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August 22, 2007

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China's emerging middle-class ignores small cars

By Ally From:  www.gasgoo.com

In the first half of 2007, sales of cars with engine displacement smaller than 1 liter declined 28.9 percent over the same period last year while sales of all sedans increased by 25.9 percent, and sales for SUVs rose 39 percent, according to the China Association of Automobile Manufacturers.

A survey conducted by Sinotrust Marketing Research & Consulting indicates that less than 20 percent of potential consumers would choose to buy a low-emission car.

There are several factors contributed to the slump in sales of low-emission cars, experts say.

First, the majority of Chinese consumers would like to judge a man’s social status or affluence by the car he or she drives.

"As people's purchasing power is rising, they are more interested in high-end cars. Chinese customers tend to believe expensive cars give them more decency or dignity," said Su Hui, general manager of the Asian Games Village Automobile Exchange in Beijing. "This propensity for bigger cars is really something new this year."

Secondly, expensive cars become more and more affordable than ever for China's fast growing population of the affluent middle-class.

Moreover, some small cars can not meet the fuel-economy regulations as most of them use outmoded technology and deliver poor performance.

Jia Xinguang, a renowned auto expert, says that invasion of global automaker into Chinese small car market has forced China’s homegrown automaker to quit from small cars manufacturing, leading to a dwindled supply of cheap small cars.

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August 21, 2007

Photos: Gasgoo

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