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Automakers See Chance to Go Big in China
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Cadillac's entry in the SUV competition, the Escalade, can seat up to eight people and gets an estimated 12 miles per gallon. It goes on sale in China next year.
For SUV sales, "the volume is low, but the growth rate is high, and we're all trying to get into this segment," said Robert Socia, executive vice president of Shanghai General Motors, a GM joint venture with a Chinese partner.
By contrast, GM's SUV sales in the United States fell 22 percent in March from the same month last year.
China's auto market is still dominated by smaller, low-cost models such as the popular
QQ made by Chery Automobile, the country's biggest domestic producer.
But even at prices below luxury levels, drivers are willing to pay for bigger wheels. Toyota Motor sold 170,000 Camry sedans in China last year, despite a price of more than $30,000, according to J.D. Power and Associates. That is 10 times the average Chinese worker's annual income.
"Chinese buyers typically like bigger cars and they have the resources to go for them," said Tim Dunne, J.D. Power's director of Asia-Pacific market intelligence.
Beijing is trying to encourage the growth of China's auto industry and domestic sales -- but communist leaders are alarmed at pollution and the rising dependence on imported oil, which they see as a strategic weakness. China is the world's No. 2 oil consumer after the United States, and imports rose 12.3 percent last year.
Regulators are phasing in tougher emissions standards and higher sales taxes for bigger engines. They are also pushing Chinese automakers to develop fuel cells and other sources of clean propulsion.
But bigger models reign even among customers willing to pay more for hybrids and other cleaner technology.
General Motors says it will start selling a gas-electric hybrid in China in July. It will be the first manufactured in China and the second in the market after Toyota's Prius.
GM's hybrid will be a Buick LaCrosse, a full-size sedan, after research found that likely buyers wanted a car that size, said Liu, the GM China vice president. He said sales are expected to be modest.
"The Chinese consumer is still back on the curve of satisfying their basic need for transportation," said John Parker, Ford Motor's executive vice president for Asia, "rather than looking at being green."
