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Customer LoginsBeijing Motor Show 2016: International OEMs seek to win back SUV market share in China
The upcoming motor show will highlight the growing tension between international and local brands as they fight to outshine eachother with new products.
IHS Automotive Perspective
- Significance: The sport utility vehicle (SUV) segment continues to be where the main battle for growth is taking place in China.
- Implications: IHS Automotive production forecasts show 50 new SUVs will commence production in China this year.
- Outlook: Chinese brands' market share is forecast to continue to rise on the back of strong SUV offerings in China this year.
In the last few years, Chinese brands have steadily been gaining market share in China. In 2014, the total volume of Chinese brands' products accounted for just 25% of the local passenger vehicle (PV) market. Today, Chinese brands account for 36% of the local PV market, based on sales in the first two months of this year. Domestic automakers have been amassing market share in China on the back of strong growth in demand for their products. These home-grown brands have now produced strong products that are winning over the local consumer base in unprecedented volume and gaining market share from the international automakers in China.
The sport utility vehicle (SUV) segment is where most of the action is taking place. Chinese brands have now overtaken international brands in the SUV segment, and control 58% of the SUV market following strong growth in the first two months of the year.
The Beijing Motor Show will therefore be the platform for automakers to showcase their latest SUVs to entice Chinese consumers. International players will push their latest and best products to woo Chinese buyers back to their brands, while Chinese OEMs have already begun to highlight how their products are now the result of years of working in alliance with international engine developers and recognised tier suppliers, and using development centres in international locations and design teams comprising big names with experience at established international brands.
IHS Automotive light-vehicle production data highlight that in 2016 an additional 50 'new' SUVs will begin production in China. The Beijing Motor Show (25 April−4 May) will be a launch pad for a number of these. Of the 50 new SUVs that will launch production in 2016, the majority (78%) are Chinese brand products.
Sales of SUVs are forecast to rise 12.76% year on year (y/y) in China, while the overall market share of SUVs has risen to 30% of total light vehicle (LV) sales in China, up from just 10% in 2010. Sales have grown from 1.6 million SUVs sold in 2010 in China, to over 7.7 million SUVs forecasted to be sold this year.
Launches
Automakers have already begun to launch their SUVs, release teasers and create hype before the Beijing Motor Show takes place. Chinese automakers have created a major stir in the market, releasing models that fit snugly with the needs of the local consumer base. But Japanese automakers are fighting back by bringing in upgrades and new models, with some even using the Beijing show to release global debuts, while the European automakers have already begun to release new SUVs this quarter, as have North Americans and South Koreans, which are working to strengthen offerings to appease the local appetite
While automakers will use the show to highlight their presence in the SUV segment, sedans will continue to play a strong role. The sedan segment is the largest volume segment in China, and despite its falling growth rates the segment continues to attract players due to its incredibly high volume, with sales forecast of over 12 million units this year.
Changan CX70. |
Automakers are also showcasing higher-end sedans to highlight their capabilities across segments.
Chinese brand SUVs with SOP in 2016
Geely Automobile has already released the BoYue SUV ahead of the Beijing show, gaining publicity and hype before the show commences. The SUV highlights the automaker's strategy to gain market share in the SUV segment and follows the introduction of the GC9 sedan at the end of 2015. Peter Horbury, the vice-president of design at Geely, said, "With the Geely BoYue we wanted to make a vehicle that was tough and bold as an SUV should be, but at the same time it should have a graceful look that fits into the Geely brand character, we also wanted to create a new benchmark for Chinese SUV's, and I believe we have created a high standard for others to try and reach." However, that's not all from Geely − our forecasts show that the automaker will add another new SUV to its line-up, with production slated to begin in the final month of the year.
Changan Auto has already teased the industry with its new CX70 which will be launched at the Beijing Show. "As a new-generation Changan seven-seat SUV, the CX70 is not only more spacious and versatile, but it brings great aesthetic appeal. Versatile interior configurations allow customers to experience a new level of convenience," the automaker stated. As is the current trend, Chinese brands are highlighting that their strong SUVs are capable of driving through tough terrain with strong in car tech features. "Additionally, the vehicle's professional SUV chassis calibration allows the CX70 to freely travel on both urban roads and muddy country roads. This gives users a superb driving experience and peace of mind," the automaker added.
And again that's not all from Changan. Our forecasts show that the automaker will begin production of another SUV by year-end, the CS95. The production version of this new CS95 model will be shown by Changan at the Beijing Motor Show.
Chery TX Concept. |
Chery Automobile will also add two new SUVs to its line-up this year. The new Tiggo7 SUV has been based on the TX Concept from Chery and will be unveiled at the Beijing Motor Show. However, again that's not all − this year, Chery will also begin production of another new SUV at the end of the year.
Great Wall Motor will also launch a new SUV at the eijing Motor Show. The new Haval H7 is expected to be joined by a new engine variant of the Haval H9, which in the future is also rumoured to have a diesel variant.
And the list goes on. Roewe from SAIC will launch a new SUV, Guangzhou Auto will add to its Trumpchi line-up with three SUVs this year, while Dongfeng Motor will add three new SUVs to its line-up in 2016. The number of SUVs that will commence production in China this year will add around 500,000 units in volume, increasing the total volume of SUVs forecasted to be sold in China this year to over 7.7 million units, while local production of SUVs will hit around 7.23 million units this year.
Mazda CX-4 SUV. |
International automakers are pulling out the stops to gain a stronger foothold in the SUV segment. This year, General Motors' (GM) Cadillac brand will begin production of the XT5 SUV. Honda will launch production of the Acura CDX, while Mazda will reveal the CX-4 SUV at the Beijing show and will also begin production of this new global model in China in the second quarter of the year. Renault has already launched production of the Kadjar SUV and our forecasts show that the automaker will by year-end begin production of another SUV in China. Peugeot will also bring in an SUV this year, while Japanese automakers Mitsubishi and Suzuki will also add SUVs to their existing models produced in China.
Outlook and implications
Overall the growth of the Chinese brands will continue in 2016 and the sheer volume of products on offer will continue to entice Chinese consumers. However, where international brands will see a sudden leap in SUV sales is in the ultra-luxury segment of imports. This is simply because international luxury car makers have created new, luxurious SUVs with the high end Chinese consumer in mind.
VW Phideon sedan. |
IHS Automotive data for luxury vehicle sales in China shows that in 2016 this segment is forecast to rise by an astounding 20% year on year (y/y). The luxury SUV segment is growing with sales in this segment forecast to continue to rise hitting over 7,000 units per annum (upa) sales in 2020. The top players in the luxury SUV segment this year are Bentley and Maserati with the Bentayga and Levante SUVs. Maserati's sales in China are forecast to rise 26% y/y this year following the introduction of the Bentayga. Competition in this segment will rise when other ultra luxury makers add SUVs to their lineups by 2020, gaining sales in the segment in China.
The Beijing Motor Show will also showcase automakers keen to highlight their adherence to the new energy vehicle trend in China. Automakers will showcase electric and plug-in hybrid variants of their models while announcing new products in the category. Apart from the flock of SUVs which will fight for attention at the show, automakers are showcasing sedans often highlighting their high technical capabilities to regain lost market share in China. Volkswagen will do this with the Phideon sedan in China.
About this article
The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.