China Small Vehicle Market: Demand forecast to increase
- In recent years, the Chinese passenger vehicle market is greatly supported by the C and SUV segments. The combined share of the C and SUV segments in 2013’s PC market stood at 55,4%, indicating that these segments are attractive.
- However, as the Chinese society shifts from large to nuclear families, people tend to select small vehicles which better fit their needs. As the 1990s generation becomes the main consumer of vehicles, demand for small vehicles is expected to further increase. Small vehicle usage is also an effective way to meet fuel efficiency rules. Since fuel consumption must be lowered to 5L/100km by 2020, small vehicles with good fuel efficiency are indispensable. In addition the Chinese government is promoting the export of foreign-made vehicles from China. As Southeast Asian nations, India and other countries step up air pollution measures, demand for small vehicles is expected to increase which in turn will boost export from China. Unlike SUV and D segment models, it will be difficult to make small vehicles profitable in the short term; however, since there are only a few automakers on the market, capturing large share is a possibility.
- All these factors form an advantageous market environment for Japanese and EU brands, which have R&D history in the small vehicle segment. However foreign automakers are lagging behind in product releases in the A and B segments.
