Higher gas prices aren’t slowing down the Chinese consumers

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The Chinese consumers seem rather unafraid of buying compact and mid size cars according to this news report. Sometimes, just sometimes, China Car Times really does wonder how the average middle class Chinese family do their accounting to afford such large cars and what we think must be average salaries (perhaps 2 to 8,000rmb for the mid level office worker, depending on location)

 DESPITE rising fuel prices and the government’s encouragement to use energy efficient vehicles, the compact and mid-size car segment will sparkle this year.

Last year, all segments except the mini car and subcompact sector, recorded double digit growth and contributed to a 22-percent jump in passenger car sales last year.

Sales of mini cars with an engine capacity less than 1.3 liters dropped 11.6 percent to 730,200 units last year, according to the China Association of Automobile Manufacturers.

In particular, sales of cars with an engine size smaller than one liter slumped 31 percent from a year earlier.

The total market share of passenger cars with an engine less than 1.3 liters fell six percent in 2007 from a year earlier.

Meanwhile, a report by Auto Resources Asia Ltd, the marketing strategy division of J.D. Power and Associates, revealed that the compact car segment posted a 31-percent sales growth last year while sales of the mid-size car sector rose 29 percent during the same period.

Most analysts agreed that the weak demand for smaller engine-powered vehicles was caused by rising concerns about quality and also due to the availability of more compact and mid-size vehicles in the market as their prices fell.

Meanwhile, a FitchRating report also said that the rapid development of compact and mid-size car segment came after changes in consumption structure in the emerging market after an explosive sales spurt over the past two years.

“Compact cars will remain a driving force to propel the market forward this year,” ARA’s report said.

Car makers have recognized the growth potential of this segment.

More than 1.86 million new compact cars hit China’s roads in 2007, a rise of 445,000 units from 2006. They accounted for just over a third of all new cars sold.