Infiniti Bets Big on China's SUV Demand to Challenge Audi, BMW

(Bloomberg) -- Luxury-car maker Infiniti is betting big on China, planning to introduce five locally-produced vehicles in a bid to triple sales in the world’s largest auto market over the next half-decade, said Roland Krueger, president of the Nissan Motor Co. unit.

First up will be the redesigned QX50 premium SUV as Infiniti targets the fastest-growing segment, Krueger said in an interview ahead of the Beijing International Automotive Exhibition starting next week. It will be built together with Dongfeng Motor Group Co. in China’s coastal city of Dalian, and goes on sale later this year.

Infiniti is recharging its attack on Audi, BMW and Lexus just as China is taking steps to liberalize its car market, a potential upheaval that could lead to intensified competition in the country. While the relaxed rules would make it easier for foreign brands to go it alone, Infiniti plans to keep relying on local partners as it pushes for market-share gains.

“You have to build your long-term success on successful partnerships,” said Krueger, 52, who joined the carmaker in 2014 after working at BMW AG for more than a decade. “We’ve had a very successful partnership with Dongfeng and we will continue to operate in this framework.”

Tariff Threat

As part of its effort, Infiniti plans to add Chinese production so that locally made cars will make up at least 90 percent of sales in the country by 2025, up from 60 percent currently. That helps the company shield from volatility in exchange rates, raw-material prices and import-tariff policies, Krueger said. “To be in China means you have to localize,” he said.

Infiniti’s China sales rose 16 percent last year to 48,408 vehicles. By comparison, Daimler AG’s Mercedes-Benz boosted sales in the country by 26 percent to 587,868.

From 2021, all new vehicles made by Infiniti in China will be electric or hybrid, and by 2025, more than half of all its global auto sales will be electrified, Krueger said. China’s electric-car market, already the world’s largest, might double from 2017 to about a million vehicles this year, he said. That “amazing growth" is set to benefit Infiniti, he said.

The U.S., Infiniti’s largest market, is only growing in certain segments such as SUVs, where sales are strong, Krueger said.

“There is growth potential for Infiniti” in the U.S., he said. “Nevertheless, the total market growth is not of the same level as we see in China.”

To contact Bloomberg News staff for this story: Dexter Roberts in Beijing at droberts34@bloomberg.net, Yan Zhang in Beijing at yzhang1044@bloomberg.net.

To contact the editors responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net, Ville Heiskanen, Sam Nagarajan

©2018 Bloomberg L.P.

With assistance from Dexter Roberts, Yan Zhang