Luxury British carmaker Aston Martin is expanding in China, the world’s biggest car market, on the back of positive growth figures, the company’s CEO said Wednesday.
“We’ve seen this explosion of growth in China,” CEO Andy Palmer told CNBC’s Nancy Hungerford at the Beijing Auto Show, discussing the expansion of Aston Martin dealerships in the country.
The company entered the Chinese market about a decade ago, but only in the last three years composed a dedicated China team. While being the largest auto market in the world, the country of nearly 1.4 billion wasn’t traditionally focused on luxury cars, Palmer explained.
“We’ll be up to 20 dealers within the next year or so, driving the biggest level of growth we see in the company,” he said, citing the company’s 89 percent growth in the country. “So China is very important for us.”
China is set to become the largest luxury car market worldwide within a few years — in 2017 it accounted for nearly 90 percent of sales growth for leading luxury automakers, according to calculations by The Nikkei. China also made up 27 percent of sales overall, a 3 percent increase on 2016. The Tokyo-based publication found that luxury car sales in the Asian nation grew 17 percent from 2016 to 2017, while sales in the rest of the world only rose 1 percent. The highest sellers included BMW, Mercedes-Benz, Audi, Lexus and Jaguar.
But Palmer rejected the idea of ever manufacturing the handmade car, which has been a British icon for decades, in China.
“I think part of buying an Aston is buying a little bit of England, or Wales in the future,” he said. “It’s all about this handcrafted Britishness, and I don’t think that works if you go make this elsewhere.”
Aston Martin in 2017 posted its first profit in eight years, and is considering an initial public offering (IPO). Manufacturing is at a nine-year high, and it sold 5,117 cars worldwide last year, topping 5,000 for the first time since 2008.
Asked where the company might choose to list if going for an IPO, Palmer was open-minded.
“Everything is on the table, obviously we’ve seen the great success of Ferrari, and that’s why one of the options for us is an IPO. London would be an obvious place but we’re not limited to that.” As Aston Martin is owned by private equity, the decision will be largely influenced by its shareholders. Referring to the shareholders, Palmer said, “I haven’t got a definite direction yet but we’re talking.”
Italian luxury carmaker Ferrari went public in October 2015, and defied skeptics after seeing booming demand and outperforming most other assets in the sector. Its share price has gone up nearly 130 percent since its initial listing.
Aston Martin in January announced a five-year trade and investment plan worth £620 million ($865 million) to boost its presence in the Chinese market. Its target number of 20 dealers in the country is double the current figure of ten. Strong sales growth has been fueled in large part by its DB11 model, a British grand tourer first debuted in 2016.