Chinese consumers are buying more domestic brand vehicles this year amid slower economic growth and the recent introduction of low-cost SUVs like the Great Wall Motors’ Haval H6 and Chery Automobile’s Tiggo. Chinese consumers bought 2.98 million home-team vehicles in the first four months of the year, a nearly 20 percent jump from the same period last year, according to data released Wednesday by the China Association of Automobile Manufacturers.
“The sales of Chinese brand SUV and MPV [multi-purpose vehicles, or minivans] both enjoyed growth in sales volume and market share,” said a CAAM statement. Most notably, Chinese brand car sales have plummeted by double digits this year, but overall growth was lifted by a 104 percent rise in SUV deliveries.
The rise in demand for Chinese-made SUVs has forced foreign rivals to slash prices. Earlier this week, GM’s joint venture with SAIC Motor Group, China’s largest carmaker, announced a raft of aggressive price cuts of as much as 54,000 yuan (about $8,700) to 40 models amid declining Chevrolet and Buick sales. Volkswagen and Honda also have reduced prices amid a slowing Chinese economy that offers domestic automakers a chance to woo locals to buy local brands.
Chinese car companies “have a renewed strategic opportunity to excel,” John Zeng, managing director at LMC Automotive, said in a note last month after first-quarter Chinese auto sales were announced. In the first three months of the year, eight of the top 10 bestselling SUVs were Chinese brands. The vehicles are priced at around $16,000, well below foreign counterparts.
China’s slowing economy is certainly helping consumers consider lower-priced new domestic SUVs. The government expects gross domestic product growth to slow to 7 percent this year, down from 7.4 percent last year, which was the lowest growth rate since 1990.
Rising affluence among China’s urban middle class has been a boon to foreign automakers like Volkswagen and General Motors, in part because Chinese cars have suffered a terrible reputation for safety. China has been trying for decades to improve its industry and to push for higher quality though a complex web of joint ventures with major global automakers and acquisitions.