If we had to pick the most attention-grabbing model in China’s Passenger Vehicle market this year, it would have to be the Wuling Hongguang Mini EV. The new battery electric vehicle (BEV) has taken the market by storm, breaking all sales expectations since its launch.
Despite a remarkably low starting price of CNY28,800, the diminutive model’s eye-catching design gives it a deceptively expensive look – something that has undoubtedly contributed to its surprisingly robust performance. In September (only its fourth month in the market), the Hongguang Mini EV racked up sales in excess of 20,000 units, propelling it to the top of China’s electric vehicle market.
The high cost of electrified vehicles is axiomatic, and with battery costs still prohibitive, most electric Mini Cars in the market currently retail for over CNY60,000. To qualify for government subsidies, BEVs must have a minimum range of 300 km, which, in turn, requires a more powerful battery and therefore raises costs.
Unlike other models in the segment, however, range is not the core focus of the Hongguang Mini EV. Instead, it is positioned as an urban commuter tool. A range selection of 120 km or 170 km is more than adequate for the needs of its target audience. And a less powerful battery translates to a lower sticker price.
Historically, Mini Cars opened the gateway for many Chinese families to enter the vehicle market, thanks to their affordability. Priced at roughly CNY30,000-40,000, the Chery QQ and BYD F0 were front runners and achieved exceptionally high sales numbers back in the day. But as the ‘consumption upgrade trend’ has gathered steam in China, and Compact Cars have become increasingly cheaper in recent years, market share for the Mini Car segment has been squeezed.
For a number of years, we have seen a substantial shift from petrol-powered to electric-powered Mini Cars as automakers seek to take advantage of the New Energy Vehicle subsidies. Large volumes of electric Mini Cars have already been purchased by the ride-sharing sector, but the uptake among private buyers has, so far, been minimal. Early pioneers held little appeal for private consumers, particularly when considering that they were as expensive as other models that offered more in terms of size and quality.
But with a retail price of CNY28,800 to CNY38,800, this pattern was broken by the arrival of the Hongguang Mini EV, thus hitting the reset button for China’s Mini Car market and heralding the start of more realistic price levels.
With the growing acceptance of BEVs among Chinese consumers and the Hongguang Mini EV’s profile as a short-distance commuter tool – not forgetting its low price, striking design and convenient size – it is little wonder that the model has been such a runaway hit, particularly in regions like Henan and Shandong, where consumer purchasing power is in the medium range.
Effective market positioning of a model can, it seems, reap handsome rewards.
(LMC Automotive blog on November 27, 2020)