Passenger Car Sales Roll Along: “Eco” Versus “Ego”
The first half numbers are in for 2007, and China’s auto industry chalked up another six months of solid gains. Total vehicle sales (trucks, buses and passenger cars) increased by 23 percent to 4.4 million units. Passenger cars accounted for 3.1 million of those sales, a 22 percent increase over the previous year.
But not everyone in China is happy with the country’s growing love affair with the automobile. In its July 9 edition, the China Economic Review reported on concerns expressed by one of the nation’s most prominent mayors.
Shenzhen mayor pleads for fewer car purchases
Xu Zongheng, the mayor of Shenzhen, one of China’s largest cities, has asked residents to not buy any more cars, the Financial Times reported. Xu said car ownership is growing far faster than the city’s ability to build roads and is causing heavy air pollution. “Although I have no legal power to do this, I am asking everyone to not buy cars,” he told a public forum…The number of cars in Shenzhen, a city of 10 million, was likely to increase by around 200,000 this year, while car exhaust could cause up to 70 percent of the city’s air pollution. China is the second-biggest car market after the US.
The city officials in Beijing undoubtedly share Xu’s opinion because Beijing has an even larger problem. By the end of May, 2007, Beijing passed the three million mark as far as the number of vehicles registered in the city. (By way of reference, there are approximately 1.9 million cars registered in New York City.) According to People’s Daily, 1000 new passenger cars are registered every day in China’s capitol. Like Shenzhen, Beijing suffers from both traffic congestion and air pollution.
During the three-day summit on China-African Cooperation which Beijing hosted in November, 2006, 80 percent of government vehicles (an estimated 490,000) were kept off Beijing’s streets, and private car owners were encouraged to take public transportation. Rumors abound that the city fathers will run experiments incorporating similar restrictions this August — a kind of trial run for next year when Beijing hosts the 2008 Olympics.
Human nature being what it is, however, China’s consumers appear to be ignoring the pleas and concerns of the country’s leaders. As reported by People’s Daily, sales of low-emission cars in China declined 11.67 percent in the first half of the year, with the majority of consumers valuing social status over the environment. Low-emission car sales dropped 25 percent in Beijing alone, according to Su Hui, head of Yayuncun automobile market. “When consumers purchase automobiles, they tend to consider how the automobiles reflect their ‘face,’ their social status. Larger vehicles, more expensive models and famous brands are usually preferred,” Su explained.
A survey, done by Sinotrust Marketing Research & Consulting company targeting 15,000 potential consumers, shows no more than 20 percent would consider low-emission cars as their first choice for quality reasons as well as social status. One consumer surveyed, Mrs. Huang, intended to buy a low-emission car, but found they performed poorly in terms of operation, comfort, and safety after a test drive compared with larger cars.
The more things change, the more they stay the same. Although they may not have expressed their preferences in terms of “face,” American consumers have always preferred the comfort of larger, less fuel-efficient vehicles. Just as U.S. lawmakers have found, China’s government officials will find that consumer tastes and the free market always prevail over government regulations and pronouncements.
That leaves the responsibility squarely up to China’s automotive industry itself to design vehicles which meet the taste and functional requirements of the consumer, but also the requirements for fuel efficiency and environmental friendliness. With China becoming such a large auto market, and concerns already being expressed about the impact of this development on the environment, doing so will not only be good for the bottom line, but also for society at large.
