SHANGHAI – Industry consultancy IHS Markit said in an analysis and commentary on April 5 prior to the Shanghai Motor Show 2017 that China’s light vehicle production and sales are expected to each hit 30 million units in 2020, as rising demand lures new and existing players to fight for a slice of the lucrative market.
Companies old and new are banking on the SUV and New Energy Vehicle (NEV) segments for growth, and IHS Markit predicts that by 2020, the share of SUVs in light vehicle sales will have quadrupled to 40 percent from just 10 percent a decade earlier. Production of NEVs, including plug-in hybrid electric vehicles (PHEV) and battery electric vehicles (BEV), is forecasted to reach 1.85 million units, up from just 3,581 units in 2010.
“The market’s sheer scale continues to attract ‘new’ players. These come in two types, each with big aspirations to gain a slice of the large market: electric-vehicle (EV) startups and startups making regular combustion engine vehicles,” commented Namrita Chow, principal automotive analyst with IHS Markit.
The Chinese government has eased its previously stringent policy on vehicle production licenses creating a sub-variety for NEV production, and is granting these licenses to startups that only produce alternative-energy vehicles, according to Chow.
So far the government has approved 12 such companies over the past year.
“High-end EV makers are targeting a niche within the market,” said Chow. “This segment attracts players aiming to make high-performance EVs that appeal to car buyers in China with high disposable incomes looking for a status symbol. The upcoming Shanghai Motor Show is set to feature new EVs in ‘production prototypes’ and futuristic concepts from new entrants.”