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 |  Apr 27 2011, 8:55 PM

The world’s two largest luxury car makers, BMW and Mercedes-Benz, are currently watching sales go through the roof in China.

Although the luxury vehicle market in that country is still growing (projections forecast about 20 percent over last year for 2011), both the Munich and Stuttgart based concerns together, sold a total of 102,497 vehicles during the  first quarter of this year, an increase of some 76 percent from the year before.

China’s economy grew 10.3 percent in the last year, the fastest rate increase since 2007 and despite Government calls to curb ‘Hedonistic Spending’ and unclog the roads, it looks like sales of luxury cars will likely continue to rise, putting China ahead of the U.S. for the first time in terms of premium car volume.

According to Klaus Maier, who runs Daimler’s Chinese operations, demand currently outstrips supply for Mercedes-Benz models and with the factories in Germany running at full capacity, the company is looking to expand local production in China.

However, despite the apparent increase in wealthy and upper middle-class Chinese, there are also signs that the gap between rich and poor is widening – the Gini coefficient, which is used to measure income distribution, has climbed from 0.3 in the mid-1980s to 0.5 today.

Whether China can sustain such rapid economic growth remains to be seen, nevertheless luxury car makers are constantly looking at new ways to entice buyers. Lexus has hired Kobe Bryant as the spokesman for its smaller models in China, while both BMW and Mercedes are doing their best to peddle cars aimed at a younger demographic, the introduction of the 1-Series and A and B-Class models being prime examples.

So far it appears that the strategy is working; in the case of Mercedes, A, B and C-Class models accounted for more than a third of total M-B sales in China last year, according to a statement issued by Daimler AG.

[Source: Automotive News]