New Chinese autos increase in value on back of improved quality output

New cars from Chinese automakers are steadily going up in market value, a key indicator of improved brand awareness and quality, according to a recent survey.

The survey, conducted by the China Association of Automobile Manufacturers and market researcher JD Power, covered 176 models from Chinese and international brands in 18 municipalities and provinces across the country.

Using new vehicles' 2015 tag prices as a base point (100 percent), Chinese models grew in price for two consecutive years to reach 107.8 percent in 2017, according to the China Passenger Vehicle Market Price Index, which was compiled based on the survey.

In comparison, both imported cars and cars made in China by international brands saw a dip in their prices in 2016 from the 2015 level, before rising again last year to 94.5 percent and 102.5 percent of the base value respectively.

The findings corroborated JD Power's 2017 survey on new car quality, which found that Chinese cars have been rapidly narrowing the quality gap with international brands.

Out of 100 new cars from Chinese brands there were 112 problems, just 13 more than their international rivals, according to JD Power. Back in the year 2000, the gap was 396 in favor of international brands.

The improved quality of Chinese cars has helped boost sales. Statistics from the CAAM showed that 10.85 million Chinese-branded passenger cars were sold in 2017, up 3.02 percent year-on-year, more than double the growth rate of the segment as a whole.

In the same year, the price index of China's passenger car market edged up 1.7 percentage points from 2016, but remained 4.3 percentage points lower than the 2015 base level.

"One apt word for last year was 'recovery'. After a dip in 2016, it feels like the automotive industry is getting better and healthier," said Lang Dawei, a data analyst at JD Power.

"We can see the start of a virtuous cycle in China's passenger car market, as compared with 2016, more cars were sold in 2017, and they were sold at higher prices."

The CAAM and JD Power expect the overall level of car prices in 2018 to edge up 2 percent year-on-year to some 97.6 percent of the 2015 level.

Of them, the prices of SUVs from volume brands are estimated to increase 2.1 percent, the highest of all segments, while volume sedans will see their prices remain about the same as in 2017.

Analysts said Chinese carmakers are likely to continue the generally positive trend seen in recent years as they begin to roll out models designed specifically to compete against international brands in the domestic market.

Some of these models are already making an impact.

For example, both VV5 and VV7, two models from Great Wall Motor's upscale Wey brand, sold more than 10,000 in January.

The model Lynk & Co 01 from Geely Auto Group sold more than 6,000 units in January, which is a solid figure considering the model was only released in late November last year.

Overall Geely sold 154,035 cars in the Chinese market in January, up 52 percent year-on-year, with eight of its 10 models selling more than 10,000 units.