Chinese car market revs up as families' pockets fill up - Politics Forum.org | PoFo

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On Sept. 22, China tried out its first-ever "no-car day." Residents were urged to take the bus or train in an effort to be eco-friendly.

The Chinese government said, "We can save 33 million liters of fuel a day throughout the country."

While a total of 108 cities joined the program, a notable exception was Guangzhou in southern China, where the number of cars is comparable to the figures in Beijing or Shanghai.

The capital of Guangdong province, which calls itself the Detroit of China, refused to take part.

While some said the city government was kowtowing to car manufacturers, a city official countered the view, saying there were concerns that the buses and subways would become too congested.

The city's poor public transport has helped promote the sales of cars among its residents.

Twenty-eight-year-old Du Wenjun bought a new car in early September.

Previously he had driven "QQ," a small car manufactured by Chery Automobile Co., based in Anhui province. Water sometimes leaked from the radiator, however, and one of the windows became unable to open.

After driving the car for only one year, he bought a new car--a silver-colored Fit, manufactured by Guangzhou Honda Automobile Co., a subsidiary of Tokyo-based Honda Motor Co.

The car cost 75,000 yuan (about 1.12 million yen). Gas and parking space rental are also expensive. But Du was willing to bear the costs.

"After I realized how convenient cars are, I couldn't go back to being on a crowded bus."

A 37-year-old member of the teaching staff of a university in Guangzhou, who wanted to be identified only as Chen, made a 2,000-kilometer round trip to Sanya on Hainan island in southern China with his wife and son in his Honda Accord.

"The trip was hard as we encountered heavy rain. But I gained self-confidence in driving long distances," Chen said.

The trip, organized by a car dealer, saw a total of 25 families or other groups make the journey.

Many of them were from rich households with an annual income of 150,000 yuan (about 2.25 million yen) or more. They included company owners, lawyers and employees of state-run firms.

In 2006, about 7.2 million cars were sold in China, the second-largest number for any country, behind only the United States.

Major Japanese supermarket chain operator Aeon Co. opened a large store with a parking space for 2,000 cars in the city of Foshan in Guangdong province.

In 2005, the total length of expressways in China exceeded 40,000 kilometers, the second-longest in the world, again behind the United States. It is expected to reach 85,000 kilometers by 2025.

High-end cars are now selling well in China.

According to Nagoya-based research company Fourin Inc., which specializes in the global car industry, 2,300 Porsches, 120 Bentleys, 120 Ferraris and 70 Rolls-Royces were sold in China in 2006.

In the first six months of this year, about 10,000 Lexus cars of Toyota Motor Corp. were sold.

"Various cars are currently sold in China. They range from cheap ones to high-grade ones," said Fourin's managing director, Tetsuo Kubo.

"In the future, there will be more middle-class people. At that point, it will become commonplace for people in China to have cars," he said.

In urban areas in China, washing machines and refrigerators can now be found in about 90 percent of households. Each household has an average 1.3 televisions and 1.6 mobile phones.

But cars remain out of reach for the average family. Currently, there are only 5.9 cars for every 100 households.

Sales are expected to increase, causing concerns about traffic jams and parking space shortages, already serious problems.

China also cannot meet its demand for oil only with its domestic supply. If the number of cars increases further, it is feared an energy shortage could occur.

At the end of 2005, Toyota started production of its hybrid Prius cars in Changchun, capital of Jilin province, in northeastern China. It was the first time that Japan's top automobile manufacturer started production of the environmentally friendly cars overseas.

With a price tag of 280,000 yuan (about 4.2 million yen) or even higher, few have been sold. But Toyota took into consideration the Chinese government's intention to spread environmentally friendly vehicles throughout the country.

Honda also plans to start exporting hybrid cars to China soon.

For the government, headed by Hu Jintao, a top priority is now being placed on the achievement on eco-friendly economic development. The automobile industry is part of this overall push.

Tongji University in Shanghai, known for its research on automobiles, is manufacturing fuel cell-powered cars and other environmentally friendly vehicles on an experimental basis in cooperation with Chinese car manufacturers.

"China must diversify the sources of fuel of vehicles by promoting the development of hybrid or lower-pollution diesel engines," Yu Zhuoping, dean of the university's Automobile Department, said.

China joined the World Trade Organization (WTO) in late 2001. At that time, there was a widespread view that the Chinese domestic car industry would suffer due to Beijing's promise to lower tariffs on imported cars.

But small private Chinese companies were able to achieve rapid growth through the manufacture of cheap vehicles.

Geely Group, based in Zhejiang province, is a prime example, with its motto, "Let's make good-quality cars that the general public can buy."

Geely Chairman Li Shufu, 44, started manufacturing passenger cars in 1997 after producing refrigerators and motorbikes.

The company initially bought engines from Toyota and manufactured cars that looked like Charade of another Japanese car maker, Daihatsu Motor Co.

At present, Geely sells nearly 200,000 small cars priced between 30,000 yuan to 100,000 yuan (about 450,000 yen to 1.5 million yen) each year. It aims to increase production to 2 million cars by 2015, with two-thirds to be exported.

The growth of the company symbolizes the rapid economic development of today's China.

However, Geely has one concern. As the image of the cheap-car producer spreads among consumers, it becomes increasingly difficult to market the company in the high-end market.

"We purchased a car manufacturer in Shanghai to make it a high-grade brand. But the cars were not accepted by the consumers. As a result, we were forced to reduce the prices," Hong Shaolun, 47, a director of Geely, said.

Currently, Chinese brands account only for 30 percent of cars sold on the domestic market. The remaining 70 percent are foreign brands manufactured by joint ventures between Chinese state-run companies and foreign companies, such as Volkswagen, General Motors and Toyota.

For Chinese consumers, foreign brand cars are considered more trustworthy than those made by Chinese manufacturers, which have limited experience in technological development.

As a result, China has become a major battleground for car makers from across the globe.

"The number of cars sold annually in China will exceed 10 million in 2008 and will reach the level of the United States (more than 17 million) in 2015. Then, it will top 20 million, becoming the world's largest," Atsuyoshi Hyogo, a managing director of Honda, said.

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Ahhh, the development of suburban culture and society. It will be interesting to see if the car will bring about uneven and random development to Guangzhou, as we see in the West.
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