by Jeff Hankins
Posted 10/11/2010 12:00 am
Updated 1 month ago
One would be hard-pressed to find an Arkansan who has immersed himself in the China market economy more than Mark McLarty.
After spending 10 years building his well-known family’s automotive sales operation in Brazil, McLarty moved to China and Hong Kong five years ago. He initially worked with TPG Capital to acquire several hundred auto dealerships to form China Grand Auto and became its CEO. That venture, the largest dealer group in China, is expected to go public in 2011 and post more than $5 billion in sales this year.
A year ago, he left the firm after acquiring 51 percent of Northern China German Automotive from partner Citigroup and has built the luxury auto dealership company into a $1.4 billion powerhouse with anticipated organic growth of 20 percent to 30 percent annually.
The company has 15 dealerships — and 34 more under construction — that sell BMW, Mini, Porsche, Jaguar, Range Rover and Volvo. The company sets up smaller-scale showrooms in the city centers, where property is limited and expensive, and more traditional car lots on outer edges of the cities.
One of the Beijing locations sold 620 BMWs in August alone, and the retail price range of $100,000 to $250,000 in China is double that of U.S. models because of consumption taxes and tariffs. Some models have a four-month wait, and buyers are still willing to put down substantial cash down payments. McLarty says 90 percent of the luxury auto sales are paid in cash.
"BMW carries the same status in China as in the U.S.," he says. "It’s definitely an aspirational purchase."
Likewise, auto sales positions are held in high regard in China and attract young college graduates. Top luxury car salespeople make about $50,000 year, which is five times the reported per capita income of Shanghai or Beijing, even though some of the salespeople don’t own a car or know how to drive.
The average age of luxury auto buyers in China is the mid-30s, which is about 10 years younger than the U.S. average. Most are real estate developers or business owners.
Don’t expect to see McLarty visiting Arkansas much as he continues to grow a company in what has become the world’s largest auto market. "Operating is so intense here that it’s very difficult to get away," he says.