Gas guzzlers a hit in China, where car sales are booming

[marmar]

from AP, via Yahoo!:



Gas guzzlers a hit in China, where car sales are booming
y JOE McDONALD, AP Business Writer

BEIJING - High, wide and fuel-hungry, the gleaming black Cadillac Escalade on display at the Beijing auto show is an unlikely car for an era of record oil prices.

But while sport utility vehicle sales in the U.S. are tumbling, automakers are finding that for China's newly prosperous car buyers, bigger is still better.

So General Motors Corp. has made the Escalade a star of its auto-show display and is eager to get it on the market here.

"If you look at the fastest-growing market segments in China, there are two — SUVs and luxury cars," said Joseph Y.H. Liu, GM China's vice president for sales and marketing.

Auto sales in China are booming, with analysts and automakers forecasting growth at 15-20 percent this year. But demand for the biggest vehicles is even stronger, with sales of luxury cars and SUVs expected to surge by 40-45 percent.

The phenomenon is welcome news for automakers seeing little or no growth in the United States, Europe and Japan. They also make fatter profits from sales of high-end vehicles than from economy models.

Sales have been boosted by economic growth that has topped 10 percent for five straight years and a surge in real estate and stock prices that created a new crop of Chinese billionaires.

Buyers of land yachts have also been unintended beneficiaries of a government policy meant to help the poor. Beijing has tried to shield farmers and the urban poor from high oil prices by freezing pump prices for gasoline and diesel, keeping them among the world's lowest. That takes the sting out of filling up a gas guzzler.

Gas costs 5.34 yuan (76 cents) a liter or 20.5 yuan ($2.90) a gallon. State oil companies are barred from passing on rising crude costs to consumers, instead covering their losses out of profits from their drilling units. ......(more)

The complete piece is at: http://autos.yahoo.com/articles/autos_content_landing_pages/554/gas-guzzlers-a-hit-in-china-where-car-sales-are-booming/;_ylc=X3oDMTFlODdrY3NtBF9TAzI3MTYxNDkEc2VjA2ZwLXRvZGF5BHNsawNjaGluYS1nYXMtZ3V6emxlcnM-

[kestrel91316]

1. This fad won't last long. Fuel gets expensive enough, the

peasants (of which China certainly has no lack) will attack them in the streets and burn them.

[hogwyld]

2. Or the rich will figure out a way to convert

the poor into a fuel source...