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Chinese SUV Makers Brace for Tougher Foreign Competition in Local Market

| Apr 11, 2015 08:05 AM EDT

Mercedes-Benz USA officials Wolf-Dieter Kurz (L) and Stephen Cannon present the new Mercedes-Benz GLE 550 e 4MATIC and the new GLE 35 4MATIC at the 2015 New York International Auto Show in New York.

Chinese automakers Great Wall Motor Co. and Jianghuai Automobile Co. will get to gauge competition in the Chinese SUV market at the Shanghai auto show which opens April 20.

Honda, Mercedes, Citroen and BMW have announced global premieres of SUVs at the show, and other automakers are set to follow.

The two Chinese companies are successfully challenging foreign rivals in the segment where sales jumped 36 percent in the first two months of this year.

China's SUV sales went up 30 percent annually since 2008 despite a slowdown of the passenger vehicle market.

More than four million SUVs were sold in China last year, accounting for 28 percent of total passenger vehicle deliveries.

SUVs are becoming more popular in China for their dynamic styling and high seating positions, according to Lin Huaibin, an analyst with IHS Automotive in Shanghai.

Lin predicts SUVs will generate more than one-third of China's passenger vehicle sales by 2025.

The Chinese automakers have cut sedan output to build more SUVs, while global players are racing to launch more SUVs.

Honda Motor Co. is planning a worldwide debut of a concept SUV customized for the Chinese market. It will be fitted with Honda's FUNTEC powertrain and infotainment technology.

Daimler CEO Dieter Zetsche hinted that a new Mercedes-Benz crossover GLC coupe will be ready to tackle the Chinese market.

Last week, the BMW Group announced that its plug-in hybrid SUV, the BMW X5 xDrive40e, will make its global debut in the Shanghai auto show.

Foreign automakers are also unveiling SUVs created for their local joint ventures.

The SAIC-GM-Wuling Automobile Co. will reveal the Baojun 560 compact SUV, which is built on the Buick Excelle platform and fitted with a 1.8-liter engine and a five-speed manual transmission.

In January, Dongfeng Nissan Passenger Vehicle Co. launched sales of the T70, a compact SUV under its joint Venucia brand. The vehicle is adapted from the Nissan Qashqai.

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