GL8 is still GL8 despite the generations of cars.
But the high-end MPV market is no longer dominated by GL8.
In the high-end MPV market above 200,000 RMB, Buick GL8’s market share has fallen from its peak of 80% to 35% in the first quarter of this year.
Is it because Buick GL8’s product power is not good enough? No.
According to the terminal retail data published by the China Passenger Car Association, even after the epidemic, Buick GL8’s sales are still on the rise.
Obviously, the significant decline in Buick GL8’s market share has nothing to do with sales, but only one reason, that is, the rapid growth of the high-end MPV market. The reason is straightforward. If the numerator (sales) remains the same, it can only be that the denominator (market size) has increased.
The overall sales data prove the changes in the high-end MPV market. In 2021, the sales of the high-end MPV increased by 23.8% year-on-year, which is significantly higher than the 6.5% increase in the passenger car market.
The new high-end MPV models mainly come from Volkswagen, Toyota, Honda, Hyundai, Kia, and other traditional automakers outside of Buick GL8 in 2021. Even the old rival Mercedes-Benz V-Class’s sales have steadily climbed.
In 2022, following the joint venture brands, independent brands are also preparing to enter the high-end MPV market on a large scale.
The biggest feature of the new high-end MPV models from independent brands is that they are all green-plate MPVs using new energy technologies.
In 2023, the high-end MPV market will be more lively. New brands focused on smart electric vehicles, such as NIO, IDEAL, Xpeng, and Ji Ke, also plan to launch their high-end MPV products, while more traditional carmakers continue to launch new products in this field.
According to incomplete statistics, there will be more than 10 new high-end MPV models launched in the three years from 2021 to 2023, not including the iterative models of the old models.
The launch of so many high-end MPV models indicates a huge change in this segment, among which a fundamental change is that high-end MPVs are beginning to enter the household consumer market.
As China’s family structure changes with the trend of increasing life expectancy and multi-child policy, the average number of people in a family is increasing, and the demand for travel is shifting from three-person family travel to three-generation travel. High-end MPV models are the best models to meet this demand.
The growth of high-end MPV sales except for Buick GL8 is the best proof. Objectively speaking, the change in the demand for family travel has driven the start of family MPV consumption.
But it seems that some car companies have heated heads. More than 10 new high-end MPV models launched in three years seems too many. In MPV’s homeland, the United States, only a few high-end MPV models, such as the Chrysler Pacifica, the Toyota Sienna, the Honda Odyssey (US version), and the Kia Carnival, are selling well.
The high-end family MPV market in China has just started, and so many new models have suddenly appeared. Although the market scale potential is great, there seem to be too many models.
The racetrack hasn’t been paved yet, and the race participants are preparing to rush in. Will there be a stampede during the race? How can we stand out in the competition?
To answer these questions, we should trace back to the origin and find answers from the market and demand.
High-end MPV≠Business Car
Are high-end MPVs the same as business cars?
In the eyes of consumers, it is true. Almost all three-row 7-seater sliding door MPVs are referred to as business cars. But from the actual sales situation, consumers have already assumed that high-end MPV≠business cars.
According to different buying populations and corresponding potential demands, high-end MPVs can be divided into two types of models: business cars and family MPVs. In terms of typical models, Buick GL8 represents business cars, and Honda Odyssey represents family MPVs.
Business cars have larger lengths and wheelbases, making it easier for more people to ride together, such as Buick GL8, which has basically remained at 5.2 meters in length for several generations, and even Mercedes-Benz Vito is over 5.3 meters in length.Business vehicles are more geared towards commercial purposes, mainly to meet the needs of second-row passengers or for carrying multiple passengers. They have rigid requirements in terms of space, requiring the second row to have independent seats and the trunk to be able to fit 2 or more suitcases when carrying 7 people.
MPVs for home use are mainly used for household travel, and it is not common to fill up all 7 seats or the trunk. Therefore, the length of the car is generally around 5 meters in length to meet the strong demand for interior space.
The need for the functionality of the second row seats in MPVs for home use is unique. Most consumers only require two independent seats, but some consumers require independent seats and the ability to switch to a side-by-side seating arrangement for the convenience of infants, young children, or elderly passengers.
In terms of power, the potential demand for business vehicles and MPVs for home use is quite different.
Business vehicles require more powerful performances, to meet the power needs of 7 passengers, and fuel economy can be sacrificed for power.
The power demand for MPVs for home use is not high, and the consumers prefer models with good fuel economy that can meet their daily travel needs.
In terms of comfort configuration, the demand for business vehicles is quite wide, while MPVs for home use require “three-door electric” functions on both sides and the rear door.
According to different needs, business vehicles can be divided into office cars and reception cars. Office cars need to meet the core needs of carrying people for travel, and satisfy the needs of multiple passengers for comfortable rides. Some office cars also need to consider carrying goods, so the needs for comfort configurations are generally lower. Reception cars, on the other hand, are the opposite. “Three-door electric”, aviation seats, and luxurious interiors are basic configurations, with more advanced front and rear independent partition, rear entertainment systems, etc. being common configurations for reception cars.
Regarding comfort requirements, MPVs for home use differ from business vehicles. Three-door electric is a basic requirement, and the front and rear independent air conditioning, NVH experience, and suspension hardness all contribute to the ride comfort and are important factors for MPV consumers to consider.
In terms of driving, business vehicles are generally driven by professional drivers or experienced drivers, and have lower requirements for advanced driving assistance functions and vehicle control difficulty. MPVs for home use are driven by family members whose driving proficiency level varies, so there is a higher demand for advanced driving assistance functions and vehicle control difficulty.
The different potential purchasing needs for business vehicles and MPVs for home use directly determine the differences in product definition and design. This difference can be clearly seen in the product design of Buick GL8 and Honda Odyssey.
The length of the Buick GL8 is over 5.2 meters, and even if all 7 seats are filled, the trunk can still accommodate 4 large suitcases. It has good power performance but high fuel consumption.# Odyssey is less than 4.9 meters long and can only accommodate one large suitcase in the trunk when fully seated with seven people. The second-row seats can be used independently or side by side. It has lower fuel consumption thanks to its hybrid powertrain.
Crowded racetrack, hybrid prevails
In the high-end MPV market, hybrid models have higher sales.
The high-end MPV market is already a crowded track, with over 10 models on sale in 2021, but the annual sales were only around 400,000, with an average annual sales volume of less than 40,000 per model, and with an obvious head effect.
Only four models have monthly sales of over 5,000, including the Buick GL8 and Toyota Sienna, as well as the Honda Odyssey + Aili Shen (two cars with the same model and different joint venture manufacturers).
The four models have different product definitions and market positioning, but they all have some hybrid power capabilities.
Even if we exclude the 48V mild hybrid technology used by the Buick GL8, the HEV hybrid technology used by the Toyota Sienna, Honda Odyssey, and Aili Shen has also been market-tested hybrid technology.
Hybrid power is changing the MPV market.
An example is the rise of the Toyota Sienna in the MPV market for households above 300,000 yuan.
The Toyota Sienna’s competitors include the Kia Jiahua, which was also launched in the second half of 2021, and the Volkswagen Vierant, which was launched earlier.
In the U.S. market, the Toyota Sienna and the Kia Jiahua are already competitors in the same category. The Vierant is a specially supplied car for the Chinese market and directly competes with the Toyota Sienna in terms of model level and price.
The sales comparison between the Toyota Sienna and the Volkswagen Vierant shows that Toyota Sienna’s hybrid technology is more popular with consumers.
The sales comparison between the Toyota Sienna and the Kia Jiahua shows that the combination of hybrid power technology and brand premium advantages has made the Toyota Sienna overwhelmingly beat Kia Jiahua when their product definitions are basically the same. Although Sienna also sells better than Jiahua in the U.S., there is no such huge difference in sales.
Not only the Toyota Sienna, but the increase in sales of the Honda Odyssey and Aili Shen after switching from pure oil power to hybrid power also shows the change in the MPV market caused by hybrid power technology.Since hybrid technology can change the market landscape, what about new energy vehicle technology with stronger power and better energy-saving effect?
Plug-in Vehicles Are More Competitive Than Hybrid Vehicles
New energy vehicle technology is a better car power technology than hybrid technology, and it can indeed make up for MPV’s inherent disadvantages.
High-end MPV models suffer from “three highs”: high wind resistance, high fuel consumption, and high operating costs.
The urban fuel consumption of early Buick GL8 models was generally above 14L/100km. After switching to 2.0T turbo engine technology, fuel consumption was reduced to around 12L/100km. The currently available 48V mild hybrid version further lowers fuel consumption to 10L/100km.
However, compared with the Toyota Sienna and Honda Odyssey that use HEV hybrid technology, the fuel consumption of Buick GL8 is still high. High-end MPVs that use HEV hybrid technology can reduce fuel consumption to 6-8L/100km.
Assuming a fuel price of 8 yuan/L, if fuel consumption is reduced by 1 liter per 2,000 kilometers driven per year, the annual fuel cost can be reduced by 1,600 yuan. The usage cost reduction brought by hybrid MPV models is about 5,000 yuan/year.
Usage cost directly affects the purchase intention of MPV consumers.
In simpler terms, consumers can drive a sedan however they want, but they have to be more thrifty when driving an MPV.
Hybrid MPVs such as Toyota Sienna and Honda Odyssey reduce the fuel consumption of MPVs to the level of ordinary sedans, which increases the usage scenarios for MPVs, allowing drivers to drive MPVs the same way as sedans.
The low cost advantage of hybrid cars is the subjective reason for opening the family MPV market.
In the high-end MPV market, if consumers can accept Japanese hybrid technology, then plug-in hybrid technology, which has better power, lower fuel consumption, and can use both fuel and electricity, and can reduce usage costs, can be more easily recognized by the market?
After adopting plug-in hybrid technology, the fuel consumption of high-end MPV models is expected to be reduced to less than 5L/100km, and it is possible to achieve zero fuel consumption pure electric driving within cities. High-end MPV models using pure electric vehicle technology can truly drive as desired, getting rid of the constraints of usage costs.
Voyah Automotive, DENZA under BYD, and Roewe under SAIC Motor will all launch new energy high-end MPV models in the near future.
Voyah Dreamer will launch two versions of hybrid and pure electric cars. The car is 5.3 meters long and has a wheelbase of 3.2 meters. It is a luxurious commercial MPV car model that competes head-on with Buick GL8. The plug-in hybrid version has a pure electric range of 82km, while the pure electric version has a range of 605km. The car is pre-sold for 380,000 to 600,000 yuan and will be launched on May 7th.
DENZA D9 will launch two versions of plug-in hybrid and pure electric cars. The car has not yet announced the specific parameters, but from the information already revealed, the car will also be positioned in the luxury commercial MPV market. It will be released in mid-May and the pre-sale price is around 400,000 yuan. Although the battery range is not yet announced, according to BYD's product definition, the plug-in hybrid version is expected to have a pure electric range of more than 100km, and the pure electric version is expected to have a range of more than 600km.
Roewe iMAX8 EV will launch a pure electric version with a range of 550km and a pre-sale price of 2.798-3.298 million yuan. After the battery installment plan is subtracted by 90,000 yuan, the pre-sale price is 1.898-2.398 million yuan.
From a practical point of view, it is necessary to consider that MPV models have higher requirements for replenishment speed than ordinary cars. In the current market situation, plug-in hybrids MPVs seem to be more easily accepted by the market due to their driving experience that surpasses hybrid MPVs.
However, everything has its but.
## Lessons from the Past, Guides for the Future
The problem with MPV market is that consumers are particularly concerned about public opinion, and the crowd effect is obvious.
Power technology, product definition, and marketing methods are superficial, and behind the best-selling models is years of product iteration and user accumulation. Buick GL8 has achieved its current status because Buick GL8 has a 23-year history of production and sales, and has carried countless dignitaries, businessmen, and nobles. Honda Odyssey has achieved its current sales volume based on a 20-year history of domestic production and carries the first memories of generations of people towards cars. Toyota Senna was able to quickly break through due to the excellent reputation of the parallel imported Senna in Tianjin Port for ten years, as well as multiple product iterations in the United States.
Do not forget that Senna exclusively enjoys brand premiums brought by Toyota Alfa and Lexus LM.
Why did Volkswagen Sharan, Kia Carnival, and the earlier Ford Tourneo Custom suffer defeats in the high-end MPV market? Is it due to lack of technical strength, unclear product definition or unclear market positioning?
These are all reasons, but they are not fundamental.
Volkswagen Sharan, Kia Carnival, and Ford Tourneo Custom are all cars that have not been inherited in the eyes of consumers. Suddenly appearing, they may also suddenly disappear.
Returning to the annual sales figures, the high-end MPV market is a market with very slow development speed. Making high-end MPVs requires automakers to have the spirit of the craftsman, continuously accumulate product reputation and brand social value, in order to achieve success.
The high-end MPV family consumption has indeed begun, and the urban affluent class also has a clear desire to buy a car. These are good news for the new energy high-end MPV market. Especially for new energy high-end MPV models, they also enjoy policy incentives such as licenses, subsidies, and tax exemptions in addition to technology.
New energy high-end MPV models should have excellent market performance.
But returning to the question at the beginning, the track of the high-end MPV market has not yet been paved, and the competitors are ready to rush forward. Will there be a stampede during the competition? How can you stand out in the competition?
The answer is affirmative. A competition on the high-end MPV track will definitely occur, and accumulation is necessary to stand out.
Today, various automakers value the rich profits and potential market of the MPV market and have successively launched high-end MPV models. But if the automaker expects a stunning effect like “a bolt from the blue”, the result is probably not optimistic.
From the sales of GL8, Odyssey, and Senna, new energy vehicle technology has advantages, giving car companies an opportunity to enter the high-end MPV market. However, whether they can dominate the market still depends on the accumulated reputation of the product.
Players who have already entered the high-end MPV market have also begun to evolve towards new energy. The next generation of the GAC Trumpchi GM8 will adopt a plug-in THS hybrid technology, the Roewe iMAX8 will launch a pure electric version, and the Maxus MIFA 9 is a high-end MPV built on a pure electric platform, proving that these automakers have prepared for long-term development in the MPV market And accumulated the advantage of being the first.
For car companies that are about to participate in the high-end MPV competition or are planning to participate, getting an entry ticket to the game with new energy vehicle technology is worth celebrating, but they must be prepared for the hardships of running a marathon with a hundred-meter sprint speed.
Intelligence cannot help MPV to grab the GL8 bowl together.
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.