Domestic automakers deem SUV trump card in the minimal growth era in China

China sees no recovery sign in the auto industry in July. The situation grows increasingly clear that China auto industry has entered the minimal growth period along with China’s macro economy. Chinese domestic automakers implemented new policies to encounter the new situation.

In the past first half of the year, China experienced pair-drop in production and sales compared with the same period of last year, with passenger production and sales growth rate dropped 5.67 and 6.38 percentage points. The accumulative production and sales quantity only increased 6.38% and 4.8% to 10,327,800 units and 10,095,600 units compared with the same period of last year. This was the first time that China had been encountered with pair-drop in sales and production since the breakout of the global economic crisis in the year of 2008.

Therefore, automakers in China were currently troubled with high inventory. In order to promote sales, automakers declared a “war” to each other in lowering official selling prices, which triggered much more turbulence in the industry.

Following historical norms, the sales will grow in the second half of the year compared with the first half. Additionally, with the cooling in the share market, more funds will be invested in the auto industry.

Chinese domestic automakers had little edge in the cutting selling price competition because they had much less premium price for their products. They sought other ways to struggle in the minimal growth era. Since small SUV had reported sales growth of more than three-fold in the first half of the year on a year-on-year basis, with an increasingly large market share of 26%. They deemed SUV the trump card to regain their market share.