Party's over? After China SUV boom, carmakers face falling prices, sales
By Jake Spring
GUANGZHOU, China (Reuters) - Carmakers coming late to China's craze for sport-utility vehicles (SUVs) this year may find it tougher to make money from a party that's overcrowded and already winding down.
With Chinese growing wealthier and often restricted to one vehicle purchase in major cities, SUVs have been a rare bright spot for an auto market sapped by the country's slowest economic growth in decades. In the year through October, sales surged 46 percent year-on-year in a broader market that grew 1.5 percent.
Carmakers have chased the rainbow with some 32 new SUV models expected in China for 2015, according to Automotive Foresight, including some being showcased at the Guangzhou auto show that opens on Friday. But with competition already squeezing prices, and sales growth seen weaker next year as demand becomes saturated, cashing in on SUVs may prove elusive.
"The good old days will pass, when you could just launch any model and you could have pretty good sales," said Yale Zhang, head of Shanghai-based consultancy Automotive Foresight.
Even as firms like Ford Motor Co (F.N: Quote) and Chongqing Changan Automobile Co 000625.SS present new SUVs at Guangzhou - the Everest and the CS15 respectively - official data shows prices are falling.
SUV prices dropped 3.4 percent in the first nine months of this year, outpacing the 1.2 percent decline for passenger vehicles overall, according to the National Reform and Development Commission, China's top planning body.
Meanwhile SUV sales growth is expected to slip to 11 percent next year, according to IHS Automotive.
That reflects an ever-higher base of sales and the market growing more saturated, yet opportunities remain for SUVs that fill market gaps, Automotive Foresight's Zhang said. While SUVs in China now skew toward small models built on sedan frames, Ford's Everest and Great Wall Motor Co's (601633.SS: Quote) Haval H7 will meet niche demand for larger SUVs, for example. Continued...