To have or not to have back was once a question.
Notchback used to be the most popular model on the Chinese automobile market. Tastes have changed over the last few years, and the hatchback is now becoming the new favourite. Statistics show there are currently more than twenty different hatchback models on the market.
Hatchbacks are positioned in the mainstream market, where price wars are commonplace. In the face of soaring manufacturing costs and increasingly-squeezed prices in the automobile industry, price wars are no longer applicable in the Chinese auto market. Especially this year, when stocks in the automobile industry reached a record high and many car companies feel that winter is on the way, accurate market positioning rather than prices will define the competition in the hatchback car market.
Industry insiders have described the hatchback market as shifting from an orange to an onion. Market segments that were categorized by income, age and gender are gradually evolving into increasingly complicated market layers. Accurate positioning, not price, will determine the success of the models.
Alternatively, the war between hatchbacks may only be the beginning, and it will kick off a positioning competition in the domestic automobile market after a competition with new models and low prices takes off.
Differentiated Hatchback Concepts
Hatchbacks used to be relatively inexpensive on the Chinese market.
There’s no doubt Citroen’s Fukang played an important role in China’s hatchback enlightenment in China. In an era when notchbacks were dominating Chinese streets, Fukang-the only brand “without a back” among the “three classical models” (Santana, Jetta and Fukang)-educated Chinese consumers about this new product with its large sales volume.
The entry price for a Fukang was between RMB100,000 (US$14,632) and RMB180,000 (US$26,338) in China, and it was perceived to be a relatively cheap model at the time. Local Xiali and Geely manufacturers later introduced even cheaper hatchback models, which were initially priced between RMB30,000 (US$4,389) and RMB70,000 (US$10,242), and they maintained the traditional positioning of hatchback cars when they entered the market.
The pace of ordinary Chinese households purchasing cars accelerated unexpectedly after 2000, and more hatchback models such as Golf and Polo began to enter China. The hatchback car market was still quiet before 2005, but the situation began to change when Fox and Peugeot 206 appeared. These two models have not only disturbed the peace in the hatchback group with their trendy, sporty designs and refreshing styles, but also created a differentiated market. Traditional hatchback models like Fukang, Geely and Xiali, whose prices had already fallen from the RMB30,000 (US$4,389) to RMB50,000 (US$7,316) bracket at the time, started directing their sales towards county-level cities.
Fox introduced the concept of the “big hatchback” whose unique selling points are huge space and a sporty image. The market positioning for this type of car focuses on urban white-collars who love to feel cool and sporty. Fox, Mazda 3, Joyear, Nissan Tilda, and the Buick Excelle HRV all fit in this camp; they’re generally priced at RMB90,000 (US$13,169) to RMB170, 000 (US$24,875).
Another camp is the “refined hatchback” represented by the Peugeot 206. This camp, including joint-venture models like the 206, Fit, Yaris, Swift and Mazda 2, is characterized by being “trendy, sporty, and smart” with prices between RMB50,000 (US$7,316) to RMB120,000 (US$17,559). “Refined hatchbacks” target urban white-collars born in the 1980s that are first-time buyers.