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Business / Auto China

Move over sedans, pickup trucks are here

(China Daily) Updated: 2016-08-08 08:45

Move over sedans, pickup trucks are here

A Ford Motor Co representative speaks during a ceremony for the company's Steeda debut in the Chinese market. Steeda is a popular pickup truck model in the US market. GUO XIAOCHUAN/FOR CHINA DAILY

Auto majors tap adventurous spirit of Chinese middle class city slickers

China's aspiring urban cowboys are finally getting their moment.

Pickup trucks, long relegated to workhorses for the country's farmers, are being allowed in select urban areas for the first time. So far, the plan to energize one of the last untapped segments in the biggest auto market is catching on. Truck sales climbed 36 percent in June from a year earlier even as sedan deliveries declined.

New models coming from Great Wall Motor Co and Ford Motor Co aren't meant to haul pigs or vegetables to market. Rather, they aim to channel the adventurous spirit of middle-class city slickers, who are discovering the joys of going off-road or taking weekend getaways with fishing gear, camping kits and barbecues stowed in their truck beds.

"We applauded the good news in our WeChat group of pickup fans," Wei Chenglin, 27, said of the eased rules in the coastal city of Dalian, where some downtown streets no longer are off-limits for his Ford F-150. "Quite a few of them have reached out to importers to place orders in the past couple of months. Pickups have great potential in China."

Trucks were banned from many cities for decades in China, presaging the government's current battles with congested streets and choking smog. With sales of passenger and commercial vehicles having grown four-fold during the last decade, that ban wasn't a problem.

Then the boom started to go bust as the economy retreated to its weakest growth in a quarter-century. Industrywide vehicle sales last year rose 4.7 percent, the slowest pace since 2012, according to the state-backed China Association of Automobile Manufacturers.

By comparison, US sales of new cars and light trucks rose 5.7 percent.

In February, the Ministry of Industry and Information Technology and two other agencies relaxed or lifted restrictions on pickups in four provinces-Liaoning, Henan, Hebei and Yunnan. The rule changes started May 1 and take effect in all those provinces by Oct 1.

Hebei and Henan are home to factories owned by Great Wall and Zhengzhou Nissan Automobile Co, respectively.

"The four provinces were selected out of a balance of interests," said Zhang Zhiyong, a Beijing-based independent auto analyst. "Pollution isn't the main concern for the MIIT and local governments when they make policy decisions. What they want is to help the auto industry prosper when the market is relatively gloomy."

The pickup-truck segment still is minuscule when compared with the US, with 328,933 pickups sold last year, according to the China Passenger Car Association. That's about 1.3 percent of the nation's 24.6 million vehicle deliveries.

In the US, pickup truck sales climbed to more than 2.5 million units last year, capturing about 15 percent of the total light vehicle market, according to researcher Autodata Corp.

Domestic pickups dominate the Chinese market, though a small number of Toyota Motor Corp's Tundras and Ford F-150s can be imported in free-trade zones.

Wei, whose family runs a horseback-riding business in Inner Mongolia province, bought his F-150 last year for 700,000 yuan ($105,000). He said more than 100 people participate in the WeChat fan club. The group, one of several on the social-media network, organizes activities such as long-distance drives to Tibet in western China.

Wei is so enamored with his truck he also uses it to commute within Dalian, even though restrictions on main streets added 15 minutes each way to his daily commute. His Land Rover SUV and Mercedes-Benz sedan stay idle at home, he said.

"I lived in the United States for two years and noticed that pickups were everywhere," Wei said. "But my friends in China never saw a real pickup until they sat in my F-150. After that, they all want one."

The regulatory change has been an adrenaline shot for domestic truck makers. Pickup sales by China's 15 biggest manufacturers rose 11 percent in May and 36 percent in June from a year earlier, according to the passenger car association. That compares with a 16 percent decline last year, when restrictions were still in effect.

Great Wall said its pickup sales in Henan surged 20 percent in the second quarter from a year earlier. Its signature model is the Wingle 6, available in colors including "Fashionable Orange." The truck's name translates loosely as "a steed running at the speed of the wind."

Already China's top SUV manufacturer, Great Wall said it will design and develop more truck models catering to city drivers based on the new policy. "If China lifts the restrictions on pickups to enter cities, it will have a profound impact on the market," the company said in an e-mailed response to questions.

Ford said in April its F-150 Raptor will be available in China starting next year. The truck comes with preset driving modes for trudging through mud and sand; zipping through the desert at high speeds; and crawling over rocks.

"By introducing it to the world's largest auto market, we hope to inspire a new generation of off-road enthusiasts," John Lawler, chairman and chief executive officer of Ford Motor China, said in a statement.

The new policy may prove difficult to implement across the country, particularly in wealthy cities such as Beijing and Shanghai, where governments limit vehicle registrations and driving days.

The four provinces chosen for the pilot program depend on struggling traditional industries, such as steelmaking and mining, and want to transition to service-oriented economies. They also face stringent regulations to improve the number of "blue-sky" days in their cities.

"It's a tricky dilemma," said Yang Zaishun, deputy secretary-general of China's car association. "If it works well in boosting pickup sales, that could add a huge burden to the urban traffic and deteriorate the air pollution in cities. Then Beijing will be cautious in promoting it nationwide."

Bloomberg

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