Cheng Gang, CEO of the Beijing Jinzhida Real Estate Development, spent US$260,000 earlier this year on a S600 model Mercedes Benz. He only uses this car for special business trips, but servicing it has been surprisingly expensive.
After a recent drive to Wutaishan, a mountain in Shanxi province, from Beijing, Cheng spent US$1,299 on a full-body service for the two year-old car, which has clocked 30,000 kilometers so far. “I get it serviced after each 5,000 km,” Cheng said.
Most automobile makers and service associations recommend a service after every 5,000 km traveled to help improve the vehicle’s fuel efficiency. Cheng, who also owns a Mercedes CL230, notes that mechanics at Mercedes-Benz dealerships have become much more efficient in dealing with such issues over the past five years.
Auto parts are another added cost. Importing spare parts and training mechanics to fit them makes maintenance in China much more expensive for luxury car brands than standard cars for which parts are usually made locally, said Hu Hai Long, sales manager at Bentley Beijing.
Parts, shipped from the UK to Bentley’s garage in Yizhuang Economic Zone on Beijing’s outskirts, carry customs duties of up to 23%. This means that, after tax, foreign-made parts cost Chinese owners more than Bentley owners elsewhere. “It makes after sales slightly more expensive than in European or UK markets,” said Hu.
Slap on insurance premiums, which vary according to the car’s price and engine size, and the costs go up again. The Land Rover Freelander costs US$2,727 per annum to insure; a Mercedes S600 approximately US$3,766.
If costs are not a factor, then the lack of good quality unleaded gasoline outside of major cities is certainly an inconvenience. Beijing Free Radio host Li Li finds it difficult to find quality gasoline outside of the capital for her Land Rover Freelander 1.8, which guzzles 14 liters on 100 km.
Premium gasoline is a must, as lesser octane petrols lessen the engine performance and increases harmful emissions. “When you’re outside the city you’re better bringing your own can,” Li Li said.
Luxury car owners face further problems when it comes to upgrading to a new car. Those that try selling their vehicles second-hand get hit with the full hidden cost of car depreciation.
Local obsessions with new trends translates to car values that can depreciate quickly, said Mao Shou Hong. Mao runs a Mitsubishi dealership in Beijing’s Fengtai district and recently sold a two year-old Mitsubishi Pajero valued at US$64,935 for US$45,454.
The real costs and value of luxury vehicles can be daunting. They are something that every potential owner should consider.