As couples plan their second child, SUVs are popular across China

In a fast-changing market like China where many popular commodities prove to be fleeting fads, sport utility vehicles or SUVs have been an exception. It seems Chinese people's fascination with them will continue for a while.

In the past four years, SUV sales grew an average 30-plus percent year-on-year, far exceeding the overall growth rate of China's automotive market.

Although auto sales are slowing this year as the authorities cut tax incentive for car buyers starting in January, more than 3 million SUVs were sold in the first four months of this year, according to statistics from the China Passenger Car Association.

A man drives his SUV along the Dandong coast in Liaoning province. Qi Bozi / For China Daily

Only the SUV segment saw positive growth in the period, up 19 percent year-on-year, while all others - sedans, MPVs and minivans - fell sharply, ranging from 1.8 percent to 24 percent.

"Chinese people have a strong affinity for SUVs, and the enthusiasm will continue for some time," said Cui Dongshu, secretary-general of the association.

Among those who will continue to fuel the segment's growth is Wang Chen, a securities broker in Tianjin.

"Not a sedan this time," said Wang, who has decided to trade his 7-year-old Emgrand sedan for a Zoyte SUV.

"SUVs are tall and roomy, which means you can sit comfortably, especially if you drive a lot; and more importantly, they offer you a better vision," said the 34-year-old.

Jumping a red signal

Wang recalled that he jumped a red signal when he drove behind a minivan, whose height prevented him seeing what was in front of him.

"Fortunately, I didn't have any accident and wasn't caught by the police either," said Wang.

First-time car buyers are joining, too. Cui Lina, who runs a translation firm in Beijing, chose a 2016 Ford Kuga last year when she won a license plate through the capital city's lottery system.

It was a "natural choice" for her. "Wouldn't you consider an SUV if you were me?" said Cui, who often drives her family to the capital city's suburban destinations on weekends.

"You aren't worried that even some road sections are poorly paved because an SUV can handle such conditions. Besides, there is more legroom so you are less tired than in sedans if you travel long distances."

During holidays last year, Cui and her husband drove some 1,300 km from Beijing to her parents' home in Harbin, Northeast China's Heilongjiang province, and more than 1,200 km from Beijing to her parents-in-law's home in Huanggang, Central China's Hubei province.

"And I'm told big cars are safer if there are accidents, aren't they?" said Cui.

Although there isn't solid evidence that SUVs are better built, Shi Jianhua, deputy secretary-general of the China Association of Automobile Manufacturers, said a strong look, just like extra space, is among the top reasons many people choose SUVs, because such things make drivers feel good.

Rising market share

Statistics from Shi's organization show that the share of SUVs in the passenger car market almost tripled from 13 percent in 2012 to 37 percent in 2016, while the share of sedans fell from 69 percent to 50 percent in the same period.

The trend continues so far, with SUVs taking up 40 percent in the first four months of this year and sedans shrinking to 48 percent.

At a forum earlier this year, Shi said he expects SUV sales to surpass those of sedans in one or two years. In fact, his expectation has already come true at some carmakers.

China's GAC Motor sold 121,000 cars in the first quarter of the year, with nearly 90,000 being the compact SUV Trumpchi GS4 while the larger GS8 sold more than 26,000 units.

The automaker plans to release another five SUV models this year, more than half of all models scheduled to hit the market this year.

"If the market wants more SUVs, then we provide more SUVs," said Wang Qiujing, president of GAC's Automotive Engineering Institute, at the Shanghai Auto Show last month.

Many others are rushing to make the most of people's fascination with SUVs. Skoda, a Czech brand that became part of Volkswagen Group in 1991, unveiled its Kodiaq in April, the first model of its SUV offensive to double China sales by 2020.

Any carmaker will find it difficult to succeed in China without a proper SUV strategy, said Skoda CEO Bernhard Maier.

Besides the Kodiaq, Skoda will launch another SUV later this year. This will be followed in the years to come by a compact SUV, which is being designed in cooperation with SAIC Volkswagen specifically for Chinese customers.

When German brand Borgward came to China in early 2016, it believed the SUV segment would be ideal for it to get established in the world's largest auto market.

Its first model, the BX7, sold about 50,000 units in a year, something laudable for a new brand to Chinese customers.

Kevin Chen, Borgward China's sales chief, said: "For the hotel industry, you have three (buzz) words: 'location, location, location'. For us, those three words are: 'segment, segment, segment'."

Premium cars are no exception. German carmaker Porsche sold 65,000 cars in China last year, with half of them being its compact SUV Macan. Bentley's SUV Bentayga is also well received in China.

British brand Aston Martin is to launch an SUV targeted at emerging economies, especially China, around 2019, said Michael Peng, president of the brand's China unit.

Italian carmaker Lamborghini's SUV Urus is to hit the market in 2018, and the company expects the model's arrival to double its global sales within two years.

Andrea Baldi, head of Lamborghini Asia Pacific, told China Economic Net that the Urus is to see higher growth rate in China than in other parts of the world.

What's next

So, a business cycle appears to be forming: customers' growing enthusiasm for SUVs leads to carmakers offering more such models, which, in turn, make their sales more likely to grow.

While it is unlikely that SUVs will remain popular forever, industry insiders are divided on what kind of models would capture buyers' imagination next.

Nan Shengliang, a senior sales manager at Geely, told reporters that MPV sales may grow as many young Chinese couples are having, or are likely to have, their second child and thus need a larger space on wheels.

Geely unveiled a concept MPV in April at the Shanghai Auto Show. Statistics from the China Association of Automobile Manufacturers show that some 2.4 million MPVs were sold in 2016, an 18 percent growth year-on-year, second only to SUVs in terms of growth rate.

Meanwhile, some carmakers, including Volkswagen and Volvo, are introducing estate cars into the Chinese market in the hope of meeting the demand of the travel-loving young.

FAW-Volkswagen launched its estate car C-Trek in November, whose sales grew steadily in the past few months. Nearly 22,000 units were sold by the end of April.

But in the short term, more are betting on new energy SUVs. Ford, the United States' No 2 automaker, is to roll out an electric SUV in China within five years, and Chinese startup Nio's first model, an electric 7-seat SUV, will start sales this year.

Traditional automakers including SAIC Motor, BAIC Motor and BYD have released their new energy SUV plans.

In the premium sector, Bentley's plug-in hybrid Bentayga will arrive in China in 2018, according to its CEO Wolfgang Duerheimer.