The Shay Rebellion | Christopher Shay

Hong Kong’s Waning Influence on the Luxury Car Market

by Christopher Shay

A crowd of shoppers gathered, eagerly snapping photos with their cell phones and cameras at the Hong Kong Ocean Terminal in Tsim Sha Tsui. But it wasn’t a celebrity they were trying capture.

Over the weekend, Mercedes-Benz parked in the middle of the pier a cherry-red and white 1934 500K Special Roadster, one of only 29 models ever built. Sports Car Market, an automobile-collecting magazine, described the classic car as “sexy, slinky, the Jean Harlow of 1930s motor cars.” In 2001, a 500K Special Roadster sold at auction in Florida for nearly $3 million.

The roadster, along with a classic race car, a concept car and an emissions-free vehicle were all brought to the Hong Kong Ocean Terminal to mark the 125th anniversary of Carl Benz’s patent of a “vehicle with gas engine drive:” the Mercedes-Benz car.

The company had much to celebrate in Hong Kong. In January, Mercedes-Benz sold 562 passenger cars in Hong Kong and Macau, a record figure, up 67% from January 2010, according to the Mercedes-Benz website, which cites the Motor Traders Association of Hong Kong as the source. With more than 4,600 cars sold in 2010 in Hong Kong and Macau, the company also saw record sales last year.

But even though consumers are buying luxury cars, Hong Kong’s influence on the automobile world is on the wane, says Claus Weidner, chief operating officer of Mercedes-Benz Hong Kong. He says the days of Hong Kong being a showroom for the mainland China car market are numbered. As China’s wealth increases, luxury-car companies have increased their offerings in the mainland. The gap between what is offered in Hong Kong and China is “closing very soon,” Mr. Weidner says.

Indeed, the mainland China market has become key to Mercedes’s growth, selling more than 15,000 units in January—up nearly 90% from the same period last year. That is more than three times as many units sold in Hong Kong in all of 2010. In hopes of selling more than 300,000 cars annually in China by 2015, Daimler AG Chief Executive Dieter Zetsche says the company, which owns Mercedes-Benz, will invest 3 billion euros ($4.11 billion) in China by 2015. NBA star Kobe Bryant recently finished shooting his first commercial for Mercedes’s Smart cars for the mainland China market.

Mr. Weidner says the mainland China market is developing so much that it is no longer comparable with Hong Kong, even though just five years ago Hong Kong was considered an indicator of the mainland market. First-time car owners are propelling the Chinese luxury auto market, while the Hong Kong market consists largely of seasoned buyers looking to replace their cars, he says. Hong Kong is also saturated with a range of high-end vehicles—and competition.

“You’re forced to get out the newest technologies, newest products,” he says.

That includes more environmentally friendly cars, a sector that Mr. Weidner predicts will grow steadily in Hong Kong. He says Mercedes will likely roll out its all-electric Smart car in Hong Kong this year. There is no price set for the electric vehicle in Hong Kong, but it will be significantly higher than the HK$99,000 base price for a regular Smart car.

Mercedes isn’t the only luxury-car company betting consumers will go green. Lexus launched its high-end hybrid SUV in Hong Kong in 2009, and Tesla started selling its all-electric sports car here last year. Audi, Ferrari and Lamborghini are also working on hybrid sports cars.

Then there’s fuel-cell technology. Parked in the Hong Kong Ocean Terminal over the weekend next to two classic cars, the Mercedes B-Class F-Cell vehicle looked unassuming from a distance. But tucked under the passenger seats are hydrogen tanks and a fuel cell. Instead of releasing greenhouse gases, the car emits water. BMW, too, is developing in its own hydrogen fuel-cell car.

Three of the Mercedes B-Class F-Cell cars are currently driving around the world on a 125-day, 30,000-kilometer tour to demonstrate the car’s road readiness. Mr. Weidner says these cars will go into production this year in Europe, but there isn’t a timeline for when they’ll be available in Hong Kong.

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