For a long time, the Chinese car market looked more like the American and less like the European markets. They liked big, they liked SUVs, they liked real cars with a trunk. For a long time, hatchbacks and subcompacts were unsalable in China. Last year, the picture changed. More and more low cost subcompacts are getting on Chinese roads.
“In China, new-car sales last year rose just 6.7 percent to 9.38m units, slamming the brakes on the market’s double-digit growth. Nonetheless, a batch of automakers enjoyed nearly 30 percent jumps in sales,” the Nikkei (sub) writes. And who might those be?
Joint ventures established by Toyota, Nissan, Honda and other Japanese automakers have maintained strong demand by rolling out subcompacts. Dongfeng Honda for instance reported a 29.1 percent surge in sales for 2008. Dongfeng Nissan’s targets sales of 388K vehicles for 2009, up 11 percent from 2008, despite a cooling local auto market, the Nikkei (sub) says.
What changed? (Government controlled) gasoline prices had risen dramatically during the first half of the year. When crude nosedived, gasoline prices remained high and only declined slightly. Also, the government slashed sales tax on cars with a displacement of 1.6 liters or less from 10 percent to 5. At the same time, the raised the taxes on the bigger bore stuff. Bigger bore didn’t suffer. But small jumped.
The Chinese market is looking more and more like the European and Japanese markets now. Who’s hurting? GM. Last year, GM’s Buick joint venture with Shanghai Automotive Industry Corp. dropped 8.3 percent compared with 2007, Edmunds said. This year, it’s likely to get worse, as small is getting bigger and bigger in China.
Not to mention that there’s a growing middle-class that is just now (financial crisis notwithstanding) getting access to cars, but cant afford the same behemoths than the super-rich got.
I’ve always found funny that U.S. buyers have car tastes very similar to those of developing countries, i.e. geared towards appearances at the expense of practicality.
Well, as much as a trunk is beschmirched by many Europeans (often due to the fact that roads are crappy and tiny, especialy in the old towns predominent there and in the British Isles/Republic of Ireland) but trunks are practical in their own way, AKM.
They keep prying eyes from looking at your stuff, busting the backlight (glass) out and looting your car.
The advent of split-fold rear seats in sedans pretty well finished off any practicality advantages that small-medium hatchback cars had for Americans.
It’s not like we’re lacking for room here.
As I tell my British friends, Michigan is approximately the same size as England, and has 6 million (and counting – downward) while England has more than 10 times that number of people.
They look at me as if I’m deranged, and don’t believe me until they visit.
They also don’t believe me when I tell them that where we live, it’s colder OUTSIDE than in their freezer compartment in their little ‘fridges in their kitchens, for a couple of months on end.
I’d tell people that and would get looks of pity as if I’d just said a tiny UFO had landed on their heads.
Of course, here in northwestern MIchigan, it was -8 degrees F. this morning on the way to work and it’s now a veritable heat wave outside. 18 degrees F.
Let’s not forget the impact of Chinese government policies. Last year, China implemented a tax policy on the purchase of new cars which added significantly to the cost of a new car with a larger than 4.0 liter engine. Mid-sized engines (between 2.0 and 4.0 liters….typical v-6 size)take a lesser…but still significant….hit. Engines less than 2 liters have no tax penalty.
If our government is so averse to a gas tax(the most prudent way to socially engineer increased energy independence, in my view), this type of tax dis-incentive to consumption might be the next best way.
@Mark MacInnis
If our government is so averse to a gas tax(the most prudent way to socially engineer increased energy independence, in my view), this type of tax dis-incentive to consumption might be the next best way.
That is the worst way to have people use less fuel.
The Chinese are smart to keep gas pricey. We should be so smart.
AKM, I think you have it backwards. Third world consumers emulate american tastes. Nothing says you’ve made it like being able to afford a large car. And american large cars have always been less expensive to buy than anyone elses.
A gas tax in the US is the equivalent of a poor tax. It is also political suicide. At least the Chinese are not letting each province make up its Fuel Economy rules.
menno, while Michigan has been beaten up rather badly for the last decade, I am pretty sure there are still over ten million people who live in the state. I am no longer one of them, but I do have land in Lake county. It sounds like you might be located near there?
Mark MacInnis : If our government is so averse to a gas tax(the most prudent way to socially engineer increased energy independence, in my view), this type of tax dis-incentive to consumption might be the next best way.
It seems to me that when European countries adopted taxes on engine displacement what happened was that manufacturers responded with comparatively small displacement engines that delivered lots of horsepower and performance, but lousy gas mileage.