Beijing have recently sold out of some high-end Range Rover models despite hefty prices.

Luxury vehicle manufacturer Jaguar Land Rover recommends a retail price equivalent to between HK$1 million and HK$1.3 million for its new Autobiography V8 model in its major overseas markets including the United States, Germany and Japan.

But its recommended retail price in China is a hefty 2.79 million yuan (HK$3.5 million), approximately three times the price in other major markets. And some private retailers may add as much as a further 400,000 yuan, China Youth Daily found, bringing the total price to over HK$4 million in Beijing.

Excluding import tariffs, transportation costs, various taxes and storage fees, which total approximately 2 million yuan, the profit margin is still 1.2 million yuan (HK$1.5 million).

While private retailers are permitted to include a modest extra charge on car sales, media reports have revealed many retailers have set prices as much as 300,000 to 400,000 yuan over the manufacturer’s recommended price.

Range Rover’s main consumers were private entrepreneurs, coal mine owners, and sometimes officials, who were not sensitive to price changes, the Daily cited a retailer in Beijing as saying.

“Seductive promotions and rampant press hype have contributed to the Range Rover’s success,” the newspaper cited car reviewer Zhong Shi as saying.

“The new-rich, such as private entrepreneurs and owners of coal mines, obsessively compare themselves to others. If one person buys a car, then others will buy it no matter how much it costs.”

“Western consumers consider Range Rover a high-end off-road vehicle, but not a real luxury car,” Zhong said. “Chinese buyers who believe driving a Range Rover could reflect their status have in fact been tricked by car sellers.”

Heavy exposure of the brand in a popular TV drama that aired in China four years ago also contributed to its popularity with lines such as: “This is no ordinary jeep. It is called Range Rover. A vehicle specially designed for the British royal family … any courageous man would want a Range Rover.”

Meanwhile, Jaguar Land Rover promised to tighten supervision of private retailers’ extra charges on vehicle sales.

“We will respond with harsh punishment for retailers found to have included illegal additional charges,” Gao Bo, senior director of Jaguar Land Rover’s China division, said in the report. “But we will not make our punishments public, after all we [Jaguar Land Rover and the retailers] are in the same boat,” he added, according to the report.