Compacts and SUVs lead the luxury automobile market in China

May saw the luxury automobile segment in China lead the country's automobile market once again. However, unlike previous months the leading models in the segment were compacts and SUVs, rather than midsizes and fullsizes. Some analysts believe this is due to oversaturation in those segments, while the markets for compacts and SUVs still possess significant development potential.

Audi is one example of a luxury manufacturer experiencing this phenomenon. In an interview with the National Business Daily, a representative from a Beijing-based Audi dealership remarked that that the Audi Q3 1.4T, which was shown at the Beijing Auto Show, has successfully attracted many consumers in the market for SUVs. Infiniti and Volvo are two other luxury manufacturers seeing a lot of strong sales results from their SUV models. "When lacking a full and varied product line, it is natural for manufacturers to primarily focus on markets which offer high growth," Yan Jinghui, deputy secretary general of Beijing Yayuncun Automobile Trading, remarked.

According to statistics from the China Passenger Car Association (CPCA), retail passenger automobile sales grew 18 percent in May; among those, growth rates for fullsize and midsize cars were 14 percent and nine percent respectively, lagging far behind the market average. CPCA Deputy General Secretary Cui Dongshu pointed out that this gap is due to the rapid growth in the subcompact and compact segments.

A shift in consumer attitudes is to part of the reason behind this. The above dealership representative noted that the store's customers focus on different types of vehicles. When they would originally focus on the A6L, they now have shifted their attitude to the Q3, A3 and similar models, despite the fact that the new A6L offers significant emission savings.

Changing trends in engine sizes are another factor seen in the market recently. Since 2010, the market share held by cars with engines larger than 2.0 L has been gradually falling. The 2.0 T version of the Audi A6L accounted for 57.79 percent of that model's sales in May, while only 37.52 percent of its sales came from the 2.5 L version. Similarly, the 2.0 T Li version of the BMW 5 Series accounted for over 91 percent of all 5 Series sales in May. Monthly sales of the 520Li alone totaled 3,045 units, up 32 percent from last May.

Beijing Benz is already making plans to equip its E-Class with a 2.0 T engine, helping it fill out the gap it had among its fullsize models. Volvo also has plans to focus on vehicles with smaller engine sizes, by relying rather on advances in technology to maximize power output.