Back in September 2012, in the briefing "China’s One-Child Policy is Shaping a New Automotive Landscape", I discussed the fact that one natural side-effect of China’s one-child policy is a proliferation of smaller households. In fact, half of all homes are expected to have just one or two residents by 2020. Traditional three and even four-generation households are being replaced by singles, childless couples, and two-generation households in China’s growing urban landscapes. Social changes regarding marriage and the evolving role of women in modern China has allowed for much of this change. Young Chinese are moving out of the familial home upon graduation from university or college, often choosing to remain in the city in which they graduated, and concentrating on personal and career fulfilment before meeting the traditional requirements of the older generation. It comes as little surprise then that the number of households with six or more inhabitants halved between the late 1970s and the mid-1990s and that they accounted for just 6.5% of all Chinese homes in 2013. In this context, full-size MPVs have typically captured a negligible share of the new car market but this is changing.
An article in Automotive News China on May 9 reported that “Full-sized people haulers and SUVs used to be a tiny and stagnant segment of China's vast passenger vehicle market. In the past, only rich people and businesses could afford those vehicles, but times have changed. These days, rising numbers of young Chinese consumers are buying big vehicles, especially large multipurpose vehicles and SUVs.” This prompted me to revisit our households data and it transpires that the number of households of six or more actually bottomed out in 2005 and has been on the rise since.
Households by Number of Persons, China, 1977-2030
Source: Euromonitor International
One factor in this change is undoubtedly the increasing number of elderly Chinese, which is having a huge effect on healthcare provision in China. As the state and the individual now share healthcare costs, expenditure on private healthcare, self-medication, and preventative medicine are all increasing. A recent report carried out by the China Health and Retirement Longitudinal Study, conducted by Chinese and Western academics, polled some 18,000 individuals in 28 regions, provinces and municipalities and found that around 24% or 44 million people aged over 60 need help in their daily activities. The same survey found that 88.7% of the elderly who require assistance with daily activities receive it from family members. The one-child policy and the migration of many young people to China's cities for work continue to threaten to erode the traditional approach of children caring for elderly parents. Admittedly, the share of these larger multi-generation homes of six or more continues to decline. However, they are actually growing in absolute volume terms, with the tally of these homes projected to exceed 30 million in 2020 and as incomes continue to rise, that’s a sizeable target market for larger SUVs and MPVs that surely cannot be ignored.