Auto Industry

The bare bones of it

Why SUVs, not electric cars, are the new nirvana for Chinese auto sales

“What’s all the fuss about?”

Exhibition isn’t far from exhibitionism in the dictionary, and at the Beijing Auto Show last week it was even more difficult to tell the two apart.

In fact, such was the acreage of bare skin on display that local authorities rebuked organisers for exerting a malign social influence.

Of course, the buzz by then was much more focused on the ladies draped over the vehicles than on the cars themselves. It was an enthusiasm shared by the amateur photography types who turned up at the event to snap shots for their personal collections. “The show has been totally ruined, as people swarm to see all kinds of women and ‘airbags’ of different sizes. I miss the exhibitions of the past,” one weibo user complained.

Then again, with a record 1,125 cars on display, it’s easy to see why manufacturers would want to come up with ‘fleshy’ new ways to get noticed.

Yang Yang, a director at the show, then sought to defend the event in the Global Times, telling the newspaper that it was the carmakers who decided on what the models wear.

“Certain German brands require models to dress in high-end, classical fashion, while Japanese carmakers prefer themed uniforms,” Yang assured reporters.

Three years ago, the buzz at auto industry events was much more engaged with hybrid vehicles – those offering combined electric and gasoline-powered engines. Policy directives promised 500,000 battery-powered cars on the streets by 2015, and there was hope of a surge for Chinese exports too.

But in reality, only a few-thousand hybrids have been sold and enthusiasm for the sector has largely evaporated.

Hence BYD Auto – formerly a pin-up for the hybrid sector – struggled to make much of a splash in Beijing last week with its newly unveiled Qin, an updated version of its original plug-in sedan, the F3DM. BYD also announced the launch of its Denza brand, another electric-powered vehicle, this time produced in a joint venture with Daimler. That struggled for column inches, too.

So apart from the bikini girls, which cars were getting headlines? Mostly sports utility vehicles, it seems, which are the new sweet spot in China’s passenger car market.

Top billing went to Lamborghini, which displayed its first-ever SUV concept car, called the Urus. And even former Spice Girl Victoria Beckham was in Beijing (she left her own swimsuit in Los Angeles) to promote a special edition of the Range Rover Evoque.

“So, [the Evoque] is definitely me. It’s quite understated. It’s just very chic. I find it very cool,” Beckham told the press, unassumingly.

Sports utility vehicles (SUVs) make up a broad category of vehicles built on a light-truck chassis, and usually with some form of off-road ability. Today German brands dominate the luxury end of the market in China, accounting for two out of every three sales, Mike Dunne, an automotive expert, told the Wall Street Journal. Japanese and South Korean automakers do better with compact SUVs: Honda’s CR-V was the bestseller last year, with sales of about 160,000 units.

This year, SUV sales have been very good, up by 18% to 441,600 units in the first quarter versus 2011. That compares to a decline in total passenger vehicle sales of 1.25%, according to data from the China Association of Automobile Manufacturers.

There is an extra advantage for foreign carmakers: most of the SUV models are imports, meaning less profit has to be shared with Chinese JV partners.

The current craze for SUVs might seem counter-intuitive, as well as out of synch with the green policy mantra adopted by regulators three years ago.

China’s increasingly congested streets are far-from-ideal for larger cars, while its one-child policy should see less need for vehicles that suit larger families.

Fuel costs for SUVs are higher as well, although this doesn’t seem to bother many of their purchasers, who are price-insensitive. Research firm LMC Automotive says that a luxury SUV costs at least $80,000.

Instead, the category seems to appeal to younger drivers who want to give off a brasher, more entrepreneurial image. Previously their first choice might have been a sleek European black sedan of the type favoured by Chinese officialdom. Now they want something sportier and spikier.

Another data point from LMC Automotive is the steady increase in female SUV buyers in China, to 19% of total sales last year from 14% in 2007.

This might stir the interest of Li Yinhe, a sociologist interviewed by the Global Times for her thoughts on the number of bikinis on display at the Beijing show.

Li’s first observation (that the trend suggested carmakers were targeting male customers) was unremarkable.

More interesting was her second suggestion: “The way that male models dress will change accordingly to satisfy demands from female car buyers.”

The Chippendales to Beijing for the auto show next year, perhaps?


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