Chinese rush to buy cars ahead of curbs

This story was first published in The Straits Times on Jan 15, 2014

SOCIAL worker Xiao Haifeng, 46, lives a three-minute walk away from the hospital where he works in the Inner Mongolia city of Chifeng.

But still, he paid 180,000 yuan (S$37,680) last August for his first car, a new Nissan Grand Livina, that he plans to use only for weekend trips with his family.

He has no real need for a car, Mr Xiao admitted. But he fears that Chifeng, a city of slightly over one million people, may eventually roll out vehicle-control measures, given the worsening traffic jams, especially in the city centre, and that may make it harder for him to buy one.

"I think such restrictions are a matter of time, so it is better to buy (a car) soon," he told The Straits Times. "Anyway, I have always dreamt of owning a car."

Despite rising concerns over the impact of cars on China's choking air pollution and clogged roads, many like Mr Xiao continue to buy cars at a blistering pace.

Nearly 22 million passenger and commercial vehicles were sold in China last year, making it the first country to cross the 20 million mark in a given year.

The figure was 14 per cent higher than in 2012, or double the 7 per cent increase forecast by the China Association of Automobile Manufacturers.

It marked the industry's fastest growth since 2010.

The roaring demand in the world's biggest car market prompted manufacturer Jaguar LandRover, which has never produced its luxury marques outside the United Kingdom, to set up a plant in China. It will start operations this year.

The figures also showed that foreign carmakers are speeding ahead of Chinese counterparts, gaining a 1.6 percentage point of market share.

Foreign carmakers now have 59.7 per cent of the Chinese car market. Toyota, for example, registered record sales last year.

German-based Volkswagen toppled United States maker General Motors as the top China seller for the first time in nine years, while Ford, thanks to its popular Focus car, saw the strongest growth among foreign brands, with a 49 per cent sales spike.

Beijing-based automobile industry analyst Jia Xinguang cited various factors for last year's blistering growth.

One reason is a rebound in Japanese car sales back to pre-September 2012 levels, before China boycotted Japanese cars because of their dispute over the Diaoyu/Senkaku islands.

He also cited how car ownership is still low in China, given that there are about 120 million vehicles in a country of over nearly 1.4 billion people.

"This means less than 100 cars for every 1,000 people, compared with over 600 for major car markets like Europe and Japan," Mr Jia told The Straits Times.

"So, the potential for car sales growth is still quite high in China, especially in smaller cities in inland areas as their economies grow and incomes rise."

Ironically, talk last year that eight more cities were set to introduce car-buying restrictions also boosted sales, with consumers like Mr Xiao making "pre-emptive" purchases, said Mr Jia.

Public opinion, Mr Jia noted, remains split over the main culprit for air pollution, with some blaming coal power plants more than vehicle emissions.

Mr Zhou Yujie, who works in the China University of Geosciences, said he bought a new 270,000 yuan Ford Kuga sports utility vehicle last November as he thinks motor emissions are less culpable than coal consumption.

"I do not think we can blame cars. In any case, I plan to limit my usage by driving only to work during the week and in winter, when the morning is too cold," he told The Straits Times.

However, car sales this year are expected to be only about 8 per cent to 10 per cent more than last year, analysts say. That is because more cities are expected to join Beijing, Guangzhou, Guiyang and Shanghai in restricting car purchases, like Tianjin did from Jan 1 by capping the number of licences.

Professor Jiang Libiao of the South China University of Technology in Guangzhou said China's slowing economy and economic restructuring efforts may also hit enterprises and their car purchases.

And with record levels of smog in cities like Beijing and Shanghai, the government may also raise petrol prices to deter car buyers, analysts said.

Still, Ms Sun Liqun, 44, who works in an education company in Beijing, is hoping to get lucky in snagging a licence plate through the capital's lottery system.

She has agonised over the past year whether to get a car that will let her travel more conveniently from her Yonganli workplace, as she finds it frustrating having to find a cab in the busy city centre.

"I have been hesitating as I do want to play a part in protecting the environment. But there is only that much I can do, and I do have a real need for a car, like many others," she told The Straits Times.

This story was first published in The Straits Times on Jan 15, 2014

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