Global carmakers are eager to grab a bigger slice of China’s hot crossover sales pie amid slowdown in the overall market.
China, considered as the world's biggest car producer, has seen domestic makers outstripping foreign rivals in terms of sales. Yang Jian, in an Automotive News China report, said that local manufacturers have sold 763,000 crossovers and SUVs earlier this year. Their international counterparts registered only 507,800 sold units.
Yang noted that "the majority of Chinese-brand crossovers are compacts and subcompacts priced from 60,000 [to] 100,000 yuan ($9,200 to $15,400)." This makes it harder for local makers to generate bigger returns as smaller vehicles yield lesser profits.
Brands have tried to combat this by venturing into more upscale units. One example is Great Wall Motor Co., which launched two SUVs in the past two years, each priced at about 200,000 yuan.
Now global brands are poised to compete against local makers by launching more units within a shorter time frame. Crossovers produced by foreign companies range between 950,000 and 200,000 yuan, ensuring higher profit margins than Chinese equivalent.
General Motors, for example, pushes ahead with its investment initiatives in China. Analyst Matt Tsien, in a Reuters report, said that "GM's Wuhan plant that opened last year was operating at maximum utilization, and a planned second phase is being added there that will double capacity to 480,000 units a year."
In February, the U.S.-based auto company saw crossover and SUV deliveries marking a 115-percent increase year-over-year.
Other brands, including Mazda, Ford and Honda, also registered sales growth on the back of new releases.
Tsien added that "UVs, multipurpose vehicles and luxury cars will continue to be hot segments in China."
GM plans to roll out more than 60 models in the next five years, of which 40 percent will be multipurpose vehicles, SUVs and crossovers. The lineup includes both new and upgraded units.