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Chinese SUV sales have passed foreign brands on the mainland. Photo: SCMP Pictures

China's carmakers are winning home SUV market with low-price strategy

After years of losing out to foreign brands, China's carmakers are winning in the world's hottest SUV market by employing a tried and tested strategy: offering them cheap.

After years of losing out to foreign brands, China's carmakers are winning in the world's hottest SUV market by employing a tried and tested strategy: offering them cheap.

By flooding the market with comparable models at lower prices, Chinese carmakers accounted for eight of the 10 bestselling sport utility vehicles in the first quarter, crowding out global nameplates like Toyota's RAV4 and Honda's CR-V.

Chinese-branded SUV sales more than doubled in the first quarter to overtake foreign nameplates in the segment this year, accounting for 56 per cent of all deliveries, according to the China Association of Automobile Manufacturers.

"A significant number of Chinese consumers are looking for a more affordable alternative to premium-priced foreign SUVs," said Bill Russo, a Shanghai-based managing director at consultant Gao Feng Advisory.

"Foreign automakers now need to price more aggressively as the market matures and becomes more hyper-competitive."

Global carmakers are competing against names little known outside China: Anhui Jianghuai Automobile's Ruifeng S3, BAIC Motor's Huansu and Chongqing Changan Automobile's CS35 all rank in the top 10 by sales.

Great Wall Motor's H6, the most popular SUV in China, costs about half the price of Volkswagen's Tiguan.

The average price of the bestselling Chinese SUVs in the first quarter was 82,900 yuan (HK$105,073), versus 167,300 yuan for the foreign makes, according to dealership quotations compiled by Autohome, a car-pricing website.

The addition of new models is being accompanied by a surge in production.

The annual output of SUVs on the mainland is estimated to reach more than 7.04 million units in 2018, compared with 4.32 million last year, according to a projection from researcher IHS Automotive.

This article appeared in the South China Morning Post print edition as: China carmakers are winning home SUV market
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