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Customer LoginsGuangzhou Motor Show 2016: Automakers reveal more SUVs for Chinese consumers
As Chinese automakers continue to gain share in their domestic market, especially in the sport utility vehicle (SUV) segment, international brands are introducing more SUVs tweaked for local tastes.
IHS Markit Perspective
- Significance: The Guangzhou Motor Show is of growing importance as it offers automakers a chance to gain traction in the fourth quarter of each year, as well as entice consumers to big-ticket purchases for the upcoming Chinese New Year.
- Implications: As automakers release more SUV models tweaked to local tastes, the volume of SUVs produced in China is expected to rise to over 10 million units per annum by 2020.
- Outlook: The top volume models of SUVs in China in 2020 are expected to be local brands' SUVs, as their products continue to gain share in the local market.
The Chinese passenger vehicle market has been showing double-digit annual growth rates in recent months, and competition is fierce. The ongoing Guangzhou Motor Show is of increased importance this year because it is taking place as China's tax cut for small-engine vehicles is in its final two months before ending on 31 December, and so automakers wishing to see a quick jump in sales are showing off new models. The current forecast for 2017 is that the Chinese market will witness low or no growth if the government does end the 50% cut in the new-car purchase tax for vehicles with engines of 1.6 litres and smaller. However, automakers still need to gain whatever volume and growth they can in 2017, and for that they will need to entice consumers with the models they have and steer them away from the competition. Therefore, this year's Guangzhou Motor Show promises to be a showcase of more sport utility vehicles (SUV), as that segment continues to see double-digit growth rates in China.
The examples of the SUV launches include the Volkswagen (VW) Group's introduction of two new models for the Chinese market at this year's Guangzhou Motor Show. VW is launching the new large Teramont SUV, the Chinese variant of the Atlas, and Skoda, the Czech brand owned by VW, is unveiling the Skoda Kodiaq. VW Group has just previewed the new large Teramont, the Skoda
Kodiaq, and the new updated Tiguan at a preview event in Guangzhou, prior to the official start of the show.
Meanwhile, French automaker Groupe PSA is launching the Peugeot 4008 SUV at the show. Renault is to launch the new-generation of the Koleos SUV, while Infiniti, the premium brand of Nissan, is to launch the QX30. In addition, SAIC is launching the new MG ZS SUV and the SAIC-General Motors (GM)-Wuling joint venture is to launch the new Baojun 510 SUV.
In an email sent to IHS Automotive, GM has confirmed it will launch the Chevrolet Equinox SUV in China, tweaked for local consumers. The automaker will also launch the all new Chevrolet Trax, among other vehicles.
Many of these models are specifically tweaked for Chinese consumer tastes as international automakers aim to regain market share lost to local brands.
Automakers are also displaying plug-in hybrid electric vehicle (PHEV) variants at the show, with Guangzhou Auto Group Corp (GAC) launching the Trumpchi GA6 PHEV, while VW will show the locally made Audi A6L e-tron.
Outlook and implications
IHS Automotive's light-vehicle forecasts show that, in the fourth quarter of 2016, production of more than 30 new models, including new generations, will begin in China. Of these, over 50% will be SUVs. The combined output of the models production of which will begin in the fourth quarter in China will add around 214,000 units to the annual production volume in China. These models are forecast to account for over 1.12 million units in production volume in 2017. This shows the importance of the Guangzhou Motor Show as a platform for automakers to entice consumers into big-ticket purchases in the New Year. The Chinese New Year, which will fall at the end of January 2017, is what automakers and dealers are targeting by launching models now.
The total volume of light vehicles forecast to be produced in China in 2016 is 25.49 million units, and in 2017 this is currently forecast to rise to 25.7 million. The volume of SUVs produced in China this year is forecast to hit 8.3 million units, rising to over 8.58 million units in 2017. Indeed, as automakers push more SUVs for Chinese consumers, the volume of SUVs produced in China is expected to rise, although the market is only forecast to see a small rise in 2017, if any, due to the expected expiry of the current 50% tax cut for vehicles with small engines. By 2020, the volume of SUVs produced in China is forecast to hit over 10.7 million units, our forecasts show.
In 2020, the top players in China's SUV market in terms of production volume are expected to be local brands. The Roewe RX5 SUV, production which began in June this year, is expected to be among the top players in the market, with Great Wall Motor's H6 and H6S SUVs continuing to be among the top volume players, while GAC's GS4 SUV, production which also began this year, is also forecast to continue to see strong volume in 2020 in China. These models are forecast to have greater production volume than SUVs produced by established international brands in China, highlighting the continued sales growth of local Chinese brand SUVs.
The latest data continues to show that local brands are still gaining traction in China, with new SUV models consistently being added to their line-ups.
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.