China April 2015: The cars of Mudanjiang, Heilongjiang province

April 29, 2015
Matt Gasnier

Suzuki Lingyang taxi in Mudanjiang

After Yanji in the Korean Autonomous Prefecture, we are now leaving the Jilin province, headed north to cross over to Mudanjiang in the Heilongjiang province, home to just under 1 million inhabitants. Mudanjiang does have an airport but it doesn’t have direct flights to either Yanji or Harbin so it’s bus all the way for me to join these 3 cities, and it’s a good opportunity to check out the car landscape in the hilly countryside between Yanji and Mudanjiang.

The Hyundai ix25 is already one of the best-selling models in Mudanjiang.

In actual fact, it’s a pretty bare landscape as there are not many private motorised vehicles in the area, let alone new ones. Of note are a handful of Chery QQ3 sedans, Suzuki Lingyang, Chery Cowin 2 and the ubiquitous Chana and Hafei minivans. Definitely a huge potential for growth here. Fun: tri-wheelers seem to be the taxi of choice in Dongjing halfway between Yanji and Mudanjiang.

The Russian influence is logically getting stronger and stronger as we get further north and away from Beijing: relaxed and modern Mudanjiang reminds me a lot of Moscow in the way the streets are laid out: massive 2 x 4 lanes with large parking spaces on each side, not much vegetation and near-skyscraper housing sprouting up. It could be depressing, but strangely, staying in Mudanjiang ended up being an exhilarating experience: I really felt like I was setting foot where almost no other Westerner had before: I haven’t spotted any since I left Shanghai. Smiles everywhere, an obsession with making sure my seat-belt was buckled up either in the bus or in taxis (unheard of in China), and people in the street watching my every move, stunned, amused and curious – not wary at all.

Haval H2

The first obvious sight when arriving in Mudanjiang is the taxis, like in many other Chinese cities still coming to grips with private car ownership. And cheap they are: you’d be hard pressed paying more than 10 yuan (US$ 1.60) for any ride around town, whether you’re on your own or you bring your entire family. As a Mudanjiang local, it would surely make you think twice before sinking your hard-earned cash in a new car, even a Chana micro pickup worth around 30,000 yuan (US$4.800). This is the context in which domestic carmakers evolve in China: competing with taxis that cost nothing. Taxis in Mudanjiang are a unique mix of Suzuki Lingyang (reminiscent of Hotan in Xinjiang Uyghur), FAW V5, Kia Rio and Hyundai Elantra in order of popularity.

ZX Auto Grand Tiger and FAW V5 taxi in Mudanjiang

So what do the friendly people of Mudanjiang drive? The Mudanjiang car landscape is also unique and once again distinctly different from the one in Yanji or even Changchun. If the Chinse car ratio is roughly the same (1/3) it is achieved mainly by older models and I would expect Chinese carmakers to hold a very small market share in 2015, not more than 15-20%. Even though Mudanjiang is roughly twice the size of Yanji, the parc is older and includes more microvans (10-15% of the traffic) and pickups (8%) with a large variety of brands including the ZX Auto Grand Tiger becoming a lot more popular, Huanghai, Gonow and old Great Wall Steeds. This seems to indicate the Mudanjiang market is a little less developed/wealthy than Yanji.

Great Wall Steed and VW Jetta

Another observation confirming this status although it is counter-intuitive is the much higher proportion of larger, foreign SUVs: Lexus LX, Toyota Prado, Highlander, Honda CR-V, Hyundai Santa Fe and the first Lincoln MKX and Navigator of this trip. On the contrary, domestic SUVs apart from the FAW Besturn X80 and a few ChangAn CS35 are almost absent whereas their foreign counterparts like the Hyundai ix25, Honda Vezel/XR-V (all 3 already frequent!), Kia KX3 (the first in this trip) and Buick Encore are being snapped up en masse.

Huanghai and Great Wall pickups

Why is this an indication that Mudanjiang has a less mature car market? Simply because only wealthier drivers will purchase larger and/or more expensive SUVs and the less-to-do drivers haven’t bought into the Chinese SUV craze just yet, remaining in a ‘sedan’ mentality for now. It’s only a question of taste because small Chinese SUVs and affordable foreign small and compact sedans are priced similarly as we’ll see just below.

Hyundai Verna and Honda Crider

In this context, the new cars that stand out in the Mudanjiang landscape, apart from the Hyundai ix25 that could seriously pretend to an overall Top 10 ranking, are the previous generations of nameplates still on sale in China, namely the Toyota Corolla EX and Hyundai Elantra Yuedong, and foreign affordable models like the Hyundai Verna, Toyota Vios and Nissan Tiida. To give you some perspective the Hyundai ix25 starts at 119.000 yuan and the Buick Encore at 149.900, while the Toyota Vios starts at 69.800 yuan, the Hyundai Verna at 73.900 and the Corolla EX at 90.800.

Toyota Corolla EX

At these prices, buyers would be able to afford a JAC Refine S3 (65.800 yuan), Zotye T600 (79.800) or Haima S5 (89.800), yet they don’t. The only domestic SUV to be successful to-date in Mudanjiang is the FAW Besturn X80 which starts at 119.800 yuan, the same price as a Hyundai ix25. That’s a different category of buyers altogether. So to summarise: wealthy buyers buy SUVs, poorer buyers buy sedans. In this the Mudanjiang market is late compared to where China is nationally (the while market is upsizing to SUV), and is closer in purchase patterns to Russia – which makes sense given Russia is less than 100km away.

Mudanjiang street scene

Volkswagen is at its weakest in any Chinese city I have vistited so far, and the only explanation I could find for this observation are a less dense dealership network and prices out of reach for most buyers. Saying that Mudanjiang car buyers completely disregard Volkswagen to opt for fellow Asian carmakers wouldn’t make much sense as it would make this city the only one so far in China to develop this taste.

Kia KX3 and Buick Encore

Let’s end on a last surprise: the national best-seller, the Wuling Hongguang, is proving very discreet in Mudanjiang: I only saw a handful of them, and the first Beijing Auto Weiwang M20 of this trip – one of its clones. Once again I will advance the explanation that Mudanjiang may be a few years late adopting national trends: small shop owners haven’t yet upsized from their microvan to the Hongguang and its equivalents.

Mudanjiang street scene