Beijing Auto Show: Escalade SUV is GM's Star, Huge Cars are in Fashion

While record oil prices are responsible for a small car comeback and solid growth in hybrid car sales in the USA despite a sector-wide slowdown, China seems to be falling in love with big cars.

"If you look at the fastest-growing market segments in China, there are two — SUVs and luxury cars," said Joseph Y.H. Liu, GM China's vice- president for sales and marketing. That's why GM put its ginormous Escalade front and center of its display at the Beijing Auto Show. Dongfeng and Auto Works, Chinese automakers, even have models clearly descended from Hummers.Why are Huge Cars Suddenly Popular in China?
Part of the blame can certainly be attributed to the link that has been built over the years in the Western world between wealth and huge SUVs. The newly rich Chinese also want to join the party, even if all the other guests are leaving.

Another culprit is the Chinese government: On one side, it asks automakers to make more efficient vehicles, but on the other it "has tried to shield farmers and the urban poor from high oil prices by freezing pump prices for gasoline and diesel, keeping them among the world's lowest. That takes the sting out of filling up a gas guzzler." Gas costs 5.34 yuan (76 cents US) a liter, or about $2.87 per US gallon.

State oil companies are even forbidden to pass on the rising crude oil costs to fuel consumers. They must take the hit from their profits, encouraging energy waste.

Statistics on Chinese Car Market Growth
But here come the real shocker. You better sit down for this.

"Auto sales in China are booming, with analysts and auto makers forecasting growth at 15-20 per cent this year. But demand for the biggest vehicles is even stronger, with sales of luxury cars and SUVs expected to surge by 40-45 per cent."

Total volume is still low compared to, say, Europe or the USA. But with such growth, it won't take long for the situation to get much, much worse. Air pollution, global warming, depleting fossil fuel reserves leading to peak oil, etc.

The most obvious thing to do would be for the government to stop keeping fuel costs artificially low. That would immediately reign things in a bit. But more must be done, and quickly.

::Gas guzzlers are a hit in China, ::Beijing Pressures Automakers to Improve Efficiency
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Tags: Asia | China | Transportation

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