Fear of road rage boosts SUV sales among Chinese motorists
Chinese drivers' survival instincts are kicking in, leading analysts to ask if there's a limit to the country's explosive growth of SUV sales.
Concern for personal safety amid rising road rage is among the reasons China's SUV registrations surged 48 percent in the first quarter of this year, according to a new research note from Sanford C. Bernstein. SUVs accounted for 27 percent of vehicles registered in the period, nearly twice the rate three years earlier, analysts led by Robin Zhu wrote.
Road violence is growing along with China's 10-fold surge in vehicle ownership over the past decade. China's security ministry issued a statement this month calling for drivers to act "civilized" and contain their anger, after a viral video showed a woman being dragged from her car and kicked in the face during an incident in the province of Sichuan.
"The angry ones are scaring the sane ones into buying SUVs for self defense," said Zhu, a Hong Kong-based senior analyst at Bernstein.
Lower gasoline prices and the poor condition of Chinese roads outside large cities also are likely reasons for the growing popularity of SUVs, according to the report.
Although industry executives expect the shift to SUVs will continue in the near term, government fuel-economy rules and higher fuel prices will keep sedans from going extinct, Bernstein said.
Also contributing to the shift is an expanding selection of cheap SUVs starting at less than 130,000 yuan ($21,000). Domestic automakers will have introduced 49 such models this year and last year, according to the report.
While foreign carmakers are likely to follow suit and introduce budget SUVs of their own, rising competition poses "a significant risk for potential returns," Zhu wrote.
Slower growth in China has dented earnings at Tata Motors Ltd.'s Jaguar Land Rover unit. The Indian automaker says profits fell 33 percent to $465 million in the first three months of the year.
Road violence is growing along with China's 10-fold surge in vehicle ownership over the past decade. China's security ministry issued a statement this month calling for drivers to act "civilized" and contain their anger, after a viral video showed a woman being dragged from her car and kicked in the face during an incident in the province of Sichuan.
"The angry ones are scaring the sane ones into buying SUVs for self defense," said Zhu, a Hong Kong-based senior analyst at Bernstein.
Lower gasoline prices and the poor condition of Chinese roads outside large cities also are likely reasons for the growing popularity of SUVs, according to the report.
Although industry executives expect the shift to SUVs will continue in the near term, government fuel-economy rules and higher fuel prices will keep sedans from going extinct, Bernstein said.
Also contributing to the shift is an expanding selection of cheap SUVs starting at less than 130,000 yuan ($21,000). Domestic automakers will have introduced 49 such models this year and last year, according to the report.
While foreign carmakers are likely to follow suit and introduce budget SUVs of their own, rising competition poses "a significant risk for potential returns," Zhu wrote.
Slower growth in China has dented earnings at Tata Motors Ltd.'s Jaguar Land Rover unit. The Indian automaker says profits fell 33 percent to $465 million in the first three months of the year.
