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Customer LoginsSame-Day Analysis: Larger D-segment SUV and MPV vehicles see sales growth in China
China's MPV D-segment witnessed sales growth of 59.4% in the first two months of the year, while the SUV D-segment's sales increased 49.7%.
IHS Automotive Perspective
- Significance: The volume in China's MPV segment is still far lower than that in the sedan or SUV segments, despite the strong growth of the MPV D-segment.
- Implications: Chinese brands are significantly increasing their market share in China, and play a strong role in the high growth rates witnessed in the C SUV, D SUV, and D MPV segments so far this year.
- Outlook: IHS Automotive anticipates further growth for Chinese brands as they strengthen their product offerings and continue to meet and anticipate the needs of the local consumer base.
IHS Automotive data show that in the first two months of the year there was considerable growth in certain segments of China's passenger vehicle (PV) market. The highest growth rate was in the sport utility vehicle (SUV) C-segment, which increased 67.9% year on year (y/y) to cumulative sales of 854,409 units. However, there was also sales growth in the SUV and the multi-purpose vehicle (MPV) D- segments.
The trend of increasing SUV sales is now extending into the D SUV segment, which witnessed strong double-digit growth rates in the year-to-date (YTD) period in February, with volume sales up 59.4% y/y to 204,761 units, from 136,814 units in the same two-month period last year. Meanwhile, the D MPV segment was the third fastest-growing segment in the PV market with sales up 49.7% y/y to 74,381 units in the first two months.
The growth of the SUV and MPV D-segments is in solid contrast to the sedan D-segment, which witnessed sales declines of 17.2% y/y in the first two months of the year. The trend of falling sedan sales extends also to the mainstay sedan C-segment, which witnessed sales declines of 10% y/y in the first two months of 2016.
Overall there are common threads to consumer trends in China. Chinese brands are witnessing strong growth, while demand for SUVs is growing, and an extension to this is the demand for larger SUVs and MPVs.
There is a strong presence of Chinese brands among the main players in the D SUV and D MPV segments, which once again are hitting the spot in terms of meeting the needs of the local consumer market. This trait is also shared within the C SUV segment, which also features a strong presence of Chinese brands.
The C SUV segment is led by the Baojun 560, the local brand of the SAIC, General Motors (GM), and Wuling joint venture, followed by the Trumpchi/Chuanqi GS4 from Guangzhou Auto Corp (GAC), the Changan CS75 from Changan Auto, and the Refine S6 from Anhui Jianghuai Automobile Company (JAC). It is only in fifth spot that the Tiguan from Volkswagen (VW) appears, followed by the Buick Envision from GM.
Overall, the C SUV segment has around 70 models competing for market share. Of these, Chinese brands account for 48 models. Of the total volume sales of over 850,000 units in the YTD period, Chinese brands account for over 64% in the C SUV segment.
The D SUV segment shows a similar trend. The Chinese brands' growth is apparent. The top player is the Great Wall Hover/Haval H6 with 75,250 units sold in the first two-month period, beating the Audi Q5, which had sales of only 20,972 units in the same period. The Ford Edge came in third with sales of 18,021 units, just ahead of the local Landwind X Series from Jiangling Motors, which was ahead of the Toyota Highlander and the Mercedes GLC, which sold a total 11,500 units in the period. SAIC's MG GS model came in next with sales of 9,230 units, compared to just 161 units in the same period last year, indicating growing interest in the model. The Hawtai Auto Santa Fe C9 is next, followed by the BYD Tang. Overall, there are around 38 models in play in this segment, of which 23 are Chinese brand models, accounting for sales of around 131,492 units of the total of 204,761 units in the YTD period. Chinese brands therefore account for over 60% of the total volume sales in the segment.
The D MPV segment shows similar trends to those witnessed in the C SUV and D SUV segments; the strong presence of the Chinese brands, and the strong growth of sales of the models from these local brands.
Outlook and implications
Chinese OEMs have succeeded in increasing their share of passenger vehicle sales by about 5.6 percentage points to 36.1% in January and February 2016, from 30.5% in the same period a year earlier, IHS Automotive data shows (please note this forecast is for the full PV market; that is, including imports and excluding exports). This year, we are expecting China's local OEMs to outpace the sales growth of the whole market for a second consecutive year and their market share has been projected to reach about 32.4%. Japanese OEMs have also achieved strong results, with sales advancing 18.8 % y/y to about 486,000 units in the two-month sales period. However, sales of Korean brands and French brands posted double-digit declines in the first two months.
Despite the high growth rates witnessed by the D MPV segment, the volume of the segment remains low with just 74,381 units of locally produced products sold in the first two months. However, automakers have already begun eyeing this segment as a potential long-term growth area, despite the current low volume. Mercedes anticipates the relaxation of China's one-child policy in favour of a two-child policy will make families likely to consider MPVs as cars that meet both family and executive functions. Across the industry, OEMs have begun to plan to produce MPVs with the expectation of the relaxation of the one-child policy lifting van sales. However, the volume, despite its growth, remains low.
Meanwhile, the mainstay sedan C-segment, despite its declining sales, continues to be the largest single segment in China with sales in the year to date period of 1.17 million units. The C SUV follows with over 854,000 units, while the D sedan segment is next, which despite falling sales is the third largest segment with sales of 308,752 units in the two-month period.
Overall momentum in the market is present in certain segments, with Chinese brands gaining considerably. We have therefore upgraded our forecast to an overall 6% growth rate for the PV segment for 2016. However, interestingly, despite the overall slump in sales in China in February, with PV sales up just 1.9% y/y, the D MPV and D SUV segments actually grew faster than the C SUV segment.
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.