China’s SUV sales reached 1.326 million in 2010, a 101 percent jump over 2009 and 68% faster growth rate than the rest of China’s auto market. Despite essentially flat auto sales during the first half of this year, SUV sales jumped 21 percent.
China’s SUV sales were just shy of 10 percent of total passenger vehicle volume. In the U.S. and Europe, SUVs accounted for 25 and 15 percent, respectively, suggesting much room for continued growth in the segment.
“China’s sustained economic boom will cause the auto market to continue maturing,” said Mizuno Yasuhide, general manager of Dongfeng Honda. “The gradual diversification of customers presents the SUV segment with great potential.”
The SUV segment was one of the bright spots in an otherwise slack auto market during the first half of this year, said Zhang Xiaoyu, executive vice president of the China machinery industry federation at the China Urban SUV Trends Forum.
The urban SUV segment was born in the 1990s to provide power, handling, comfort and superior passenger and cargo room. In China the urban SUV concept was popularized by Dongfeng Honda in 2004 with the introduction of the second generation CR-V. The growth of China’s affluent middle class has been key to CR-V’s success. By the end of July the Dongfeng Honda had sold a cumulative total of 500,000 CR-Vs in China.
Other SUVs that have been enjoying strong sales includes the Hover SUV made by the independent brand Great Wall, and the Tiguan, Sportage, RAV4, Qashqai and Chery’s Tiggo which are all among the top 10 in the segment. CR-V leads sales in eastern and central China while Hover leads sales in western China.
The SUV is increasingly appealing to better educated, more affluent middle-class consumers who devote more time and energy to family life. SUVs provide more room for the kids and a degree of insulation from traffic while also being able to better negotiate whatever roads that may be encountered on weekend excursions to the countryside.
The SUV segment has experienced some structural changes because of its fast growth of recent years, according to a survey by Sinotrust. In 2007 the top 3 SUV models made up 42.4 percent and the top five, 63.4 percent. By 2010 the share of the top three fell to 27.9 percent and the top five to 40 percent as competition increased. Moreover, the market share of SUVs priced between 150,000 and 300,000 yuan ($22,000 – $44,000) continues expanding into the largest slice of the SUV segment.
The only forseeable hurdle to the continuing expansion of the SUV segment is their heavy gasoline consumption at a time when the central government is expected to implement policies to boost fuel efficiency and to discourage fossil fuel consumption. For that reason, analysts expect the continued growth of SUVs in China to be dependent on the development of new energy-efficient, environmentally-efficient models.
