Of all key new launches at the on-going Shanghai Auto Show, more than half of them are SUVs. It is because China SUV sector’s growth in 2014 tripled that of the overall market.
According to the latest "2015 SUV Market Trend Research Report" recently jointly launched by TNS Sinotrust and China Business Journal in Beijing, several factors contributed to the ultra strong growth of SUV sector:
* SUVs can better meet Chinese consumers' need for more personalized and diversified products, so they're increasingly preferred by Chinese car buyers;
* Car makers have kept introducing new SUV models to the Chinese market and created a strong product portfolio;
* SUV has earned market shares at the expense of sedans.
In 2014, China's passenger car sales hit 16.97 million units, 12% higher than a year ago, among which SUV contributed 3.95 million units with an annual growth rate of 36.1%, according to CPCA.
SUV's share of China's total car market rose 4 percentage points to 23%, but it still has much potential. In the United States, SUV has occupied about 28% of the overall market. Last year, with oil price plunging, SUV's share rose to 31.7%. However, because of US consumers' preference of pick-ups, (top three best-selling models in US in 2014 were all pick-ups), SUV's market share has been squeezed.
In China, pick-ups were categorized as trucks and have lots of road limits according to Chinese rules. So pick-up is a marginalized category in China, whose market share has remained about 2% of the total sales.
With Chinese families' income increasing, demand for SUVs also rises. According to TNS Sinotrust research, SUV ownership is 7.5% for families with an annual income below 75,000 yuan. For families with 150,000 yuan to 190,000 yuan of annual income, the proportion rises to 16%. While for the most wealthy families, whose annual income is above 500,000 yuan, SUV ownership rises to 36.5%.
Another TNS Sinotrust research on passenger demand trend also found that many first car buyers opted to buy a SUV as their first car - 66.5% of SUVs were sold to first time buyers, compared with 22.2% in 2010.
SUV market share was rising across all city tiers. In tier-1 cities, it is higher than 23%, while it was fastest among tier-5 cities: it reached 23.7%, even higher than 23.3% of tier-1 cities, according to the registration data of new passengers cars made in China
From a SUV model perspective, small size SUV is the fastest growing sub sector. Its annual sales overtook medium size SUV in 2014, and next only to compact SUVs.
Many would assume that small size SUV buyers were from younger generations, such as born after 1985, or even 1990. They should have big egos. They must be chasing fashion, personality and handling. They were probably funded by their parents for this car. But the reality is, according to TNS Sinotrust's small size SUV survey, they were the most mainstream buyers of the car market: their average age was 29.34, many of them were born before 1985, or even between 1985 and 1975. They were married with child(ren). They have bigger families with higher incomes than what people have thought them of. They have settled down in their lives and enjoy successes in careers.
As for compact SUV, the biggest sub sector of SUV, now consumers are looking for "safety" and "handling", rather than "external appearance" in 2010. It means further compact SUVs need to emphasize more on technological features, such as transmissions with higher fuel efficiency, better chassis adjustment and better safety-related features and equipment.
Of all compact SUV consumers surveyed, 62% of them preferred turbo engines, among them 68% would like it to be bigger than 1.8T. Also, nearly half of compact SUV buyers wanted all wheel drive cars, while manual transmission is gradually phased out by automatic transmissions.
TNS Sinotrust's research also found that seven seat SUVs might be the next big thing. Though seven seat SUV sector has grown into a clear market by itself in China, middle and middle to big seven seat SUV sectors are still overlooked areas. Only a few models under luxury brands are offering such products, thus forming a very under competitive market. With the loosening of China's family planning policy, the size of Chinese families will become bigger in middle and long term. As more cities restrict the availability of local car plates and limit the access of out-of-town cars, it is increasingly important that the only car a family owns should be more versatile. Now 31% of SUV owners prefer a seven-seat SUVs as their next car. The bigger the family size, the higher the preference.
Small size SUV: Vehicle length between 3,850 and 4,350 mm, wheelbase shorter than 2,670 mm.
Compact SUV: Vehicle length between 4,300 and 4,750 mm, wheelbase between 2,600 and 2,760 mm.
Middle size SUV: Vehicle length between 4,400 and 4,850 mm, wheelbase between 2,650 and 2,800 mm.
Middle and big size SUV: Vehicle length between 4,750 and 5,150 mm, wheelbase between 2,790 and 3,050 mm.