China March 2016: Focus on the All-new models

Hyundai Elantra Lingdong

After a break in February due to the Lunar New Year, the Chinese market is back on its unstoppable race to launch ever more models produced locally. In March, a record 12 new China-made nameplates have hit dealerships across the country, almost all of them with big potential. This month we welcome French carmaker Renault in the growing list of worldwide manufacturers now producing in China.

Hyundai now has four generations of Elantra in simultaneous production in China.

1. Hyundai Elantra Lingdong (#58 – 11.103 sales)

A first month above 10.000 units is a rarity in China: the last nameplate to have managed this feat is the Baojun 730 at 12.006 in August 2014, to then be met with the ground-breaking success we have witnessed in the past 18 months. But the new generation Hyundai Elantra – in essence the worldwide model we all know – is the last one in a line of extremely successful models in China. So successful in fact, that Hyundai has kept in production to this day every single generation of Elantra it has launched here in the past 12 years. The 2000 model, launched in December 2003 here, climbed up to 2nd place overall in 2005 just below the FAW Xiali and is kept on life support solely for Beijing taxi companies. The 2006 model, baptised Elantra Yuedong, launched in March 2008 with 11.023 sales, hit 26.034 units in March 2010 and went on to peak at #3 overall in 2009 and 2010.

Finally, the Elantra Langdong launched in August 2013 with 11.613 units, peaking at 35.654 in December 2015 and #10 over FY2015. Only 30 months after the previous generation launch, a fourth Elantra is now available in China – baptised Elantra Lingdong – and at 11.103 units its volume start is in line with the previous two generations. The first two generations only generate a few hundred sales a month so they won’t be any competition of the new model. To be deemed a success, it will have to at least reach 25.000 monthly units. A stint above 40.000 monthly sales would make it the most successful Hyundai in the 15 year-presence of the Korean manufacturer in China.

Bar for success: 25.000 monthly sales

2. Kia KX5 (#106 – 6.001 sales)

Despite shy sales so far in 2016, Kia has been very successful at aggressively expanding its SUV lineup to suit the changing tastes of the Chinese consumer. The carmaker launched the China-exclusive KX3 one year ago in March 2015, accumulating over 65.000 sales since. Similarly to sister brand Hyundai with the Elantra, Kia is keeping the previous two generations of Sportage in its lineup and has therefore chosen to name the new model KX5 to give room to the previous two. The 2010 Sportage (baptised Sportage R) peaked at 11.326 sales last December and the 2004 model hit a personal best of 6.810 units in June 2010, so in this context the KX5 start is excellent. Interestingly, Kia does not price-cut the 2004 Sportage (159.800-238.800 yuan) vs. the Sportage R (164.800-249.800) aiming the former at 3rd and 4th tier cities and the countryside. Hitting 10.000 monthly sales regularly would establish the KX5 as a step-up from the previous two generations, but depending on how well the two Sportage hold on, it may not need to hit that high a figure to be deemed a success.

Bar for success: 8.500 monthly sales

3. Chery Arrizo 5 (#119 – 5.456 sales)

Unveiled at the Guangzhou Auto Show last November, the Arrizo 5 is the fourth nameplate to bear the more upmarket sub-brand label from Chery. The previous three have been painful flops but that hasn’t deterred Chery to insist with the Arrizo sub-brand. To the carmaker’s credit, the 5 marks a notable improvement in design and interior quality and clearly has the best chances of success so far. The Chinese customer agrees: with 5.456 sales for its first month the 5 signs the best monthly volume of any Arrizo model: the 7 peaked at 4.251 units in January 2014, the 3 at 3.944 in January 2015 and the M7 at 1.434 in April 2015. The Arrizo 5 is also the third best-selling Chery in China this month below the Fulwin 2 (6.549) and Tiggo 3 (5.932). If this launch level is maintained in the long term, Chery could start having a good case in its hand to transform its Arrizo sub-brand into a full blown brand in the way Great Wall did with Haval and also in the way they are thinking of doing with the Tiggo sub-brand to compensate for the sinking brand image Chery is handicapped with at home. Based on the previous Arrizo launches, the 5 is already a success, and will cement this status if it can maintain this level in the long run.

Bar for success: 6.000 monthly sales

4. Renault Kadjar (#166 – 2.753 sales)

With Subaru, Renault was the last OEM to not have a factory in China. Thanks to a long-time coming partnership with Dongfeng – the same company that also has joint-ventures with the two other French manufacturers Peugeot and Citroen – Renault finally enters the China-made scene this month, and with a splash at that. Choosing to discard its immensely successful entry range (Duster-Logan-Sandero-Kwid), Renault has opted for a French sophistication positioning in China. Following the success of the imported Koleos SUV (15.000 sales in 2015), the French carmaker is building a strong SUV lineup: after the imported Captur launched last July, the Kadjar is the first China-made Renault, produced in a shining new plant in Wuhan with an initial annual capacity of 150.000 units that can be doubled if there is enough local demand.

The new generation Koleos will follow in H2 after making its first appearance at the Beijing Auto Show next week. The Kadjar immediately raises the bar for Renault: it sells 2.753 units for its introductory month, to be compared with 1.500 at best for the Koleos. 7.500 monthly sales will establish Renault as a solid player in the SUV game, with stretch targets being the Nissan Qashqai (averaging 9.000 sales over the past 4 months) and the Hyundai Tucson (15.000 deliveries in March). These targets may seem a tad ambitious given the other China-made compact French SUV, the Peugeot 3008, has a monthly best of 7.352 units and PSA Peugeot-Citroen has been a local producer of close to 30 years. However Carlos Ghosn announced in 2014 that Renault could aim at 800,000 annual sales in China. The success or lack thereof of the Kadjar is therefore capital for Renault to hit its ambitious long-term sales plans, as it will be for the foreseeable future the main volume-maker for the brand.

Bar for success: 7.500 monthly sales

5. Qoros 5 SUV (#218 – 1.232 sales)

Aimed at tricking a wealthy Chinese clientele into believing this is a European brand, Qoros was born out of a joint-venture between Chery and an Israeli investment company. So far, a lot of money has been spent with not much success: Qoros posted a 2.2 billion yuan loss in 2014 (US$ 340 million), a figure that worsened to 2.5 billion yuan in 2015 ($385m). An introduction to Europe was aborted in 2014 faced with one-digit monthly sales figures in Slovakia, the brand’s test market. To Qoros’ credit, the carmaker understands its survival relies fully on the SUV segment. After a faked attempt at approaching the category with the Qoros 3 “SUV” a mere plastic-ed up variant of the Qoros 3 hatchback, the brand means business with the outlandishly-designed 5 SUV. So far so good: its introductory month sales figure is high. The 3’s best stands at 914 and the 3 SUV at 1.335, so at 1.232 the 5 SUV delivers the 2nd best-ever month for a Qoros nameplate. After delivering 14.000 sales in 2015 Qoros is aiming at “30.000 to 50.000” in 2016. The road to profitability is a long and tortuous one though, so the 5 SUV will need to not only confirm this launch figure but improve on it drastically to maintain the brand’s chances of survival intact.

Bar for success: 3.500 monthly sales

6. BMW 2 Series Active Tourer (#225 – 1.107 sales)

After the 3 Series L, 5 Series L and X1 crossover, the 2 Series Active Tourer is only the fourth BMW nameplate to be produced locally. As an import, the 2 Series nameplate sold 13.469 units in China in 2015, making it one of the 20 most popular imports in the country and BMW’s third best-selling import below the X5 (39.000) and X3 (30.000). Assuming that a large majority of these sales come from the Active Tourer variant, it is interesting to note that the Mercedes B-Class, also imported, sold roughly the same amount last year. As import data has only been made available recently, there are no robust data trends indicating an average sales lift when a model that was previously imported kick starts local production, but it’s safe to table on a 3-fold increase in sales, which would put the locally-produced Active Tourer around 3.500 monthly deliveries. Any more and this is a success. The 2 Series Active Tourer enters the China-made market with no real competitors as this is a new format for Chinese buyers, making forecasting sales a difficult task. Note the Chinese Automobile Association of Manufacturers incorrectly categorises it as a sedan: it should be an MPV.

Bar for success: 4.000 monthly sales

7. Geely Boyue (#227 – 1.018 sales)

Finally. Since its takeover of Volvo, Chinese carmaker Geely has managed to streamline its brand stable to just its own and improve drastically its sedan lineup to go against the grain of the Chinese market and increase its sales. The EC7, Vision and King Kong all deliver sizeable volumes each month in a depressed segment and the GC9 has astonished with its interior quality and sleek design. All of this was achieved without a serious offer in the booming SUV segment, the GX7 featuring outdated design and mechanics. Geely’s much anticipated SUV offer based on the GC9 platform, the Boyue, has now hit dealerships and expectations are sky high. Playing in the larger end of the SUV segment and competing with Haval and Toyota to name but the best, the Boyue has by far the highest potential of any new March launches.

In the past 18 months, an astounding number of Chinese carmakers have completely reversed their fortunes on the sole basis of their new SUV lineup. MG, Brilliance, GAC Trumpchi are some examples. The pent-up demand for a modern Geely SUV should be very high and its price range places it right in the middle of the hottest-selling SUV segment in China. At 4.52m long it ranges from 98.800 to 157.800 yuan (US$ 15.200 – 24.300), in direct competition with the 4.62m Haval H6 (88.800 – 141.800 yuan), 4.51m GAC Trumpchi GS4 (99.800 – 146.800 yuan) and 4.65m Changan CS 75 (108.800 – 143.800 yuan). These nameplates are some of the most successful of the past few months, with respective record monthly volumes of 46.075, 30.512 and 27.842 units. We should therefore expect at least 20.000 monthly units from the Boyue, with 30.000 in a good month a reasonable stretch target.

Bar for success: 20.000 monthly sales

BYD Yuan at the Shanghai Auto Show 2015 

8. BYD Yuan (#243 – 878 sales)

After the Tang (June 2015) and the Song (August 2015), BYD continues to expand its dynasty series with its smallest SUV yet: the Yuan, unveiled at last year’s Shanghai Auto Show. The SUV share in total BYD sales keep increasing, reaching 45% in March. If all goes well the Yuan should improve this further. It is however a test for BYD who has never sold such a small SUV. It is priced competitively at 59.900 – 121.900 yuan (US$ 9.200 – 18.800) for the petrol version, with the hybrid variant a lot more expensive at 209.800 – 249.000 yuan ($32.400 – 38.400). So far the Tang’s best month has been 5.503 sales and the Song 6.513 units, regularly ranking at #2 and #3 BYD SUV below the S7. The Yuan should at least aim at the same level to be deemed a success, but a peak around 10.000 monthly deliveries would be a welcome breath of fresh air for the brand, losing 11% year-on-year in March.

Bar for success: 5.000 monthly sales

9. Changhe Q25 (#251 – 791 sales)

Another model unveiled at the Guangzhou Auto Show last November, the Changhe Q25 is in fact the twin sister of the Beijing Auto Senova X25. Changhe is indeed a subsidiary of BAIC. Not famous for pleasant designs and a microvan specialist, Changhe is engaged in a joint-venture with Suzuki and has been relatively discreet in recent years. Its Freedom M50 MPV, launched in January 2015, is slowly creeping up the ladder and sold a record 4.761 units last December. Changhe productions also include the Suzuki Beidouxing and Liana. Somewhat surprisingly, this Q25 is actually nicer on the eye than the Senova X25 but the brand’s limited reach, appeal and experience in passenger cars will probably prevent it from reaching 10.000 units as the X25 did this month. A step in the right direction for this small manufacturer though.

Bar for success: 3.500 monthly sales

10. Weichai Enranger 727 (#272 – 583 sales)

It’s all guns blazing for newcomer Weichai Enranger: after the G3 crossover last July and the 737 MPV last September, the 727 is the brand’s third launch in nine months. The first spy pictures of its models appeared in 2014, so Weichai took some time to bring them to market but now that it has, nothing seems to be able to stop the new carmaker. If the G3 plateaued at 1.506 sales for its second month in market, the 737 has managed to make its mark in the MPV segment, hitting 5.179 deliveries last December but down to 1.937 in March. This is a good sign for the 727 which will logically be priced even more attractively, although not much information has seeped out about this new entry yet.

Bar for success: 2.500 monthly sales

11. Beijing Auto Weiwang S50 (#325 – 188 sales)

Not learning any lessons from Geely’s aborted experience, Beijing Auto is currently juggling with a handful of different brands and replicating models across them at lightning speed. Even more strikingly than the BAIC Senova X25 and Changhe Q25 (see above), this new Weiwang S50 is an almost identical re-badge of the Senova X65, Huansu S6 and Borgward BX7. We should now consider the Weiwang and Huansu sub-brands as full-blown brands as their respective lineups (four nameplates each) is starting to hold ground and they both feature specific logos. Senova for its part features the BAIC logo. And Borgward is a different carmaker altogether using a German brand but financed by BAIC. Confusing much?

The S50 is positioned below the X25 and S6 in price, starting at 95.000 yuan (US$ 14.700) vs. 106.800. Weiwang’s strength so far has been in the microvan and MPV segment with 23.344 units hit last December by the M30 MPV. Its other SUV entry, the 007, is a total flop. Among BAIC brands, Huansu and Senova have been widely more successful, so it will be very hard for the S50 to single-handedly expand the Weiwang brand into the hotly-contested SUV segment. But anything is possible in China.

Bar for success: 3.000 monthly sales

12. DS 4S (#349 – 72 sales)

While the entire Chinese market has its sights firmly set on SUVs, French upscale brand DS continues to launch highly unadapted nameplates such as this 4S hatchback. According to the French press, the DS brand is a flamboyant success in China where it was born as a standalone brand rather than a premium lineup inside the Citroen range. The China hype was so loud that DS is now also a standalone brand in Europe. Yet looking at Chinese sales figures, it’s hard to see any sign of “flamboyant” success: 1.355 sales in March and less than 5.000 over the first quarter. Pure importer Lexus sells five times that.

The brand’s best-seller is, logically, its sole SUV: the DS 6, exclusive to China. After peaking at a reasonable 3.325 sales for its third month in market back in December 2014, it has repeatedly fallen well below 2.000 units ever since and is now down to a paltry 887 deliveries for March. The 5 and 5LS hardly register at all, with 123 and 273 units respectively this month. It’s time for another SUV or three. Well no, you can have a hatchback. To justify the brand’s existence in China, the 4S will have to reach at least 3.500 monthly sales, and stay there in the long term. An almost impossible task, as its inaugural month, at 72 units, is in line with the current performance of the other nameplates in the lineup.

Bar for success: 3.500 monthly sales

Previous month: China February 2016: Focus on the All-new models