Statistics show a growing number of urban Chinese families are planning to purchase SUVs, something that marketers and retailers should consider when promoting products in alignment with the lifestyles that come with owning these roomier vehicles.
Four in ten (40%) current car owners drive a compact family car — the most popular type of vehicle owned by Chinese households. However, the majority (58%) say they will switch to SUVs.
At the same time, manufacturers must also work harder to introduce models that alleviate consumer concerns such as high fuel consumption and parking difficulty.
Replacing compact cars
As the fastest-growing passenger car segment in China, new research from Mintel’s SUVs China 2018 report reveals that the sales volume of SUVs (Sports-utility vehicles) are estimated to have grown 22.1% in 2017, reaching 11 million units.
Sales are projected to hit 27.8 million units in five years’ time to 2022, with a CAGR (Compound Annual Growth Rate) of 20.2%. Meanwhile, over half (53%) of surveyed urban Chinese car buyers are planning to buy an SUV model car, significantly higher than other car groups.
In fact, the most popular type of car currently owned by Chinese households is the compact family car. Four in ten (40%) current car owners drive a compact family car, which is 11 percentage points higher than those who own an SUV (29%). However, the majority (58%) of current compact family car owners say they will switch to SUVs, according to Mintel.
“There is no doubt that SUVs will continue to be the best selling passenger car in the Chinese market,” says Aaron Guo, associate research director of auto and finance at Mintel. “Broadly speaking, large-size SUVs will be favored by the market in the foreseeable future as they meet current consumer trends of trading up and opting for more room.”
Car buyers consider buying SUVs because they offer more interior space (31%) and are believed to be safer (23%).
Space is especially valued by middle-income (33%) and low-income (36%) households. While, post-90s (36%) car buyers are significantly more likely to buy SUVs for the larger interior space, their older counterparts do not feel the same, including Generations 80s (28%) and Generation 70s (32%), Mintel reports.
Alleviating consumer concerns
While interior space is a key factor for SUV buyers, the results happen to be top barriers to purchasing SUVs, including high fuel consumption (47%) and parking difficulty (36%).
“While consumers are very interested in buying SUVs, they are not yet convinced by the current available models,” Guo explains. “Manufacturers need to work hard to introduce models that appeal to the full range of consumer needs.”
In general, 22% of surveyed SUV buyers consider a model within the price range of RMB 150,001-200,000. What’s more, the median price tag first-time SUV buyers consider is RMB 205,000, with the average price being RMB 270,400. Replacement car buyers who plan to buy an SUV are checking an average price of RMB 295,700, with a median price of RMB 250,000, according to Mintel.
Finally, post-80s are the core buyers of SUVs, given that 56% are considering SUV models compared to half of post-90s (51%) and post-70s (50%). When it comes to budget, post-90s (average of RMB 285,300) have almost the same budget as post-80s (average of RMB 288,100), the report states.
“Our research shows that Chinese car buyers are willing to pay more for SUVs, whether they are first time buyers or replacement buyers,” Guo says. “This should encourage car manufacturers to introduce more premium middle-to-full-size SUV models. Specifically, post-90s have shown a similar spending willingness and budget as post-80s, as well as a similar passion for SUVs and they have the potential to raise their budget in the future.”