Demand expected to grow for small-engine, new-energy cars

Within this increase in market share for vehicles with smaller engines, the level of zero emission vehicles, or pure EVs, is expected to remain at fewer than 40,000 units per annum, but the number of SUVs with small engines is expected to significantly increase, while sedans with small engines will rise, but not as fast as the SUV growth rates.

From a volume perspective, however, the small engine sedan will have the largest volume share of the light vehicle market in China.

In 2015, IHS Automotive forecasts are that 2.67 million SUVs with engines of 1.6 liters and smaller will have been produced in China. In subsequent years, this segment will grow by double-digit rates, rising by more than 21 percent year-on-year in 2017.

The growth rate is then expected to slow, but volume will continue to rise with the segment rising to more than 5 million units in 2020.

Meanwhile, as this small engine SUV segment increases market share in China, production of sedans with small engines will also rise, albeit at a much slower growth rate of single digits.

In 2015, this segment will account for about 8.5 million units, and will rise to 10.8 million units by 2020, IHS forecasts show.

The author is principal analyst at IHS Automotive.