Cashing in on SUVs may be elusive
Print Edition
CARMAKERS coming late to China’s craze for sport-utility vehicles this year may find it tougher to make money from a party that’s overcrowded and already winding down.
With Chinese growing wealthier and often restricted to one vehicle purchase in major cities, SUVs have been a rare bright spot for an auto market sapped by the country’s slowest economic growth in decades. In the year through October, sales surged 46 percent year on year in a broader market that grew 1.5 percent.
Carmakers have chased the rainbow with some 32 new SUV models expected in China for 2015, according to Automotive Foresight, including some being showcased at the Guangzhou auto show that opened yesterday. But with competition already squeezing prices, and sales growth seen weaker next year as demand becomes saturated, cashing in on SUVs may prove elusive.
“The good old days will pass, when you could just launch any model and you could have pretty good sales,” said Yale Zhang, head of Shanghai-based consulting company Automotive Foresight.
Carmakers are undeterred for now. At the Guangzhou show, Weiming Soh, Volkswagen AG’s vice president for sales and marketing, said the German automaker will launch six new locally made models in China’s SUV market in the next three to four years.
Even as automakers like Ford Motor Co and Chongqing Changan Automobile Co present new SUVs in Guangzhou — the Everest and the CS15 respectively — official data show prices are falling.
Prices dropped 3.4 percent in the first nine months of this year, outpacing the 1.2 percent decline for passenger vehicles overall, according to the National Development and Reform Commission, China’s top planning body.
Meanwhile, sales growth is expected to slow down to 11 percent next year, according to IHS Automotive.
“SUVs, I think, in the future won’t continue to increase rapidly like now,” said Zhu Huarong, president of Chongqing Changan Automobile, speaking at the Guangzhou show. “It will return to a rational, normal growth.”
That reflects an ever-higher base of sales and the market growing more saturated, yet opportunities remain for SUVs that fill market gaps, Zhang said.
While SUVs in China now skew toward small models built on sedan frames, Ford’s Everest and Great Wall Motor Co’s Haval H7 will meet niche demand for larger SUVs, for example.
Market fragmentation also means top selling models are no longer being bought in the same profit-boosting volumes: China’s top-10 best selling SUVs only accounted for 34 percent of the market as of September, compared with 64 percent in 2010.
New SUVs will have a tougher time commanding fat profit margins they may have enjoyed in recent years, analysts at Fitch Ratings wrote in a note last week.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
