Are Chinese brands breathing life back into the small crossover segment?

The subcompact crossover segment has received a slight nudge in popularity in recent memory, as per our Industry Insights for Q3 of 2019. The segment was started quite some time ago with a few standouts such as the Ford EcoSport, Nissan Juke, Hyundai Kona and more expensive options such as the Honda HR-V and Mazda CX-3. 

The segment boomed back in 2014, with the introduction of the Ford EcoSport, a lightweight, gasoline-powered subcompact crossover that boasted ground clearance and a good loadout of features for the time. The nail in the coffin for this model was the sub-P1,000,000 price tag. Other brands like the Nissan Juke also burst onto the scene and sold remarkably well with a slowdown happening around the time the excise tax finally came into effect. 

In Q2 of 2018, the segment reached an all-time high of about 20% of all tracked sales based on AutoDeal’s data. The excise tax started to take full effect during that year, and since this segment is known for being priced below P1,500,000, the new law had a profound effect on its price tag. After reaching the height of its sales figures, the segment dropped substantially when Q3 rolled around, netting a tracked sales figure of about 13%. Q4 of 2018 was when the segment reached an all-time low, reaching a percentage that was just a little over 5% of total tracked sales. 

The excise tax phenomena caused cars that were once affordable, to become that a little more unreachable. Primarily, the law targets cars that hover around the P1,500,000 mark and below. According to our data, Filipinos also like to shop for cars that go around the P1,000,000 mark, a price point that most subcompact crossovers sell for. With the excise tax in full swing, segment pioneers like the Ford EcoSport and Nissan Juke crossed into the P1,000,000 mark, which puts off consumers looking to pay for a car that is priced under the 7-digit mark.

2019 is different, however, as there seems to be a small resurgence in the segment’s popularity. After the deficit, the interest came up again in Q1. The second quarter’s metrics are more favorable. The tracked sales figures here come closer to 10%, a marked increase because of a couple of more affordable and well-endowed models started to creep in. The likes of Geely and top-dog MG have made waves in the segment thanks to affordable and attractive products like the MG ZS, which defied all expectations and became the second best-selling subcompact crossover in the Philippines for Q3 of 2019, just behind the refreshed Ford EcoSport.

Q3 2019 saw a bit of a dip in the segment, but with stellar introductions like the Geely Coolray being released in September, towards the tail-end of Q3, we expect to see some of the metrics pop up again in terms of tracked sales. 

So, what does that mean for the future of the subcompact crossover? The segment is getting taken over slowly by Chinese manufacturers because price-per-feature is a big proponent in the buying decision of a consumer looking to not go over budget for the latest tech. We think that the MG ZS will stabilize in its popularity, and standouts in the segment like the Geely Coolray will continue to pique consumers’ interest thanks to the accessible price point and excellent fit and finish that is unheard of in the price point that the car occupies. Other brands are getting reintroduced, like Chery, who is defying all expectations and is offering a subcompact crossover that’s even more accessible. 

Chinese cars are getting better, and some of them are even out-shining long-time staples the moment you step in the cabin and drive off. There is definitely a demand for crossovers in the Philippines, and a vehicle with good ground clearance, comfort, and space is sure to entice consumers, with the affordability being one of the deciding factors.