Passion for SUVs powering market

China's love affair with the SUV will continue this year, according to projections from the China Association of Automobile Manufacturers.

The industry group says at least 3.85 million SUVs will be sold in 2014, a rise of nearly 29 percent from last year.

The association's deputy secretary-general Shi Jianhua released the figures at an SUV-themed forum in Beijing organized by the China Business Journal in late March.

CAAM statistics show that China's SUV sales hit 2.99 million units in 2013. More than 560,000 have already been sold in the first two months of this year.

"SUVs will get more popular with people's rising income because the vehicles have good sporty performance and are at the same time as comfortable as sedans," said Shi.

Lin Lei, president of Sinotrust International Information &Consulting (Beijing) Co, told the forum that China's steady economic growth has been boosting the development of its passenger vehicle market.

A record 18 million passenger vehicles were sold in 2013. The SUVs accounted for 21 percent of the total, more than double the ratio in 2008.

Lin said the proportion is 28 percent in the US.

Another driving force behind the popularity of SUVs is a wave of purchases as drivers update their vehicles, said Lin.

He noted that Chinese consumers prefer sedans when they buy their first vehicles and SUVs the second time because they need room to carry more family members.

At the same time buyers born in the 1980s are now a big segment of the SUV market as they aspire for more freedom and diversity compared with earlier generations, said Lin.

Sinotrust statistics show that younger people account for nearly 49 percent of Chinese vehicle owners.

"More and more of them will choose SUVs especially because the government is gradually easing the one-child policy," said Lin.

Smaller cities

It looks even more promising in smaller or western cities, said industry insiders.

The percentage of SUVs in overall passenger vehicle sales in first-tier cities has been dropping since 2009, Zeng Yehui, brand supervisor at Chinese SUV maker GAC Gonow told the forum.

Zeng said the figure has been growing steadily in third-tier cities, reaching 39.3 percent on average in 2013, especially in western regions with demanding topography.

Sinotrust's Lin agreed with Zeng's judgment. A survey by his company shows that SUV sales in Yunnan, Gansu, Sichuan and Guizhou provinces as well as Chongqing municipality increased more than 50 percent in 2013.

The proportion of SUVs in the local passenger vehicle markets is more than 50 percent in the Tibet autonomous region and at or above 30 percent in the autonomous regions Xinjiang and Ningxia.

While large and mid-sized SUVs are increasingly popular in the western regions, Lin said compact models will continue to take the lion's share nationwide this year and the small-sized versions are expected to emerge as another popular segment.

In China, SUVs are classified into five categories ranging from full-size to small, according to CAAM.

Lin's survey shows at least 14 small SUV models by both joint venture and indigenous brands have been or will be unveiled this year.

Shi from CAAM attributed the popularity of small SUVs to lower prices and lower fuel consumption.

"In a society that advocates energy saving and emission reduction, the smaller SUVs will have a promising market for a long period to come," he said.

Due to people's increasing awareness of environmental protection, SUV manufacturers are coming up with a wide array of energy-efficient models.

Among them, hybrids remain the most popular, while pure electric models are the last choice, according to Lin's survey.

Lin also noted there will be more room for diesel SUVs in the next few years as diesel supplies have become abundant over the past decade.

The Chinese government is updating its standards for diesel fuel and diesel engines are becoming less noisy and more environmentally friendly.