SUVs May Overtake Cars in Chinese Market Share, Experts Say
Wu Ziye
DATE:  Sep 13 2017
/ SOURCE:  Yicai
SUVs May Overtake Cars in Chinese Market Share, Experts Say SUVs May Overtake Cars in Chinese Market Share, Experts Say

(Yicai Global) Sept. 13 -- Though cars remain the mainstay of China's auto market, sport utility vehicles may overtake cars in terms of market share as SUVs become more competitive, experts from the country's auto industry said.

Chinese users are willing to pay more for SUVs, leading to higher profits for SUV producers and sellers, said Hu Yong, general manager of FAW Car Co. [SHE:000800].

China is the market where the proportion of SUV sales to total auto sales is highest, and this prompted domestic carmakers to introduce SUV models. Chinese companies rolled out 66 new ones last year, and 43 of them were SUVs.

China sold 9,047,000 SUVs last year, accounting for 37.1 percent of its total passenger vehicle sales, China Association of Automobile Manufacturers data show. The country sold 4.5 million SUVs in the first half, accounting for 44 percent of passenger vehicle sales.

SUV sales are set to grow for another five years, auto experts said.

Hu believes that it is only a matter of time before SUVs account for a bigger market share than traditional cars. "It will happen in one or two years," Hu said. "Compared with traditional cars, SUVs will continue to enjoy a lead."

SUVs make up about 60 percent of imported vehicles and that percentage could be as high as 63 percent, said Sun Yong, president of Know-How Education Ltd. "Given the above data, there is still ample room for growth for China's SUV market, and SUVs' market share will continue to rise after passing 50 percent."

"In third-tier cities where road conditions are relatively poor, users are more concerned about vehicles' maneuverability and safety," said Fan Xin, president and director of Jiangling Motors Corp. [SHE:000550]. "The SUV market will become gradually saturated in first- and second-tier cities, but will continue to grow exponentially in third-tier cities. An increase in the number of female drivers will also stimulate SUV demand."

"Additionally, once a user drives an SUV, he will find it difficult to switch back to a car as the driving method and view are entirely different," Fan said. "Once he gets used to driving an SUV, he will choose an SUV when replacing his old vehicle."

"The SUV market will be fiercely competitive in the next five years," Hu said. "Both domestic Chinese brands and joint venture brands will be in the race."

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Keywords:   MSCI,Supply And Demand,Industry Performance