Rising road rage in China fuels demand for SUVs

SHANGHAI — Chinese drivers’ survival instincts are kicking in, leading analysts to ask if there’s a limit to the country’s explosive growth in Sport Utility Vehicle (SUV) sales.

Concern for personal safety amid rising road rage is among the reasons China’s SUV registrations surged 48 per cent in the first quarter of this year, said a research note Sanford C Bernstein released yesterday. SUVs accounted for 27 per cent of vehicles registered during that time, nearly twice the rate three years earlier, analysts led by Mr Robin Zhu wrote.

Road violence is growing along with China’s 10-fold surge in vehicle ownership over the past decade. China’s Security Ministry issued a statement this month calling for drivers to act civilised and contain their anger, after a video, which went viral, showed a woman being dragged from her car and kicked in the face during an incident in the province of Sichuan.

And it was hardly an isolated event. About 100 million road-rage incidents have been reported since January 2012, said the Ministry of Public Security. Incidents arising from drivers forcefully changing lanes or disrespecting the right of way rose 10 per cent in the first four months of this year, compared with the same period last year, it said.

“People are easily agitated nowadays, feel underappreciated and disrespected, and they take it out by being bullies on the road,” Ms Sun Xiaohong, a prominent female observer of the auto industry for more than a decade, said in an interview with Bloomberg.

Road rage is expected to get worse. Official forecasts show that 1 billion Chinese are expected to get their driving licences in the next 10 to 15 years. More than 150 million civilian vehicles were in use in China as of last year, said the National Bureau of Statistics.

“The angry ones are scaring the sane ones into buying SUVs for self defence,” Mr Zhu, a Hong Kong-based senior analyst at Bernstein, said in an e-mail to Bloomberg.

Conspicuous consumption has grown in China as the economy booms and many consumers are moving beyond entry-level sedans to the more spacious SUVs as well as luxury models.

Lower petrol prices and the poor condition of Chinese roads outside large cities are also among the likely reasons for the growing popularity of SUVs, according to the report.

Although industry executives expect the shift to SUVs to continue in the near term, government fuel-economy rules and higher fuel prices will keep sedans from going extinct, said Bernstein’s research note.

Also contributing to the shift is how the nascent Chinese automobile industry, with many local carmakers partnering foreign firms to benefit from their technological expertise and branding, has released a slew of new and affordable models for urbanites. There is an expanding selection of cheap SUVs starting at less than 130,000 yuan (S$28,300). Domestic carmakers will have introduced 49 such models this year and last year, the report showed.

While foreign carmakers are likely to follow suit and introduce budget SUVs of their own, rising competition poses “a significant risk for potential returns,” Mr Zhu wrote.

Slower growth in China is already denting earnings at Tata Motors’ Jaguar Land Rover unit.

The maker of Range Rover Evoques said profit fell 33 per cent to £302 million (S$628 million) in the three months ended March, the biggest decline since the quarter ended March 2013. AGENCIES