Mini-vans the next big thing as China eases one-child policy

Guangzhou, November 30

Automakers are betting that Chinese families will embrace mini-van, hoping the larger, unsexy sibling of best-selling SUV will become next big thing just as Beijing relaxes the one-child policy.

Mini-vans, or multi-purpose vehicles (MPVs), were front and centre at the Guangzhou auto show, where Volkswagen AG presented a super-sized version of its Touran and Guangzhou Automobile Group subsidiary GAC Motor showcased a prototype mini-van. The show ended on Sunday.

These seven-seaters currently account for just 10 per cent of passenger car sales in China, but sales are growing at a faster pace than the entire auto market, the world’s largest.

Industry experts say the appetite for bigger cars is strong enough in China, where extended families often live under one roof, to potentially turn it into the largest MPV market after the United States, where automakers have sold big cars to families for years.

At the end of October, China further relaxed its one-child policy, a move which experts said would not necessarily lead to a sudden increase in the size of the average family.

But Chinese authorities hope it will help boost the population to 1.45 billion by 2030 from 1.37 billion at the end of last year.

“After the roll out of two-child policy, I believe market share of seven-seat SUVs and MPVs will further rise,” said Wu Song, GAC Motor’s general manager.

MPV sales for first 10 months of the year grew 7.8 per cent, according to the China Association of Automobile Manufacturers, outperforming the 1.5 per cent growth in the overall car market.

The focus on Chinese families is relatively new for MPV makers which for years targeted companies seeking large, luxurious models for executives or small businesses that need a workhorse to haul goods and staff.

Many households include at least one set of grandparents, as they play a key role in childcare. These extended families, coupled with restrictions in most major cities on owning a second car, give MPVs an advantage over five-seat sports utility vehicles (SUVs) that currently account for bulk of passenger car sales growth.

“The cost of owning two vehicles is high. That is why demand for seven-seat vehicles has grown greatly,” said Gustavo Céspedes, executive vice president of General Motor’s joint venture with SAIC Motor and Wuling Motor which makes China’s best selling MPVs.