Chinas Multifaceted Passenger Vehicle Industry

Published Date : Jul 18, 2014

A passenger vehicle or passenger car is one that is used to ferry passengers, carry-on luggage and/or temporary goods. A passenger vehicle has no more than nine seats, including the driver’s seat. These include sedans, mini and light buses not having more than nine seats. Passenger vehicles can be largely categorized into basic passenger vehicles, sport-utility vehicles, mini passenger van, and crossover utility cars.

China’s automotive industry, on the whole, has been the world’s largest in terms of automobile unit production. With rising income, Chinese consumers have now shown greater interest in automobiles, leading to an exceptional spurt in the global automotive industry. However, there is still plenty of scope for growth and innovation in China’s passenger vehicle industry [], thanks to the ever-evolving behavior of the consumer. Based on the need, requirement and financial standing, passenger vehicle consumers in China are divided into those who purchase a passenger vehicle owing to requirement, and those who purchase high-end, trendy and sophisticated automobiles owing to higher disposable income or greater wealth. 

Main categories of passenger vehicles

Basic passenger vehicle: Sedans are an example of basic passenger vehicle, with two rows of seats and a cargo compartment in the rear. A sedan seats four or more passengers. Sedans come in multiple versions: notchback, fastback, hardtop and hatchback.

Sport-utility vehicle: A sport-utility vehicle (SUV) is a large automotive four-wheel drive vehicle that is designed to be used on rough surfaces. They have greater high-ground clearance and an upright, box-like body. SUVs also come in a variation of sizes: mini, compact, mid-size, full-size and extended-length.

Crossover-utility vehicle: A crossover-utility vehicle (CUV) is one that combines features of a sport-utility vehicle such as tall interior, high-ground clearance, and high H-point; and those of a basic passenger vehicle such as platform, car-like handling and independent rear suspension.

Minivan: A minivan is a box-shaped passenger vehicle, with removable seats for baggage. Minivans are often marketed as multi-utility vehicles (MUVs) or multi-purpose vehicles (MPVs). Minivans are taller than a sedan or hatchback, and the cargo versus seating area ratio is often flexible depending upon its size. 

Trends in passenger vehicle industry of China

Shift to smaller vehicles: China’s passenger vehicle industry is dominated by mid-to-small-size vehicles. Rising fuel prices is the most important factor behind this shift. Other reasons include more frequent power shortage, effort to reduce oil consumption and greenhouse gas emissions and strict new fuel economy rules. In order to encourage consumers to shift to smaller cars, China’s government has included schemes such as lower parking charges for smaller passenger vehicles and preferential fuel-pricing policy. 

Entry into global market: Chinese-made passenger vehicles have found a receptive audience in emerging markets that have similar price expectations, and emission and quality requirements to those in China. Moreover, the competition is much less intense in the global market compared to what Chinese carmakers face locally.

Development of fuel-efficient and alternate fuel vehicles: China has always encouraged an environment of fuel-efficiency and developing new and alternate sources of energy. This has extended to passenger vehicles as well and with a view to sustaining the growth of the nation’s automobile industry, China seeks to overcome its concern regarding fuel consumption. Electric, hybrid cars and vehicles using alternate fuel such as CNG/LNG are constantly rising. In the year 2013, the government rolled out various incentives in favor of environmentally friendly vehicles. 

Global outlook

China’s auto market overtook the U.S. back in 2010. However, analysts predicted a slowdown in the current year owing to the new car sales restrictions. But with international automakers increasing their investment in the automobile market in China offering cheaper models, local carmakers have been forced to step up their game, leading to an increase in passenger-vehicle sale. 

With more and better charging infrastructure being built, the market for electric cars in China is set to grow, and market research firms predict that the country will soon be the world’s largest market for new-energy vehicles. 

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