While China may be the world’s largest market for electric vehicle sales, Chinese car buyers have a new love affair: pickup trucks.
As in the U.S., pickups are ideal for construction, farm, and maintenance companies — but consumers find them very appealing for the horsepower and cargo capacity. Chinese vehicle maker Great Wall Motor Co. and Ford Motor Co. are betting big on it.
The world’s largest new vehicle sales market saw its numbers fall for the first time last year since the 1990s, but pickups sales grew 10 percent to about 452,000 units sold during that time. That marked the fourth straight year of sales growth for the pickup truck segment, according the LMC Automotive consulting firm.
Great Wall, China’s largest pickup manufacturer, and Ford, the maker of the popular F-Series pickups, plan to grow their product lines in the Chinese market.
Great Wall is developing a multi-purpose pickup truck model targeted at luxury vehicle buyers. It will be the first leisure model built by the Chinese company, according to President Wang Fengying.
It will come with a higher sticker price than its other truck models, and will become one of five all-new pickup truck models in the next three years, sources familiar with the company’s plan said. At least one of them will be an electric pickup model.
Luxury vehicles also broke the downward trend in sales last year. Consumers and business executives in China are fine with spending more on gasoline as they climb the ladder in personal wealth in the world's second largest economy. Related: World’s 2nd Largest Oil Company Sees Huge Drop In Profit
In recent years, pickups have become much more consumer friendly, with companies such as Ford, General Motors, and Fiat Chrysler, tapping into the growing market. These car shoppers are more interested in the perks and benefits of smooth-driving trucks with sophisticated dashboard panels and comfortable seating. Trucks used to be built for commercial buyers, but have been seeing significant growth from consumers — with stable gasoline and diesel prices helping quite a bit.
Ford will be launching a new pickup model in China this year. It will join the F150 Raptor that was introduced in the market two years ago, and the midsize Ranger pickup that was brought to the market last year. The Raptor, which is pricier than the basic F150 pickups, is appealing to consumers with its 450 hp and ability to tow up to 8,000 pounds. Raptor sales tripled in China to nearly 25,000 sold last year with a starting price of 466,800 yuan ($69,565).
“Ford continues to see growing opportunities in China’s pickup truck market, because of a combination of regulatory conditions and growing consumer interest,” a spokesman said in an e-mailed statement.
China backed off regulatory restrictions starting in 2016, allowing pickups to be sold in a number of urban markets in four of 31 mainland provincial-level areas. Last year, the vehicles became even more attractive to consumers with a mandate removed on unsightly labels marking pickups as commercial vehicles.
In January, the government said it will be relaxing restrictions on pickups sold in cities. It will be part of a set of measure to boost consumer spending. Details weren’t released on when these restrictions will be lifted.
New vehicle sales dropped last year as China’s booming economy, the second largest in the world after the U.S., showed signs of slowing growth. Related: Good News And Bad News For The Ethanol Industry
The government’s “new energy vehicle” campaign in recent years — promoting local carmakers and their foreign automaker partners— to tap into attractive purchase incentives on the battery electric and plug-in hybrid vehicles has resulted in a lot of new EVs on the road and increased the willingness of car manufacturers to invest in new EV models.
The new energy vehicle incentives, however, will be reduced 30 percent this year.
Automakers are seeing electric pickups as a way to join market demand for EVs in China. Beyond Great Wall and Ford, Jiangling Motors (Ford’s JV partner), and Volkswagen’s partner JAC Motors, are looking at entering that segment.
Zhejiang Geely Holding Group Co Ltd is working on a new electric pickup, a company source told Reuters. The source, who declined to be named, said it might be manufactured through the company’s Yuan Cheng Auto unit.
Automakers are waiting for China and the U.S. to settle their trade war on import tariffs.
Li Jiyuan, who works at a dealership that sells Toyota vehicles and Fiat Chrysler’s Ram pickup trucks, says business has been hurt by trade war uncertainties.
China continues to be the world’s largest auto sales market, and growth is expected to continue. For now, gas and diesel powered pickups and luxury models are the hot commodity.
By Jon LeSage for Oilprice.com
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