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SUVs capture the Chinese fancy
By Lu Nengneng |
December 24, 2012, Monday
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Print Edition
Print Edition
SPORTS utility vehicles are all the craze in China, offering a segment of hope for carmakers facing slower growth in more traditional autos.
SUVs tailored for urban use in a country where city dwellers now outnumber their rural brethren offer the best chance to capture the new trend. Despite rising fuel prices and tough parking conditions, the big-size gas-guzzlers are selling well. In the first eleven months this year, their sales soared 26.3 percent from a year earlier to 1.79 million units. That compared with 7 percent growth in the passenger car segment and 4 percent in the overall vehicle market.
Cui Dongshu, deputy secretary-general of the China Passenger Car Association, attributed China's SUV boom to the increasing consumer desire for vehicle versatility, not to mention road cachet.
For one thing, SUVs have big capacity for carrying passengers and goods, making them ideal for motoring holidays - another trend catching hold in China. In a sense, people can take their city life with them when traveling.
Though the market share of SUVs in China has more than doubled in 10 years to over 10 percent as of November, the inroads still lag mature markets, such as the US, where SUVs account for 15 percent of the market, and Europe, where they have a 30 percent share.
The perception of untapped potential has driven carmakers to shift their product focus.
Last month at China's last major auto show this year in Guangzhou, Guandong Province, SUVs accounted for a quarter of all vehicles on display and nearly half of the new models being introduced.
Next year will no doubt continue to be the year of the SUV, with more than 15 models already on track for launches. They range from the low-end to the upscale, from Chinese to foreign nameplates.
Price war
Since many carmakers have put SUVs at the center of their manufacturing strategies, the huge supply expected to hit the market in 2013 risks triggering a fierce price war within the segment.
Luo Lei, deputy secretary-general of the China Automobile Dealers Association, said he doesn't think the rapid growth of China's SUV market can be sustained over the long haul. In fact, he said, "The market is already becoming saturated and will stabilize its pace of development in the future."
Unlike last year, when China's SUV boom hit all tiers of the market, the high-end segment experienced a dramatic slowdown this year despite relentless discounting. Mid-range models with engines ranging from 1.8 liters to 2.5 liters enjoyed the best sales.
Independent auto analyst Zhang Zhiyong said the smaller-sized SUVs capture the consumer trend of wanting vehicles that express individuality yet provide efficient mobility in increasingly crowded cities.
Though designed for off-road motoring, most SUVs sold in China never get off the pavement. Such dominant street use lessens the need for power and allows higher fuel efficiency amid ever-rising gasoline prices.
This gap in the market is now being filled by compact SUVs powered by turbo-charged engines. They are suitable for both daily commuting and the occasional out-of-town trip, making them versatile and cost efficient in the eyes of consumers. A case in point is General Motors' Buick Encore, which made into China's top 10 SUVs by sales in November, just one month after its launch in the country.
SUVs tailored for urban use in a country where city dwellers now outnumber their rural brethren offer the best chance to capture the new trend. Despite rising fuel prices and tough parking conditions, the big-size gas-guzzlers are selling well. In the first eleven months this year, their sales soared 26.3 percent from a year earlier to 1.79 million units. That compared with 7 percent growth in the passenger car segment and 4 percent in the overall vehicle market.
Cui Dongshu, deputy secretary-general of the China Passenger Car Association, attributed China's SUV boom to the increasing consumer desire for vehicle versatility, not to mention road cachet.
For one thing, SUVs have big capacity for carrying passengers and goods, making them ideal for motoring holidays - another trend catching hold in China. In a sense, people can take their city life with them when traveling.
Though the market share of SUVs in China has more than doubled in 10 years to over 10 percent as of November, the inroads still lag mature markets, such as the US, where SUVs account for 15 percent of the market, and Europe, where they have a 30 percent share.
The perception of untapped potential has driven carmakers to shift their product focus.
Last month at China's last major auto show this year in Guangzhou, Guandong Province, SUVs accounted for a quarter of all vehicles on display and nearly half of the new models being introduced.
Next year will no doubt continue to be the year of the SUV, with more than 15 models already on track for launches. They range from the low-end to the upscale, from Chinese to foreign nameplates.
Price war
Since many carmakers have put SUVs at the center of their manufacturing strategies, the huge supply expected to hit the market in 2013 risks triggering a fierce price war within the segment.
Luo Lei, deputy secretary-general of the China Automobile Dealers Association, said he doesn't think the rapid growth of China's SUV market can be sustained over the long haul. In fact, he said, "The market is already becoming saturated and will stabilize its pace of development in the future."
Unlike last year, when China's SUV boom hit all tiers of the market, the high-end segment experienced a dramatic slowdown this year despite relentless discounting. Mid-range models with engines ranging from 1.8 liters to 2.5 liters enjoyed the best sales.
Independent auto analyst Zhang Zhiyong said the smaller-sized SUVs capture the consumer trend of wanting vehicles that express individuality yet provide efficient mobility in increasingly crowded cities.
Though designed for off-road motoring, most SUVs sold in China never get off the pavement. Such dominant street use lessens the need for power and allows higher fuel efficiency amid ever-rising gasoline prices.
This gap in the market is now being filled by compact SUVs powered by turbo-charged engines. They are suitable for both daily commuting and the occasional out-of-town trip, making them versatile and cost efficient in the eyes of consumers. A case in point is General Motors' Buick Encore, which made into China's top 10 SUVs by sales in November, just one month after its launch in the country.
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