Domestic brands gain with strong offerings; SUVs, electric cars find favor
The domestic vehicle market remained in the doldrums in July, with total sales of passenger cars dropping 6.58 percent year-on-year to 1.27 million, an industry association announced on Tuesday.
The decline followed a year-on-year drop of 3.36 percent in June, which was the first time that sales of passenger cars showed a year-on-year decrease in more than two years, according to the China Association of Automobile Manufacturers (CAAM).
In the January-July period, sales of passenger cars reached 11.36 million units, up 3.39 percent year-on-year, CAAM data showed.
Total sales, including passenger and commercial vehicles, grew by a meager 0.39 percent year-on-year in the first seven months to 13.35 million units, according to the CAAM.
The vehicle market began to cool markedly in 2014, when overall sales growth slowed to 6.9 percent, approximately half the 13.87 percent expansion recorded in 2013.
Major global vehicle producers such as Volkswagen AG and Hyundai Motor Group have lowered their prices recently in response to the industry slowdown.
CAAM officials said in July that the sales growth rate in 2015 may sink to 3 percent, compared with a forecast of 7 percent in the beginning of this year.
Sales of sport utility vehicles (SUVs) remained a highlight of the lackluster market. During the first seven months of the year, 3.05 million SUVs were sold, up 44.31 percent year-on-year, CAAM data showed.
"Compact SUVs will remain popular with Chinese buyers in the next few years," CAAM secretary-general Dong Yang told the Global Times at a press conference on Tuesday.
Domestic brands, which offer more compact SUV models than their foreign rivals, are gaining ground even in dismal conditions.
The association's data showed that passenger car sales of domestic brands increased 13.58 percent year-on-year to 4.68 million units in the first seven months, accounting for a 41.17 percent share of the overall passenger car segment, up 3.69 percentage points over the same period in 2014.
Next came German and Japanese auto producers, which claimed shares of 19.65 percent and 15.53 percent, respectively, in the passenger car market, according to the CAAM.
Besides strong offerings in compact SUVs, Dong noted that improved quality is also a major reason for the increasing market share of Chinese automakers.
Major domestic automakers such as Chery Automobile Co and Great Wall Motor have been trying to move up the value chain by producing more expensive cars. Some high-end models cost more than 200,000 yuan.
The average price of Chery cars has increased to 84,000 yuan ($13,280) from 55,000 yuan in 2013, according to information from the Tuesday press conference.
Boom in NEVs
Despite the stagnant market, sales of new-energy vehicles (NEVs) surged in the first seven months of the year.
Sales totaled 89,549 units, up 260 percent year-on-year, and pure electric cars accounted for more than 60 percent of the volume, CAAM data showed.
Car purchasing restrictions in major cities like Beijing and Shanghai are pushing more consumers to consider NEVs, which are exempt from most of the restrictions and also enjoy government subsidies, according to a survey released by consultancy The Nielsen Co on Tuesday.
But the report noted that although sales of pure electric cars have been strong, consumers are more likely to favor plug-in hybrids because of concerns over long charging times and the small range of electric cars available.
