Mini Van Market Heating up

Vehicle registrations in mainland China reached 811,568 units in January 2009, among them passenger vehicle registrations reached 682,385 units, a year-on-year decline of 15.9%. After deducting the effect of the week-long Spring Festival holiday the year-on-year growth was 8.9% on real term. Whilst almost all countries were suffering from depressions in their vehicle markets, mainland China PV market, however, still shows promising signs.

By body type, hatchbacks and SUVs decreased the least with 8.6% and 10.9% declines respectively. Sedans, dropped more than the average with a 17.7% year-on-year decline. MPVs still struggled by plunging 32.5%.

Central Region Soaring

Although this year had five working days less than the previous year, eight provinces still maintained growth in January 2009. PV registrations in central regions soared with Hunan, Anhui and Shaanxi all gaining more than 10% year-on-year growth. Zhejiang and Jiangsu also started to stabilize in January, with Zhejiang even seeing an increase. Guangdong, however, still bore the heaviest brunt to a 47.9% decline, with its rank dropping out of the top three.

The policy that cut taxrates by half for PVs under 1.6 liters has started to take effect. The market share of PVs under 1.6 liters jumped to 69.0% after January 20 from 60.7%, up nearly 10 points. The market share of 1.8 liters and 2.0 liters PVs, however, both saw marked declines.

Mini Van Market Heating up

The Mini van market is one of the bright spots in January. Their registrations reached 114 thousand units in January 2009, a year-on-year decline of 9.5%, nearly half of the average decline rate of 15.9%. Outperforming other models, Wulingzhiguang recorded a 16.3% year-on-year growth or 57 thousand registrations in January, accounting for 50% of the total mini van market.

The last several years have witnessed an underperformance of mini vans. Their growth rate in 2006 and 2007 were both below 20%, while the overall PV market achieved nearly 25% growth during the same period. In 2008 when global financial crisis out broke, the overall PV market slumped to a 6.5% growth while mini vans also plunged to a only 5.2% growth.

The heating up of the mini van market can be contributed to the explosive growth of central regions. Sichuan, Anhui and Shaanxi all achieved more than 30% year-on-year increases despite five working days less than the previous year. Other central region such as Hubei, Hunan and Jiangxi also gained more than 10% growth in mini van registrations.

Counties to Drive Mini Vans Growth

As income levels of peasants continue to improve, counties have started to become the main force to drive the mini vans growth. Counties in Luoyang and Changsha both contributed more than half to the local mini van registrations in January 2009. In Luoyang, its downtown witnessed a 20.7% decrease in mini van registrations in Jan 2009 while its counties saw a 34.1% increase. In Chengdu, its counties also outperformed the downtown area with four counties seeing more than 100% growth in Jan 2009, comparing to a 33.3% growth of the downtown area.

The rural market in mainland China with its vast size and demand base offers a great opportunity for mini vans. The newly released policy "vehicles to the countryside'' which offers a 10% subsidy to peasant buyers, is likely to ignite the market this year.