Auto sales in China are expected to increase around 8% a year, to 22 million vehicles in 2020, due to increasing demand for SUVs.
McKinsey & Co consider the SUV segment the fastest growing among all segments and expect sales for these vehicles to triple by 2020. One of the main reasons for this increase is the fact that incomes are rising in smaller cities and the new wealthy customers tend to choose bigger vehicles. According to the report smaller cities will account for nearly 60% of new car sales by the end of 2020, an increase of 40% from this period.
“Chinese consumers are growing more sophisticated about cars and their tastes are evolving,” said analysts Arthur Wang. “Many have already purchased a first, entry-level car and will be ready to upgrade to newer and better models.”
VW, GM and Ford have already begun increasing capacity and offering China a wider range of models for the wave of first-time buyers. Over the past 10 years, the top 10 automakers have invested more than $38.4 billion to tap growth in the world’s biggest auto market. McKinsey predicts that car ownership in China will be half of the US rate by 2020.