Micro-card: the small car market is getting favored
Wuxi Changchen Technology Co., Ltd , https://www.wxchangchen.com
The micro-card market, once a niche segment, has recently experienced a surge in activity and interest. In mid-September, Chrysler announced plans to manufacture small trucks in China, signaling a growing presence of international players in the region. Earlier in September, SAIC-GM-Wuling launched its new micro-card model called "Small Tornado," while in early August, Jianghuai High-tech introduced the Xiaowei and rolled it out nationwide. Previously, Futian upgraded its popular "Time Star" model, which holds a significant market share. Meanwhile, Dongfeng also announced that it is planning to introduce micro-card products by the end of this year.
**Emerging from the "Cold Palace"**
China first started producing micro-cards in the 1980s, but development was slow. However, with evolving economic conditions, changing policies, and the rapid growth of the logistics sector, the demand for micro-cards has expanded significantly. Industry experts estimate that the micro-card market will reach 200,000 units this year.
Moreover, the domestic auto industry has shifted from rapid growth to more stable expansion, leading to reduced profit margins for manufacturers. As a result, automakers are now focusing on smaller market segments to find new sources of profit. Competition has moved beyond major cities into smaller towns and rural areas, where micro-cards play a crucial role. These vehicles have thus emerged from their previous status as overlooked options and are now gaining recognition.
With continuous product improvements, many micro-card companies are seeing strong returns. Changan Micro Card currently holds a 40% market share, while SAIC-GM-Wuling follows closely with 25%, showing a clear upward trend. Hafei, Changhe, and Jiabao are also active, though their sales remain lower than the top two. This relatively low market concentration offers opportunities for new entrants.
Some large automotive groups are now showing interest in the micro-card segment. Chrysler’s CEO, Lesotho, stated that introducing minivans in densely populated countries aligns well with global trends, highlighting the potential for growth in this market. Dongfeng also aims to boost its micro-card production capacity to 150,000 units by 2008, emphasizing the importance of this segment. JAC sees the Xiao Wei model as a key driver for strategic growth.
**Bright Future Ahead**
Many manufacturers are turning their attention to the micro-card market due to its strong performance. According to data from January to November 2004, mini truck sales grew by 24.2%, far exceeding the industry average and becoming a bright spot in an otherwise sluggish market. Analysts believe this positive trend will continue in the coming years.
First, China's macroeconomic environment remains favorable. With GDP growth expected to exceed 8% in the first 10 months of 2005, the auto industry has a solid foundation for long-term development. Second, the agricultural vehicle market is vast, and stricter regulations are pushing users toward micro-cards. The implementation of the "Road Traffic Safety Law" and vehicle size regulations has further accelerated this shift.
Additionally, the government is prioritizing rural development, investing in infrastructure and improving living conditions in rural areas. As part of the "Village and Village Communication" initiative, farmers’ demand for Light trucks and minivans is increasing. Micro-cards, with their affordability, versatility, and quick return on investment, are well-suited for rural consumers.
The logistics industry’s expansion also presents new opportunities. Dr. Lu Guihua from the Central University of Finance and Economics noted that both heavy trucks and micro-cards will be essential tools for future logistics. Currently, light trucks dominate urban logistics, but micro-cards are expected to gain more traction. Rising fuel prices are also boosting the appeal of these efficient vehicles.
**Competition Intensifies**
As the micro-card market evolves, competition has become fiercer. In the past, micro-cards were seen as low-quality, low-cost vehicles with outdated designs. Now, manufacturers are investing heavily in innovation, design, and customer service.
SAIC-GM-Wuling’s "Small Tornado" features a newly developed chassis designed for specific market segments. It offers improved strength and a lower ground clearance, making it ideal for logistics and heavy loads. The standard model comes with a 1-liter engine, the largest in the current micro-card market, along with enhanced safety and comfort features.
JAC spent over a year developing the Xiao Wei, conducting thorough market research and product reviews. After its launch, the company organized nationwide test drives and offered prizes to buyers. Changan, the market leader, has been cutting prices on its micro-cards and accessories to maintain its competitive edge. The price reductions are the most significant in the company’s history, with plans to launch a new model at the same price as the old one before the end of the year.
Both Hebei Changan and SAIC-GM-Wuling expressed cautious optimism about the future of the micro-card market. While they see strong growth potential, they also recognize the intensifying competition.