Beijing Auto Show: Escalade SUV is GM's Star, Huge Cars are in Fashion
by Michael Graham Richard, Gatineau, Canada on 04.25.08
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
More Articles About China
::China to Build 97 Airports in 12 Years & the Future of Air Travel
::How Fair Is Reporting On China's Environment?
::China Celebrates Status As No. 1 Polluter, And Other Doublespeak
::China Short Of Coal: 12-Day Reserve And Counting
Why are bad habit so contagious?
Why are bad habits so contagious?
"The newly rich Chinese also want to join the party, even if all the other guests are leaving."
Wishful thinking. The popularity of SUV's continues to spread globally, and nearly every manufacturer continues to add more of them to their line. No one is leaving the party, they're just arriving more slowly.
"Wishful thinking. The popularity of SUV's continues to spread globally, and nearly every manufacturer continues to add more of them to their line. No one is leaving the party, they're just arriving more slowly."
Compared to how it was not long ago, the party is definitely over. There's still a cocktail with some smooth jazz playing, but the rock music is over..
Just look at the financial results of Ford, GM and Chrysler in the past few years..
It's simply a factor of an exploding economy. Suddenly there are Chinese with lots of disposable income. In a country where uniformity/equality is so important and there is such a long history of poverty, its a HUGE ego boost to show off your wealth.
Its no different from when a poor person in the US suddenly gets rich (e.g. lottery). They purchase all the things that they think are needed to show people that they are rich- big house, big car, etc. not realizing the shallowness of it all.
Not an excuse, but an explanation.
Worldwatch wrote an interesting article about this a month ago: http://www.worldwatch.org/node/5657
"SUV buyers comprise a relatively small group of China's new rich, who represent the top of the nation's income pyramid. While personal cars are still beyond the reach of the average Chinese citizen, for the country's most affluent, luxury SUVs are becoming their second or third vehicle. Price and cost are not a limitation, and what buyers look for in the chunky and sturdy vehicles is the image the SUVs convey, which caters to their aspirations for novelty and individualism."
"we live our lives under the illusion of freedom but are likely to be slaves to some defunct economist."
Ugh, China's just as bad as we are, if not worse for wanting to BE like us. That gas price has to go up significantly if we're ever going to solve this oil crisis.
It's not a matter of "solving the oil crisis", it's whether we'll make it out alive (or maybe with just a bad limp).
It's not a matter of "solving the oil crisis", it's whether we'll make it out alive (or maybe with just a bad limp).
SUV's should be heavily taxed with luxury taxes to make them less attractive to future buyers. Trucks i can see having a purpose, but a 125lb professional urban female buying an 6000lb 12mpg escalade just because she can is ridiculous
"GM put its ginormous Escalade front and center of its display at the Beijing Auto Show."
Did we ever wonder about GM's commitment to the planet?
This explains it quite explicitly.
They are interested in selling huge unsustainable guzzlers, but not interested in making our planet survive.
"Just look at the financial results of Ford, GM and Chrysler in the past few years.."
That has as much if not more to do with union labor rates and year-over-year double-digit increases in employee healthcare than anything else. The financial results of GM and Ford are both significantly improved recently even though the number of vehicles they are selling has continued to fall and not because of anything to do with sales numbers of SUV's, but because they were able to negotiate more favorable contracts with UAW and offload tens of thousands of union employees.
The domestic manufacturers are also hurt by a dramatic increase in "party-goers". Ten years ago there were no foreign large SUV's/trucks and only a handful of mid-sized SUV's/trucks. Today there are about twice the number of players in each of those and other large vehicle categories. Toyota's financial results are also just fine even though their cars, trucks, and SUV continue to get larger.