Fascination with SUVs expected to continue to lead sales growth

Shoppers inspect a SUV at a mall in Yichang, Hubei province. SUVs are expected to see the fastest growth in 2016 among all segments in the Chinese auto market, experts said. [Photo/China Daily]

The fascination of Chinese with SUVs looks likely to continue for some time but domestic automakers should not pin all their hopes on the model, industry experts warn.

SUVs will see the fastest growth in 2016 among all segments in the Chinese market, said Dong Yang, vice-president of the China Association of Automobile Manufacturers, at the association's last news conference of 2015.

Cheng Xiaodong, a principal analyst with the Price Monitor Center of the State Development and Reform Commission, was even more optimistic.

"SUV sales will remain robust in the coming three to five years," Cheng told Auto Business News. "Despite the new normal of slowed economic growth, they will see a two-digit growth rate."

Such positive projections are based on the model's rising popularity in China. In the first 11 months of 2015, carmakers sold 5.46 million SUVs, a 48.2 percent surge year-on-year. This was in stark contrast to sales of sedans, which fell 8.2 percent year-on-year during the same period.

The CAAM statistics show that SUVs accounted for 29.6 percent of China's passenger sales by the end of November, almost six times the ratio in 2006.

Shi Jianhua, the CAAM's deputy secretary general, said a strong look and extra space are among the top reasons many buyers choose SUVs, as such features make drivers feel good.

Analysts said the fact that those buying their second car often want a change is also fueling SUV sales, as most first-time car buyers purchase sedans.

Private cars started becoming part of Chinese people's daily lives in 2002 and are generally replaced every five to eight years, industry insiders said.

It is probably thanks to this positive outlook that almost all automakers, especially Chinese manufacturers, are making SUVs an indispensable part of their portfolios in the market.

The CAAM statistics show that Changan's two SUV models－the CS 35 and CS 75－saw sales reach 297,000 units, 44 percent of the marque's sales from January to November; JAC sold 19.16 units of its Refine S2 and S3 SUVs, 62 percent of its total sales in the same period; and GAC Motor's GS4 and GS5 sales totaled 125,300 units, 77 percent of its sales in the first 11 months of 2015.

Global competition

International automakers are also enriching their lineups with SUVs to woo Chinese customers.

Volkswagen is planning to introduce 10 such models within two years. Jaguar, which has been specializing in sedans, unveiled an SUV called F-PACE at the Guangzhou auto show that concluded in November. Aston Martin's CEO Andy Palmer said the brand is working on a crossover that will hit the market in about three years.

Competition will become fiercer as multinational automakers take the SUV market more seriously, especially the compact SUV segment where Chinese models dominate now, so it is crucial that Chinese automakers do not put all their eggs in the same basket, said industry insiders.

Gong Bing, vice-president of Changan Automobile, said, "An automaker will not have a 'healthy' lineup if there is overdependence on the SUV market." He predicted the growth rate would slow to around 10 percent in 2018 from more than 40 percent now.

Geely CEO An Conghui said Chinese brands must build on their products and services, in an interview with National Business Daily.

"Some brands attempt to catch up with or even overtake international ones with their SUVs but I don't think that is feasible. Chinese brands do not lack products; what we lack are star products."