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Why electric crossovers, SUVs will dominate China's roads
Yang Jian | 2017/4/21

SHANGHAI -- Never before have automakers launched so many crossovers and SUVs at the Shanghai auto show. 

Those vehicles account for more than half of the new models exhibited at the show this week. And in deference to China's increasingly tough fuel economy standards, many of those crossovers and SUVs are electric.

The automakers' message: The crossover-SUV segment is sizzling, and these products target both consumers' desires and China's standards.

More often than not, a visitor wandering through the show's booths finds himself surrounded by crossovers and SUVs. Nearly all of the new models introduced by Chinese brands here are in that segment. 

This comes as no surprise. After struggling to compete with foreign rivals in China's huge sedan market, the domestics started trimming their sedan lineups about three years ago and focused on crossovers and SUVs.

Geely and Great Wall -- China's largest producer of SUVs -- have been especially adept at this. But what is surprising is the vigor that global automakers have shown in expanding their lineups of the vehicles.

Take General Motors. Over the last few years, the Detroit automaker's joint venture with SAIC Motors has introduced a number of crossovers and SUVs for Buick, Chevrolet and Cadillac.

But GM hasn't stopped there. Now it is working to transform SAIC-GM-Wuling Automobile Co. -- a joint venture that once specialized in no-frills microvans -- into a manufacturer of crossovers and SUVs.

Over the past two years, SAIC-GM-Wuling has launched two crossovers for its entry-level Baojun brand. And in Shanghai this week, it unveiled a seven-seat SUV for the Wuling brand.

Rural consumers, attracted by affordable prices and GM technology, have flocked to Baojun showrooms.

With a strong assist from Baojun, GM's China sales in March jumped 16 percent year on year to top 345,000 vehicles. That enabled it to outsell Volkswagen Group to be China's largest automaker for the month.

Many other global automakers also have displayed new crossovers and SUVs here. Ford Motor Co. introduced the new Kuga, Renault SA unveiled the Kadjar and Citroen showcased the C5 Aircross and the DS 7 Crossback, just to name a few.

But China's increasingly tough fuel economy standards threaten to spoil the party. Because crossovers and SUVs weigh more than comparable sedans, they typically require bigger engines.

The automakers' solution is to launch electrified versions of their hot-selling crossovers and SUVs. And those models were on display this week in Shanghai.

Changan Automobile Co., China's largest domestic carmaker, exhibited a battery-electric compact crossover called the CS15. Volkswagen's new I.D. brand revealed the Crozz, a crossover EV concept. And Jeep previewed the Yutu, a plug-in hybrid seven-seat concept SUV. 

These three models are to hit the market from 2018 to 2020.

China crossover-SUV segment remains red-hot. In the first three months, sales of the vehicles surged 24 percent to more than 832,000. By contrast, China's overall light-vehicle sales edged up only 1.7 percent.

So we can expect two powerful trends to reshape China's auto market: consumers' love affair with crossovers and SUVs, and the country's tough fuel economy rules.

By 2020, Beijing will require automakers to reduce their average fleet fuel consumption to 5.0 liters per 100 kilometers. That's a sharp drop from last year's fleet average of 6.9 liters per 100 kilometers.

In U.S. terms, that's equivalent to a fleet fuel economy goal of 47 mpg in 2020, up from 34 mpg today.

The only way automakers can meet this goal is by introducing battery-electric vehicles and plug-in hybrids. And if they want consumers to buy these fuel-efficient models, the vehicles had better be crossovers and SUVs.

Pictured: Yang Jian is managing editor of Automotive News China.

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