Chinese Students Major in Luxury Cars

[godwin]

15.5 billion between 0.25million students last year. So it still averages 40k / student.. so a base Boxster for everyone?

Chinese Students in U.S. Boost Luxury Car Sales - Businessweek
Chinese Students Major in Luxury Cars
By Tim Higgins December 19, 2013
Chinese students at the University of Iowa began coming into Carousel Motors in Iowa City about three years ago to get their Mercedes (DAI:GR) and Audi (NSU:GR) luxury cars serviced. Finally, general manager Pat Lind started asking if they’d ever considered his dealership when they made their original purchase. No, the students told him. Back in China, they’d been told to buy their wheels in Chicago before heading to college.

So Lind began sponsoring the university’s Chinese student association, which sends information to incoming students in China before they arrive in the U.S. Sales to Chinese students doubled and now make up about 5 percent of the vehicles sold at the dealership, located about two miles from campus. “We became an advertiser,” Lind says, “and got our face in front of them.”

The number of students from China enrolled in U.S. colleges and universities reached 235,597 during the past academic year, more than triple the 64,757 enrolled in 2002-03, according to the Institute of International Education. These students often come from families that are better off than the typical American college student’s, says Sid Krommenhoek, a founder of Zinch, a consulting firm owned by textbook rental company Chegg that works with prospective Chinese students. Shelling out $50,000 for a high-end car is viewed as an affordable status symbol compared with back home, where such cars can cost two to three times as much because of hefty import duties.

Zinch surveyed 25,000 Chinese students last year and found that 62 percent said they could afford to spend at least $40,000 each year on a college education. “Most schools are recruiting [Chinese] students for whom the difference between a $20,000 and a $40,000 education is a rounding error,” Krommenhoek says. “This is a very attractive demographic for foreign brands.”

Chinese students in the U.S. purchased about $15.5 billion in new and used vehicles in 2012 and 2013 through October, according to Art Spinella, president of CNW Marketing Research. His figures, based on car sales, student and family visa data, and other factors, include Chinese students attending high school, undergraduate, and graduate institutions in the U.S. A comparable group of American students purchased $4.7 billion in vehicles, CNW estimates.

The interest in autos among Chinese students in the U.S. shouldn’t be surprising. Teeming demand on the mainland has boosted global automakers’ profits in recent years. While China’s austerity measures slowed luxury sales somewhat in 2013, deliveries there of Volkswagen’s (VOW:GR) Audi—for many years China’s No. 1 luxury nameplate—increased this year through September by 23 percent, to 366,038. Only 114,411 Audis were sold in the U.S. during the same period.

A little more than half the vehicles bought by Chinese students in the U.S. during the 22-month period CNW studied were new, with an average purchase price of $52,796; and 32 percent of buyers paid cash. Those buying used vehicles paid about $36,500, and 58 percent used cash. About 40 percent of their U.S. counterparts purchased new vehicles, with an average price of $19,472, CNW says. And fewer than 5 percent of those buyers paid cash.

Lind’s Chinese student customers almost always pay with cash. “Many times they’ll come in here,” he says. “They’ll pick out the car and say, ‘OK, I’ve got to call my parents and tell them how much to wire over. I’ve only got $20,000 in my account and I need $50,000, so they’ll wire the difference.’ ”

Some dealerships, such as Mercedes-Benz of Eugene, in Oregon, have hired Mandarin-speaking sales staff to deal with the rush of Chinese students craving luxe rides. Steve Shaheen, general manager of Okemos Auto Collection, a BMW (BMW:GR) and Mercedes dealer near Michigan State University in East Lansing, says he’s seen his sales to Chinese students rise to as much as 15 percent of his total business, from zero five years ago. Chris Perantoni, sales manager at Royal on the Eastside, an Audi and Volkswagen dealership near Indiana University at Bloomington, trumpeted in his advertising that the store had a salesman who spoke Mandarin and Cantonese—until the staffer’s visa expired and he had to leave. “Him being bilingual definitely helped,” says Perantoni, who estimates that as much as 10 percent of his annual sales are now to Chinese students. “We’d love to have him back.”

Ralph Parshall, general manager at the Mercedes dealership in Eugene, says an influx of Chinese students over the past two years at the University of Oregon has boosted his annual sales by as much as 8 percent. Parshall began sponsoring several Chinese student activities, including dance parties put on by a student group called Pretty in China. In November the group took over a nightclub in Eugene for Asian Night, a party that included a special VIP entrance where guests took pictures on a red carpet in front of a Mercedes logo backdrop. Pretty in China’s online videos show young people arriving at previous events in exotic sports cars such as an Audi R8 and a Mercedes SLS with gull-wing doors, and posing in front of a BMW.

Hao He, 22, an Oregon sophomore from Guangzhou who says he paid cash for his black BMW 335i, is part of a campus group called the International Student Auto Club. The group has about 30 members, mostly from China. One student has a Lamborghini, though most prefer BMWs, He says. While members throw barbecues and help new students navigate the car-buying process, their favorite thing to do is gather in parking lots with their rides. “We don’t show off—we just park someplace and talk to each other about how to modify your car,” He says.

Oregon senior Calvin Yang, 24, another club member from Guangzhou, says many Chinese students arrive expecting to buy just basic transportation but soon learn they can afford much more. “After they know the price, they’re sure they want to buy a car,” he says. “I’ve seen some students—they’ve bought a car three days after they arrived in the U.S.”

Some can’t seem to stop buying. Iowa City’s Lind says one Chinese student recently came to him to purchase a Mercedes CLA, a sedan that begins at $29,900. The student then took a road trip to Chicago, where he traded the car in for an Acura RDX, which starts at $34,520, only to return to Lind’s dealership to swap that for another Mercedes, which he drove for 400 miles before switching it for a Lexus IS250, which begins at $35,950. “He finally said, ‘Oh, I just like trying different things,’ ” the dealer says. “We’re four cars behind as far as getting titles and licensing.”

The bottom line: Chinese students in the U.S. bought about $15.5 billion in new and used cars in the 22 months ended in October.
Higgins is a reporter for Bloomberg News.

[Qmx323]

lmao

not surprising.... Used to see kids come in at work with duffel bags of bills for cars on the spot

[Energy]

Oregon senior Calvin Yang, 24, another club member from Guangzhou, says many Chinese students arrive expecting to buy just basic transportation but soon learn they can afford much more. “After they know the price, they’re sure they want to buy a car,” he says. “I’ve seen some students—they’ve bought a car three days after they arrived in the U.S.”

It because cars are so cheap here and in the US compared to Asia. For the same price as a Camry, you can get a nice luxury car. Their parents think its "good value" so why not get the nicer car.

[Dragon-88]

My of my friends from China had the option of any 2 supercars when he moved here for school. Buddy chose a brand new 2010 STI & E63 AMG.. Took the left over money and put in a bigger turbo + track setup on the STI and bigger supercharger on the AMG(600+HP).. Shits crazy fast..

[dared3vil0]

If he had the option to buy two SUPERCARS, bought an STi and an E63, and used the remainders on mods... That is some expensive mods...

[boostfever]

my dream supercar is a 2010 STI...

[Dragon-88]

Well when your family owns a AM dealership and has over 15 supercars, including a Zonda. You just gotta change it up once in awhile.

[thumper]

Originally Posted by Qmx323

lmao

not surprising.... Used to see kids come in at work with duffel bags of bills for cars on the spot

i didn't believe the story a car salesperson recently told me that was similar to what you said... asian kid walked into the showroom with pulling a suitcase full of cash and bought a car right then and there. i guess i was wrong.

[E-SPEC]

And still a high percentage of them appreciate fuck all.

[pissedoffe55]

im jelly

[pastarocket]

-wondering what percentage of luxury and exotic sports car sales in Lower Mainland dealerships are from Chinese student buyers.
Posted via RS Mobile

[Vale46Rossi]

Originally Posted by thumper

i didn't believe the story a car salesperson recently told me that was similar to what you said... asian kid walked into the showroom with pulling a suitcase full of cash and bought a car right then and there. i guess i was wrong.

I am not sure about all dealerships but at Mercedes, BMW, Audi, you cannot buy the car with 100% cash and cash I mean is suitcase full of money.

Under the Canadian Anti Money Laundering law it does not allow this.

[thumper]

Originally Posted by StevenDuang

I am not sure about all dealerships but at Mercedes, BMW, Audi, you cannot buy the car with 100% cash and cash I mean is suitcase full of money.

Under the Canadian Anti Money Laundering law it does not allow this.

it was a private all-makes preowned dealership.

how does this law work? i've bought vehicles before with cash alone before without issues... but not a 6-figure exotic.

[Manic!]

Anything over 10K has to be reported. That's why drug dealers lease cars and rend condo's/houses and not buy them.

[SumAznGuy]

I thought drug dealers rent and lease because of the forfeiture laws?

[Manic!]

Originally Posted by SumAznGuy

I thought drug dealers rent and lease because of the forfeiture laws?

Nope the goverment wants to know how you got your money. You buy a million $ house in cash but your taxes show you make 40K a year they know somethings up. That's why criminals have to launder money.

[rsx]

What an odd title. I thought Chinese students were literally declaring their degree in the study of luxury cars.

[godwin]

That law doesn't really stop money laundering, it just make sure if there are laundered money the gov have the means to confiscate it.. The gov just don't like seeing the money go to waste.

Besides the restriction is useless once you use electronic transfer.. eg a registered company. The reality is a lot of companies around the world still deal mainly in cash.

Foreign students can bring money in as much as they want.. they just need to report it. It is an honour system, the customs officers take the students' word. I rent a few properties to foreign students from China. They do bring enough cash in Sept to last for their school year.. ~ like 120k? (you usually see fire sales before the end of the school year when those kids are short on cash). One tip, always pre charge 1 year of storage before the summer break and get a release form from them. I have quite a few of them not coming back nor wanting the stuff. I ended up giving 30k worth of belongings.. name brand clothes etc to Sally Ann.

Since cash is legal tender, of course you can pay anything you want in cash, even if they only fit in suitcases. At the 2 Asian affiliated banks HSBC and Bank of China, they do have service to provide you with $100 bricks.

Originally Posted by StevenDuang

I am not sure about all dealerships but at Mercedes, BMW, Audi, you cannot buy the car with 100% cash and cash I mean is suitcase full of money.

Under the Canadian Anti Money Laundering law it does not allow this.

[asian_XL]

If foreign students need to pay extra on tuition, how about extra luxury tax for these people, i dont think it will be called discrimination.
17% goes up to 50% sound reasonable, that benefits the economy
Posted via RS Mobile

[rsx]

Originally Posted by asian_XL

If foreign students need to pay extra on tuition, how about extra luxury tax for these people, i dont think it will be called discrimination.
17% goes up to 50% sound reasonable, that benefits the economy
Posted via RS Mobile

They're already helping the economy by spending money. Housing, cars, services, etc.. If you want to increase taxes by up to 50% then the demand for goods will go down.

[Gululu]

Originally Posted by rsx

They're already helping the economy by spending money. Housing, cars, services, etc.. If you want to increase taxes by up to 50% then the demand for goods will go down.

exactly. nowadays, most Chinese families send their kids straight to the USA becuz it is easier to obtain student visa than canada. canada has already lost its edge due to complications thx to the Harper government.. most rich families are already immigrating to USA cuz its easier.

[entrax]

Originally Posted by StevenDuang

I am not sure about all dealerships but at Mercedes, BMW, Audi, you cannot buy the car with 100% cash and cash I mean is suitcase full of money.

Under the Canadian Anti Money Laundering law it does not allow this.

don't think it works that way. it is similar to banks where you have to file a Large Cash Transaction Report. you can still continue with the transaction, but you have to fill in the form if more than 10k and it asks for your personal info and stuff like what you do for a living.

it's basically just to keep track of people's big transactions. if they see something is questionable, that's when they contact you: ie. you get a 70k car and you file a 25k income.