Market Trends of China Luxury Car Industry
Sports Utility Vehicles Hold a Major Share
Due to its diverse landscape, China is a popular travel destination for SUV enthusiasts and brands. An SUV gives drivers the power and versatility required, whether cruising through city streets or tackling rough terrain. Popular SUVs on the market are good examples of this, as they are appropriate for the difficult roads in China.
Recently, the dominance of SUVs became a defining trend in the luxury vehicle market. Consumers increasingly favor the elevated driving position, spacious interiors, and versatility offered by luxury SUVs. This shift has led many luxury automakers to expand their SUV lineups, adapting to the evolving preferences of consumers seeking both luxury and utility.
Additionally, engine specifications are important because they determine the performance and fuel efficiency of SUVs, making them some of the best options on the market. The best SUVs in the country are outfitted with strong engines that provide ample power and torque for both off-road and city driving to meet consumer demand in China. Whether it is an internal combustion engine or hybrid or electric version, these SUVs provide various engine options to suit different tastes, demonstrating their marketability.
Considering the growth of luxury SUVs, companies are seeing growth opportunities in the segment and are focusing on various technological advancements to develop new products. For instance,
- In January 2024, Lexus, a Toyota luxury sub-brand, officially launched the next-generation GX luxury hardcore off-road SUV in China, which is available in three 550h variants, with prices ranging from CNY 778,000 to CNY 888,000.
These cars provide a more secure and assured driving position, making one feel more confident while driving. SUVs are also well-known for their off-road ability and fuel efficiency, which makes them a sensible option for drivers in China who frequently deal with difficult road conditions.
These factors, coupled with high disposable income, rising brand awareness, and high-power purchase parity, contribute to the segment’s growth.
The Electric Vehicles Segment is Expected to Reach the Next Growth Level
Initiatives taken by the Chinese government to boost electric mobility and increase the sales of luxury cars in the country also helped sales growth and attracted new investments. In terms of policy and taxation reforms, the country is considering a tax cut to revive its weakened automotive market. The tax cut may aid China in supporting its automotive industry. For instance,
China has extended its tax exemption policy for new energy vehicles (NEVs) until 2027, focusing on promoting the EV industry.
Moreover, with growing sales and production of electric cars, the Chinese automotive industry has been witnessing exponential growth Y-o-Y, with the world's largest electric mobility market. For instance,
According to the World Economic Forum, Chinese automakers account for more than half of the electric vehicles (EVs) produced in the world.
The government allows international automakers to set up more than two joint ventures in the country. Most international players already have more than two joint ventures with their Chinese partners. Additionally, they can set up wholly owned companies in the country. These conditions create opportunities for other luxury brands to tap into the market.
Considering the future of electric vehicles, the major luxury OEM companies, which include BMW, BYD, and Lexus, are investing majorly in new technology, establishing supply chains, and increasing production capacity for EV production and various components of EVs, such as battery packs and motors.
In April 2023, at the Auto Shanghai 2023, Lexus presented a range of electric vehicle models, including the RZ 450e, RZ Sport Concept, and RZ Outdoor Concept, with different lifestyle solutions.
Of the top 10 best-selling EVs, half of the brands are Chinese, led by BYD, which trails only Tesla in global market share and is beginning to ship its electric vehicles abroad. The Chinese battery manufacturers, namely CATL and BYD, are the industry's biggest players, and Beijing controls access to critical raw materials.
Thus, such factors are contributing to the growth of the electric vehicles segment.
