Volvo Penta, Europe’s largest industrial and marine power system provider, will target China’s emerging pleasure boat market as its growth engine in the near future, said the company’s executives.
“To maintain our market position, we plan to invest 500 million yuan ($76.54 million) in the Chinese market over the next three years, with most of it going to expanding our business in the pleasure boat segment,” said Goran Gummeson, president and chief executive officer of the Swedish company.
According to Gummeson, the interest in boating and boat ownership has been expanding sharply in China in the recent years as the nation’s rapidly growing economy gives more people the ability to buy pleasure boats.
“We believe that China is going to have a large future market for pleasure boats and it is going to happen quickly. Chinese consumers want to acquire the same lifestyle as consumers in Western countries, and boat ownership moves to the top of their wish list after they have bought cars and houses,” Gummeson said.
Statistics show that the total revenue of China’s yacht market reached $3.4 billion in 2010, and it is expected to grow by 25 percent this year.
Gummeson said his ambition for and confidence in Volvo Penta’s business in China’s pleasure boat market also come from the nation’s huge potential as a boat manufacturing base, after the United States and Europe.
“This development is driven not only by domestic demand but also by the fact that more and more international boat builders are thinking of producing boats in China for export to Europe and North America,” said Stefan Carlsson, president of Volvo Penta’s European operation.
He told China Daily that their boat-making customers, including Azimut Yachts, Princess, and Sessa Marine, all expressed interest in having production in China.
“We hope that in the near future, our engine sales in China’s pleasure boat market will surge from the current hundreds of units to thousands of units annually. In the next three years, the volume of pleasure boats in China will take off,” said Giorgio Paris, the company’s Asia region president.
Gummeson added that China’s local yacht market will start in the high-end segment and then go down to what they call “day boats” for family holiday use, with prices at about 300,000 yuan for each unit.
Entering the Chinese market in 1996, Volvo Penta has maintained its leading position in providing power systems to industrial equipment in the local market, as well in commercial marine products such as police and traffic-control boats.
Cao Guoping, vice-president of Volvo Penta China, said the price of a pleasure boat engine could be even 10 times that of an engine in the industrial sector, which indicates the huge profit opportunity in China’s pleasure boat market.