What slowdown? Chinese buyers are still crazy for SUVs

Is China's slowing auto sector bottoming out?
Is China's slowing auto sector bottoming out?

When it comes to buying cars, the Chinese are developing a taste for a true American passion: the SUV.

Sales of sports utility vehicles are surging in China, the lone bright spot for an industry that has suffered greatly as growth slows in the world's second-largest economy

SUV sales in September jumped 58% over the previous year, according to the China Association of Automobile Manufacturers. Sales of all other vehicle types declined.

"Consumers have just had their first car or their second car experience," said Daniel Kirchert, president of luxury brand Infiniti's joint venture in China. "They want to try out new concepts."

Infiniti recently launched a modified version of its QX50 SUV that is specifically targeted at Chinese consumers. The model boasts a lengthened wheel base, which provides more legroom in the rear seats. The extra space is a major selling point, Kirchert said, because Chinese customers like to be able to transport friends.

Booming SUV sales have also helped General Motors (GM) weather the broader slump in China, its largest market. Baojun, a GM joint venture that specializes in low-cost cars, launched its first SUV in July. Within two months, it was the third-ranked SUV in China.

Related: GM to test fleet of driverless Chevy Volts in 2016

Yale Zhang, managing director at AutoForesight in Shanghai, said that attractive prices are luring Chinese customers to the SUV. Chinese-brand SUVs are often priced similarly to their sedan counterparts, allowing status-conscious buyers to show off a large vehicle for half the cost of a foreign import.

Baojun's SUV, for example, sells for less than $15,000.

SUVs are also a lot of fun. Zhang said most Chinese drivers may not take their vehicles offroad very often, but they take pleasure in knowing that "if they want to, they can."

Demand for SUVs is likely to remain strong now that having a second child is an option for more families. Chinese authorities lifted the decades old "one-child policy" last month, seeking to encourage population growth and a bigger workforce.

The policy change could be boon to carmakers if it encourages parents to trade in that old sedan for a brand new SUV.

-- Andrew Stevens contributed to this report.

Related: Top China banker implicated in corruption probe

China's new growth target is ...

Personal Finance


CNNMoney Sponsors