In the midst of the intensifying competition in China's automotive market, the MPV (Multi-Purpose Vehicle) segment has demonstrated greater potential for growth.
Can the Chinese public embrace the concept of MPVs as family cars?
The practice of paying hundreds of thousands of yuan more for a luxury MPV is becoming a thing of the past.
The high-end MPV market, once dominated by imported and joint venture brands, is undergoing new changes.
From a total volume perspective, 2023 is seen as a turning point for MPV models, with sales breaking new records, especially for new energy vehicles.
Data shows that although the growth rate has slowed, the trend remains unchanged.
Passenger Car Association data indicates that in August, China's MPV sales were 92,000 units, a year-on-year decrease of 3.9%, and a month-on-month increase of 9.9%; cumulative sales from January to August were 656,000 units, a year-on-year decrease of 7.9%.
Among them, the sales performance of domestic brands was quite prominent.
In the top ten MPV sales list of the Passenger Car Association data for August, domestic brands occupied six seats, with a combined sales volume of 32,843 units.
A number of domestic car manufacturers are accelerating the research and development and production of new MPV models, especially high-end products.
In the past, the technology iteration of traditional foreign and joint venture high-end MPV models was slow, and the situation of price increases was no longer the case.
Orient Securities research report pointed out that the reason for car companies to layout the MPV market is, on the one hand, the expansion of domestic demand is expected to become a new leading demand; on the other hand, the past mid-to-high-end MPV market was mainly occupied by foreign capital, now whether it is Toyota Alpha or Buick GL8 and other classic models, they have all faced challenges from a number of domestic brands, and a new industry pattern is taking shape.
Electrification technology has made MPV models more controllable, no longer a boring driving tool; intelligence has made the car cabin more different, no longer just competing for seat comfort, but with more possibilities for business and entertainment; buyers in the high-end MPV market pay more attention to service and experience, which gives car dealers the opportunity to transform into travel and even more scene service providers.
These three points are exactly where the advantages of domestic car manufacturers lie.
The recovering sub-market, intelligent and electric is the catch-up handle.
Looking back on the development of the MPV market, since 2016, the market sales of MPVs have once declined, and the sales have been low, until 2023, the market sales of MPVs have rebounded from the bottom, exceeding 1.09 million units, a year-on-year increase of 15.9%.
In the past market pattern, the products on the list are mainly dominated by SAIC Maxus, Buick GL8, Toyota Alpha.
Among them, Buick GL8 occupies the mid-end market, and Toyota Alpha is positioned in the high-end market.
At that time, the MPV consumer market was "tacitly divided" by various princes, in the intermediate and above consumer market, the proportion of joint venture brands was very high, and the high-end line was dominated by imported and foreign brands.
Domestic brands mainly seized the entry-level market with the advantages of cost-effectiveness and delivery speed.
At that time, the first in sales of mid-to-high-end MPV models was Buick GL8.
In 2021, the GL8 sales volume was 170,011 units, in 2022 it was 126,838 units, and in 2023 it was 131,258 units.
Toyota Alpha's sales volume was 23,963 units in 2021, about 15,000 units in 2022, and 20,000 units in 2023.
Don't look at the sales volume of joint ventures and foreign brands, but the profit is quite high.
For example, Toyota Alpha, after its debut at the Beijing Auto Show in 2010, has been selling well in China for more than ten years.
The model often appears as a star nanny car, making it a "social currency" in the Chinese mainland market.
According to the "industry rules", buying a new Alpha often needs to buy other products at a higher price, and the price increase range has risen from 30,000 to 500,000 yuan.
In the view of consumers, traditional MPV models are often slow to update iterations, and they call it the manufacturer's stinginess in "squeezing toothpaste" to release new technology.
For this reason, a Japanese luxury brand product person once explained to us that the high-end MPV consumer group is relatively conservative, and they prefer the reliability of the product rather than showing off skills.
At the same time, he also did not hesitate to say that due to the difficulty of finding a car in the Chinese market, the motivation to accelerate updates is slightly insufficient.
In the past decade, there has been a V260 model with a Mercedes-Benz logo, which has achieved domestic production with the help of Fujian Mercedes-Benz's factory.
However, due to its modification from a truck chassis, the technical ceiling is not high enough in terms of controllability, comfort, and quietness.
Other domestic models that are self-defined as luxury MPVs are often not higher than 300,000 yuan, and they try to seize the market by cost-effectiveness, but the effect is not obvious.
The early SAIC Maxus MPV models rely on government vehicles and freight scenarios, and the sales are still acceptable, with sales of 55,896 units in 2021, 47,209 units in 2022, and 30,523 units in 2023.
As for SAIC General Motors Wuling MPV models, they are mainly freight models with price concessions, which are not included in this discussion.
However, in 2023, the traditional market pattern was broken, and Chinese domestic brands shook the status of foreign and joint venture brands.
Tengshi D9 surpassed Buick GL8 to win the annual sales champion of the MPV market, and Trumpchi M8 also squeezed into the top ten annual sales list.
In the high-end MPV market, from January to August 2024, Tengshi's cumulative sales reached 79,894 units, of which D9's sales reached 71,342 units.
Tengshi D9 ranked first in the national MPV retail sales in August.
The mid-to-high-end MPV market, which was once firmly controlled by joint venture brands and imported brands, is entering a new stage of development, and now it is possible to see more Chinese domestic brands in the mid-to-high-end MPV market.
On the other hand, as the competition in China's car market becomes more and more fierce, the update iteration of mid-to-high-end MPV products has also shown a trend of change, one of which is the deepening penetration of new energy.
In 2016, the market penetration rate of China's new energy MPV was only 0.8%, and it showed a significant upward trend in the following years, rising to 4.1%, 9.8%, and 25.21% in 2021-2023.
After the Internet e-commerce had a huge impact on the traditional wholesale and retail circulation model and the professional logistics distribution model, the MPV market below A-class shrank rapidly, and the trend of high-end and electrification of the MPV market became obvious.
The enthusiasm for traditional low-priced MPVs is no longer there, and the competition of MPVs has begun to move towards intelligence and electrification, with prices rising to more than 300,000 yuan, moving towards luxury.
The MPV consumer market has some significant characteristics, such as a preference for plug-in hybrid technology.
In 2023, the sales volume of domestic plug-in hybrid MPV models reached 164,000 units, a year-on-year increase of 430%.
The sales volume of pure electric MPV models was only 81,000 units, far lower than plug-in hybrid models, and the growth rate was also not as high as plug-in hybrid models.
Taking Tengshi and Lan Tu as examples, in the first 11 months of 2023, the sales volume of Tengshi D9 pure electric version accounted for only 6% of the total sales volume, and the sales volume of Lan Tu Dream Home pure electric version accounted for only 19% of the total sales volume.
Joint venture MPV models are also undergoing transformation and upgrading, for example, Toyota has equipped the 2024 model of Sai with a 2.5L intelligent hybrid dual-engine power system, which has a clear advantage in fuel consumption compared to traditional MPVs, ranking second in the domestic MPV sales list in August.
For consumers, the cost of plug-in hybrid MPVs is lower, the endurance is stronger, and the anxiety about charging and supplementing energy in public places has not been completely resolved.
This consumption habit is very close to the situation at the beginning of the development of new energy cars, and with the help of technology updates and the improvement of the charging and supplementing energy system, the future space of pure electric MPVs is not small.
While improving endurance, the comfort of MPVs has gradually become a development focus.
MPVs are gradually changing from commercial and dual-use in the past to home use as the main purpose.
Data from iResearch shows that 71% of consumers choose MPVs because they are more suitable for family travel.
New needs and scenarios, combined with new technologies, have given traditional MPVs the opportunity to upgrade.
At present, the competitiveness of Chinese domestic brands in the MPV market is gradually increasing.
How to seize the trend, continue to maintain their position and expand the market?
What have the domestic brands done?
In the past, controllability was the most obvious short board of MPVs, as if driving an MPV was unrelated to the driving experience.
This problem, in the new energy market, has had the opportunity to break through.
On August 28, the new Lan Tu Dream Home, jointly launched by Lan Tu and Huawei, opened for pre-sale.
Lan Tu CEO Lu Fang told us that the new Lan Tu Dream Home has not only been fully upgraded in performance and configuration but also made breakthroughs in the pain point of "difficult driving".
Lan Tu is a new energy intelligent car brand incubated by Dongfeng Motor Group in 2018.
In Lu Fang's view, traditional MPV models are difficult to match cars and SUVs in terms of system coordination and intelligent configuration, which is also one of the reasons why MPV sales have been lower than other models for a long time.
Chinese people are more willing to ride in MPVs than to drive MPVs, which is also one of the reasons why the MPV market is relatively small.
In the dealer link, this is very obvious.
Compared with other models, the people who try the car are the ones who drive the car, and naturally they are also the ones who pay.
When it comes to luxury MPV models, potential customers spend most of their time in the cabin, looking at whether the chair is comfortable, whether the function is rich and easy to use, and the test drive is second.
This can be supported by data, the "2024 China Car Intelligent Experience Research" released by J.D.Power points out that the acceptance of intelligent cabin-related technology configurations is higher in the hearts of Chinese users, and it is more valued when buying a car.
For this reason, the MPVs built by domestic car companies will put more effort into intelligence, both self-developed and cross-border cooperation with intelligent technology companies, such as the new Lan Tu Dream Home under Dongfeng, which is the first to carry Huawei's Qian Kun smart driving and Hongmeng cabin, thus making up for the shortcomings of traditional brands in the aspect of intelligence.
It is worth mentioning that domestic high-end MPVs have begun to enter the Guangdong-Hong Kong-Macao Greater Bay Area, which is the basic plate of sales for traditional Japanese luxury high-end business cars.
"Alpha is used very well in Hong Kong, and 009 should be better."
Geely Holding Group President and CEO of Zeekr Intelligent Technology An Conghui told us that the current price of Toyota Alpha in Hong Kong is about 760,000 Hong Kong dollars, and the price set by Zeekr is very competitive.The MPV market, once considered a niche, has given some companies the opportunity to turn things around and prove themselves.
For example, BYD and Daimler's joint venture, Denza, launched the Denza D9 in 2022.
Data shows that in 2023, Denza's sales reached 127,800 units, with the D9 model accounting for more than 93% of total sales.
In mid-August 2024, the D9 DM-i sold 8,722 units, while the D9 EV sold 459 units, with the overall sales amounting to 9,181 units.
Additionally, as of August 2024, the cumulative sales of the Denza D9 reached 79,894 units.
The cumulative sales of the Denza D9 since its launch have exceeded 200,000 units.
The clientele for high-end MPVs have strong and differentiated demands for travel and consumption.
To attract customers, Zeekr has made a cross-industry collaboration, offering a private jet travel service worth 198,000 yuan for orders of five or more Zeekr 009 models.
How effective is the recommendation to buy a car and get a private jet travel service?
A regional dealer manager told us that in their area, no one has claimed it yet.
The reason is that this type of consumer rarely directly recommends car products to each other on a point-to-point basis; rather, they become interested in seeing the car themselves after seeing friends or peers purchase it.
In fact, such cross-industry practices are quite common in the high-end consumer goods sector.
Just as we discussed with Ni Kailing, the CEO of Europe's largest car dealer, BaoAiJie (China), the core of luxury car dealers is not selling cars, but providing considerate services based on customer insights.
Therefore, focusing on their familiar luxury clientele and exploring various consumer needs, listening, understanding, and meeting them, might be a more sustainable transformation and development direction.
In the business MPV market, focusing on digital car machines, mobile phones, and more localized cross-border services, might be the advantage for Chinese car companies to differentiate themselves.
Whether it's intelligent driving or smart cockpit experience, domestic brands have grasped the consumer demand for intelligent electric MPVs, catching up and seizing the initiative.
Now, the competition in this market is becoming increasingly fierce.
On September 11, Yu Chengdong, Chairman of Huawei's Terminal BG (Business Group) and Smart Car Solution BU (Business Unit), confirmed the upcoming release of an MPV, but the specific information is currently confidential.
Of course, the competition in the automotive industry is never a sprint; short-term results are important, as they are the feedback from the market.
At the same time, long-term persistence should not be overlooked, such as patiently developing products.
"Many characteristics of foreign car companies are worth our continuous learning, such as how to make high-end luxury 'subtle and pervasive'," an expert from a car factory gave us an example.
A certain foreign luxury MPV model is not particularly prominent in new energy and intelligence, but it has a following of consumers who like it—because it's comfortable to sit in.
To understand this, they bought the product for disassembly and research, and found that the secret lies in the inclination angle of the vehicle's armrest, which is exactly in line with the ergonomics of East Asians.
"Such detail design is not eye-catching, not noticeable, but it can make consumers pay, which is exactly what we are learning at this stage."
Leave a Comment