BAIC steps up efforts on SUVs

Automaker adjusts focus to satisfy consumers' need for larger, more fuel-efficient cars

Beijing Automotive Group Co Ltd, one of China's top five automakers by sales revenue, said it will deploy more resources into developing its SUV business to compete with its established rivals.

The main driving forces behind the move are diversifying tastes and families' demand for second vehicles, not only among Chinese consumers, but also in overseas markets such as South Africa, Brazil and members of the Association of Southeast Asian Nations, according to the company.

Xu Heyi, chairman of BAIC Group, said the company will focus on improving its offroad vehicle offerings because consumers today have higher demands for their SUVs' functionality. Many enjoy long-distance travel and driving on a wider variety of road conditions, he said.

"The SUV market is growing at a fast pace and people have big aspirations for that. This is an area in which we want to be uniquely positioned," Xu said.

The automaker sold 27,000 SUVs under its own brands in 2017, up more than 50 percent year-on-year. In the first half of this year, the company sold 14,000 SUVs, up 37 percent year-on-year.

BAIC started making offroad vehicles in the 1960s and was the first SUV producer in the country. Today, the company's SUV lineup includes the BJ20, BJ40 and BJ80 and their variants, retailing from 150,000 yuan to 350,000 yuan ($21,850 to $51,000).

The Beijing-headquartered automaker introduced its offroad BJ40 Plus model in May to improve its product quality. It is equipped with a new spiral spring independent front suspension, 10-inch large screens and 12.3-inch full LCD meters, as well as other luxury technology configurations.

The SUV sector is the fastest-growing in the Chinese auto market, with sales soaring nearly 6.3 percent year-on-year to 4.69 million vehicles in the first half of 2018, according to the China Association of Automobile Manufacturers.

In addition to the domestic market, BAIC officially opened a manufacturing facility in South Africa in August, with an annual production capacity of 50,000 vehicles by the end of 2019. Located in South Africa's shipping hub Port Elizabeth, trial production had already started earlier, with the first batch of cars rolling off the assembly line on July 24.

In the long run, BAIC aims to supply automobiles made in the manufacturing facility - including SUVs, passenger vehicles, pickups and light trucks - not only to the South African market, but across the African continent. Its focus will be on fast-growing markets such as Nigeria, Cameroon, Egypt and Algeria, according to the company.

For Chinese automakers, entering global markets has become an attractive option to maintain their robust growth, and many countries they are targeting have some of the most discerning customers in the world, Xu said.

"This is why we have been keen to bring our pillar products such as SUVs and pickup trucks to overseas consumers to meet their specific needs," he said.

As the Chinese government continues to encourage auto companies to produce fuel-efficient cars to tackle pollution and traffic congestion, Xu said BAIC will add larger models and plug-in hybrid versions to its lineup.

"Previously, domestic customers were not very interested in fuel economy, but now things are changing. A growing number of people are aware of the air quality. For them, green is fairly tangible," said Sun Fuquan, a researcher at the Beijing-based Chinese Academy of Science and Technology for Development.

SUVs have taken a considerable share of auto market sales from sedans in China, as the market currently has the highest sales penetration of SUVs globally, Sun said. Many automaker brands have realized that a growing number of young Chinese families want bigger vehicles and are likely to have a second child, he added.

BAIC employs over 130,000 members of staff worldwide, and has built more than 20 plants and research and development centers in Mexico, India, Japan, the Netherlands, Spain, Germany, Italy and the United States. It sold 2.51 million vehicles globally in 2017, netting 470.3 billion yuan in revenue.

The group said it plans to sell 300,000 vehicles annually by 2020 in overseas markets through its sales networks in over 80 countries and regions.