Chinese students at the University of Iowa began coming into Carousel Motors
in Iowa City about three years ago to get their Mercedes-Benz and Audi luxu
ry 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 i
n 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 b
ecame 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 con
sulting firm owned by textbook rental company Chegg that works with prospect
ive Chinese students. Shelling out $50,000 for a high-end car is viewed as a
n affordable status symbol compared with back home, where such cars can cost
two to three times as much because of hefty import duties.
Among Chinese student car buyers in the U.S. in the past two years, 32 perce
nt paid cash (Photo: Clayton Cotterell …
Zinch surveyed 25,000 Chinese students last year and found that 62 percent s
aid they could afford to spend at least $40,000 each year on a college educa
tion. "Most schools are recruiting [Chinese] students for whom the differenc
e between a $20,000 and a $40,000 education is a rounding error," Krommenhoe
k 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 v
ehicles in 2012 and 2013 through October, according to Art Spinella, preside
nt of CNW Marketing Research. His figures, based on car sales, student and f
amily visa data, and other factors, include Chinese students attending high
school, undergraduate, and graduate institutions in the U.S. A comparable gr
oup 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 surpri
sing. Teeming demand on the mainland has boosted global automakers' profits
in recent years. While China's austerity measures slowed luxury sales somewh
at in 2013, deliveries there of Volkswagen's 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 pr
ice of $52,796; and 32 percent of buyers paid cash. Those buying used vehicl
es 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, C
NW says. And fewer than 5 percent of those buyers paid cash.
Lind's Chinese student customers almost always pay with cash. "Many times th
ey'll come in here," he says. "They'll pick out the car and say, 'OK, I've g
ot 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 Man
darin-speaking sales staff to deal with the rush of Chinese students craving
luxe rides. Steve Shaheen, general manager of Okemos Auto Collection, a BMW
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 t
otal business, from zero five years ago. Chris Perantoni, sales manager at R
oyal on the Eastside, an Audi and Volkswagen dealership near Indiana Univers
ity at Bloomington, trumpeted in his advertising that the store had a salesm
an who spoke Mandarin and Cantonese-until the staffer's visa expired and he
had to leave. "Him being bilingual definitely helped," says Perantoni, who e
stimates that as much as 10 percent of his annual sales are now to Chinese s
tudents. "We'd love to have him back."
Ralph Parshall, general manager at the Mercedes dealership in Eugene, says a
n influx of Chinese students over the past two years at the University of Or
egon has boosted his annual sales by as much as 8 percent. Parshall began sp
onsoring 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 en
trance where guests took pictures on a red carpet in front of a Mercedes log
o backdrop. Pretty in China's online videos show young people arriving at pr
evious events in exotic sports cars such as an Audi R8 and a Mercedes SLS wi
th 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 ha
s a Lamborghini, though most prefer BMWs, He says. While members throw barbe
cues and help new students navigate the car-buying process, their favorite t
hing 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," H
Club member Yang tries out a friend's Audi (Photo: Clayton Cotterell | Bloom
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 t
hey want to buy a car," he says. "I've seen some students-they've bought a c
ar three days after they arrived in the U.S."
Some can't seem to stop buying. Iowa City's Lind says one Chinese student re
cently came to him to purchase a Mercedes-Benz CLA, a sedan that begins at $
29,900. The student then took a road trip to Chicago, where he traded the ca
r in for an Acura RDX, which starts at $34,520, only to return to Lind's dea
lership to swap that for another Mercedes, which he drove for 400 miles befo
re 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."