China Pushes Automakers for Fuel Efficiency; Consumers Buying Larger Vehicles
20 April 2008
New York Times. While China’s government is pressuring automakers to improve efficiency, China’s consumers are increasingly buying large sport utility vehicles and full-size luxury cars.
The shift of the Chinese market toward larger vehicles will probably push up the country’s already voracious demand for imported oil and make China an even bigger emitter of global warming gases. The trend toward big vehicles is being driven by rising incomes for China’s elite as well as government price controls on gasoline and diesel fuel that are keeping fuel prices below world levels as a way to limit broader inflation in the economy.
For the first two months of 2008, sales of sport utility vehicles in China were up 38 percent and sales of luxury cars climbed 30 percent compared with the corresponding period a year ago. By contrast, overall sales of cars, S.U.V.’s and minivans rose 16 percent.
...many auto executives are skeptical that Chinese consumers will be willing to pay considerably more for cars with hybrid engines and other alternative propulsion technologies while hybrids still account for less than one percent of the far more affluent American market. So unless the government heavily subsidizes vehicles with new technologies, their sales may be limited along with their effect on oil imports and emissions of global warming gases.
There may be a mind set of "more for your money". A large car just looks like more for your money. They are roomier and seat more people comfortably. If they can make these cars get better mileage, then that might help.
I do not think that they want to dictate what size cars can be sold. It IS a communist country, but once someone has made some money, they do not want the government telling them that they can not buy a big Buick.
At first, the government allowed companies like Chrysler to come in and build Jeep SUVs. They liked it as a utility vehicle that could be used for many things. The Chinese government wanted the factories and jobs there and wanted the technology. The decades old business dream of selling soda pop to 1 billion Chinese is still an attraction, no matter how much of a myth it is.
Posted by: sjc | 20 April 2008 at 07:09 PM
If they want to mandate hybrids, that's fine with me. If you're going to have an authoritarian govt, might as well do some good with it instead of pretending that these people actually have a choice. Then once they're all driving hybrids, and have their own solar panels, they can demand democracy with their new autonomy. Win/win.
Posted by: Elliot | 21 April 2008 at 12:39 AM
how do subsidised fuel prices curb inflation exactly? I would have thought it was the other way around, surely the more people have to spend on fuel, the less they will have to spend on other things, thus curbing inflation.
oh, and by the way, if it's not immediately obvious that stoking a love for SUV's in the world's biggest market is a disaster of epic proportions for the environment then the rose-tinted glasses need to come off with some alacrity.
Posted by: eric | 21 April 2008 at 01:26 AM
The original article is much more balanced.
While the number of large SUVs being sold in china is increasing, I suspect that it is swamped by a much larger number of much smaller vehicles. Yes, the high tech solutions being offered by some chinese manufacturers will be too expensive, but so will the SUVs, from home or abroad.
Posted by: Tim | 21 April 2008 at 06:04 AM
the chinese gov is subsidizing fuel prices in order to grow the economy.. and this is one of the distortions, people will buy gas guzzlers and will never buy a hybrid.
They are also having fuel shortages, the refineries are hesitant to make diesel/gas since they have to sell it so cheap under price controls. Price controls did not work either when Nixon tried them.
Posted by: Herm | 21 April 2008 at 06:31 AM
@eric
Pls see US economy for your answer. If something as essential to an industrial nation raises in cost everything else has to just to compensate. Unless you use ur bicycle to go everywhere you then convince every other form of transportation not to use gas any more then we may not see such an inflation in prices on things such as milk and eggs.
signed dumb engr
Posted by: JJSpawn | 21 April 2008 at 08:03 AM
Mark Twain once said "there are lies, darned lies and statistics". Numbers can mislead. If you sell 1 SUV this year and 2 next year, you have had a 100% increase in sales. As they say, the devil is in the details and when you hear these kinds of numbers it is best to look deeper into them and find out how they were collected and computed.
Posted by: sjc | 21 April 2008 at 09:50 AM
I think it's important to also know that hybrids, like the Prius, is heavily taxed in China. It costs about $32,000 for a basic Prius there. I do not know what a typical car or SUV cost in China, but from what I read, it's significantly lower.
I believe that Buicks are popular there because it is considered a status symbol, and people do like bigger cars there, as do many all over the world.
One definition of inflation is that there is too much money, chasing fewer goods. If the gas prices is allow to float in China, it's likely that inflation would skyrocket there. That's my guess...
Posted by: Charles S | 21 April 2008 at 11:35 AM
There is nothing wrong with buying big cars.
There is plenty wrong with buying cars that use a lot of fuel, but the two are not fully correlated.
Subsidizing fuel is crazy - the Chinese must know this and are already over the "economic ignition" hump, so they could stop it any time the felt like (and put the money into public transport for instance).
Why should we expect the Chinese to have "special wisdom" - the chances are they will repeat the errors that the west has made - or maybe $117 oil will dampen it a bit.
All we can do is hope that since their automakers are newer and might have less mental baggage, they could get to BEVs or PHEVs quicker than we are in the west.
Posted by: mahonj | 21 April 2008 at 03:24 PM
"There is nothing wrong with buying big cars.
There is plenty wrong with buying cars that use a lot of fuel, but the two are not fully correlated."
I would say there is a pretty strong correlation between vehicle size and fuel consumption. in almost all cases, the larger vehicle will be heavier and have a higher aerodynamic drag factor, therefore requiring more energy to travel the same distance. so yes, there is something wrong with buying big cars.
Posted by: eric | 21 April 2008 at 04:41 PM
My Taurus SHO has the same interior passenger room and more trunk room than a Mercedes S500, but gets much better mileage. It is considered a mid size auto but weighs less than 3000 pounds. The Mercedes weighs over 4000 pounds. The aerodynamics of the SHO were very good back in the day and the fact that I routinely get 27 mpg on the highway and can seat 5 with all the luggage says you can have a big car and good mileage.
Posted by: sjc | 21 April 2008 at 07:17 PM
SJC...Did you actually overall average 27MPG over 1 year? Or did you only get 27MPG on 2 short tanks just to check your max. MPG....while you drove solo? I would get 53MPG in my Festiva on the summertime highway, but it really overall averaged only 45MPG thru the winter, spring, summer & fall.
Posted by: litesong | 21 April 2008 at 11:11 PM
Actually, if you are talking about Buick (http://www.buick.com.cn/), you should bear in mind that most cars of that brand sold in China are "Excelles" (rebadged Daewoos) which aren't exactly huge. Still, the same people might want a bigger LaCrosse if they could afford one...
Posted by: Nikokin | 22 April 2008 at 01:31 AM
I get 27 mpg on long trips with 2 people and get almost 25 mpg with 4 people and luggage. The point is, you can have a large comfortable car that gets good mileage. It has to be light and aerodynamic with an efficient engine and transmission. This is nothing new, the automakers have known this for a long time. Once people realize that they do not have to drive econoboxes to get good mileage they will accept it. Watch the Camry and Altima hybrids. People will buy as many of them as they can make.
Posted by: sjc | 22 April 2008 at 08:46 AM
sjc...Americans think your 27MPG is great because they care little for the planet. My 53MPG car just made me want a 100MPG vehicle. Now that won't satisfy me. I want a car that has 1/500th the pollution of an ICE. I have the way pointed out to me. My electric bicycle has only 1/700th the pollution of an ICE.
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