Automakers hope MPV is the next big thing as China eases 1-child policy
Automakers are betting that Chinese families will embrace the multipurpose vehicle, hoping the larger, unsexy sibling of the popular SUV will become the next big thing as Beijing relaxes its one-child policy.
MPVs were front and center at the Guangzhou auto show, where Volkswagen AG presented a supersized version of its Touran and GAC Motor showcased a prototype minivan. The show ended Sunday.
These seven-seaters account for just 10 percent of passenger-car sales in China, but their sales are growing at a faster pace than the entire auto market.
Industry experts say the appetite for bigger cars is strong enough in China, where extended families often live under one roof, to transform it into the largest MPV market after the United States, where automakers have sold big cars to families for years.
At the end of October, China further relaxed its one-child policy, a move that experts said would not necessarily lead to a sudden increase in the size of the average family.
Family friendly
But Chinese authorities hope it will help boost the population to 1.45 billion by 2030 from 1.37 billion at the end of last year.
"After the rollout of the two-child policy, I believe the market share of seven-seat SUVs and MPVs will further strengthen," Wu Song, GAC Motor's general manager, told Reuters.
MPV sales for the first 10 months of the year grew 7.8 percent, according to the China Association of Automobile Manufacturers, outperforming the 1.5 percent growth in the overall car market.
The focus on Chinese families is relatively new for MPV makers that traditionally targeted companies seeking large, luxurious models for executives or small businesses that need a workhorse to haul goods and staff.
Many households include at least one set of grandparents, as they play a key role in child care. These extended families, coupled with restrictions in most major cities on owning a second car, give MPVs an advantage over the five-seat SUVs and crossovers that account for the bulk of passenger-car sales growth.
Practical decision
"The cost of owning two vehicles is high. That is why demand for seven-seat vehicles has grown greatly," said Gustavo Cespedes, executive vice president of General Motors' joint venture with SAIC Motor and Wuling Motor, which makes China's best-selling MPVs.
GM and its partners account for more than half of all MPV sales. The top seller is the Wuling Hongguang, a utilitarian MPV that starts at 42,800 yuan ($6,700). The more family-friendly Baojun 730, which starts at 69,800 yuan ($10,900), became the second most popular MPV just one year after it was launched.
Spurred by the success of the Baojun, rival Geely Automobile Holdings is designing an MPV for families, a person familiar with the matter said. A company spokesman said it was too early to discuss future products.
GAC Motor also sees opportunity in families. Design director Zhang Fan said GAC started working on a car two years ago to fill the gap between basic MPVs and high-end models such as Toyota Motor Corp's Alphard, which starts at 759,000 yuan ($118,600). "That gap is actually quite lucrative," he added.
The rising popularity of the lumbering MPV shows that more Chinese consumers are becoming savvy and choosing cars that meet their needs, and not because of the status they confer.
Ma Li, a plastic surgeon in Beijing, bought an MPV because he said its sliding doors were safer for his 10-year-old son. "I didn't think at all how my friends would view this car," Ma added. "The important consideration was the practical use."
These seven-seaters account for just 10 percent of passenger-car sales in China, but their sales are growing at a faster pace than the entire auto market.
Industry experts say the appetite for bigger cars is strong enough in China, where extended families often live under one roof, to transform it into the largest MPV market after the United States, where automakers have sold big cars to families for years.
At the end of October, China further relaxed its one-child policy, a move that experts said would not necessarily lead to a sudden increase in the size of the average family.
Family friendly
But Chinese authorities hope it will help boost the population to 1.45 billion by 2030 from 1.37 billion at the end of last year.
"After the rollout of the two-child policy, I believe the market share of seven-seat SUVs and MPVs will further strengthen," Wu Song, GAC Motor's general manager, told Reuters.
MPV sales for the first 10 months of the year grew 7.8 percent, according to the China Association of Automobile Manufacturers, outperforming the 1.5 percent growth in the overall car market.
The focus on Chinese families is relatively new for MPV makers that traditionally targeted companies seeking large, luxurious models for executives or small businesses that need a workhorse to haul goods and staff.
Many households include at least one set of grandparents, as they play a key role in child care. These extended families, coupled with restrictions in most major cities on owning a second car, give MPVs an advantage over the five-seat SUVs and crossovers that account for the bulk of passenger-car sales growth.
Practical decision
"The cost of owning two vehicles is high. That is why demand for seven-seat vehicles has grown greatly," said Gustavo Cespedes, executive vice president of General Motors' joint venture with SAIC Motor and Wuling Motor, which makes China's best-selling MPVs.
GM and its partners account for more than half of all MPV sales. The top seller is the Wuling Hongguang, a utilitarian MPV that starts at 42,800 yuan ($6,700). The more family-friendly Baojun 730, which starts at 69,800 yuan ($10,900), became the second most popular MPV just one year after it was launched.
Spurred by the success of the Baojun, rival Geely Automobile Holdings is designing an MPV for families, a person familiar with the matter said. A company spokesman said it was too early to discuss future products.
GAC Motor also sees opportunity in families. Design director Zhang Fan said GAC started working on a car two years ago to fill the gap between basic MPVs and high-end models such as Toyota Motor Corp's Alphard, which starts at 759,000 yuan ($118,600). "That gap is actually quite lucrative," he added.
The rising popularity of the lumbering MPV shows that more Chinese consumers are becoming savvy and choosing cars that meet their needs, and not because of the status they confer.
Ma Li, a plastic surgeon in Beijing, bought an MPV because he said its sliding doors were safer for his 10-year-old son. "I didn't think at all how my friends would view this car," Ma added. "The important consideration was the practical use."
