The first car you owned in China
We had finished a meeting with Rick Wagoner, President, General Motors. The last question that was permitted had been asked. Rick was sitting right across from me. I looked over at him as he was getting out of his seat, pointed my finger towards him and said, “What was the very first car you owned?” Just as quickly he shot back, “Chevy Camaro”.
Everyone, I asked that day, knew instinctively, the first car they ever owned. The head designer for General Motors, Ed Welburn’s first car was a Corvair. Carlos Ghosn, President, and CEO of Nissan Motor Ltd remembered instantly that his first car was a used car, but wouldn’t say since it was a competitor. My husband’s first car was a ’71 Valiant, mine was a Volkswagen Bug: green, named Herman.
People don’t forget the very first car they owned. In fact, many people, as they get discretionary income buy the first car again. Some have gone as far as locating the original car and repurchasing it.
There are 1,321 billion people living in China, about 21% of Chinese are under the age of 15. China is reporting that there are around 45 million passenger vehicles on the road.
This means that there are about 1.2 billion first time car buyers in China. If you didn’t know why all the automotive manufacturers are on the fast track to China, it is because of the first time car buyers.
The Economist says that the median income for a Chinese person is $5,430, and the price of a gallon of gasoline is $2.88.
While cars are not being exported to the United States yet, parts are being exported and built into cars in America.
Top Manufacturers in China:
1. First Auto Works – China’s largest automaker of trucks and cars, including a car named Hongqi, which means Red Flag. FAW has joint ventures with VW and Toyota.
2. Shanghai Auto – Shanghai Automotive Industry Corp(SAIC) has to Joint Ventures with General Motors and Volkswagen in China. SAIC is a state enterprise owned by the city.
3. Changan – Third largest automaker in China, after First Auto Works and Shanghai Auto. The state-owned company already has dealings with Ford, Suzuki, and Mazda for Chinese operations. Changan is working with the Italian design and engineering firm IDEA and has opened an R&D center in Italy.
General Motors gave me some numbers you might be interested in:
China is almost the same size as the United States, but the Chinese population is about 135 people per square kilometer, which is about four times greater than that of the U.S.
The average life expectancy in China is over 71 years old, up from 35 years in 1949.
China’s GDP grew an estimated 11.4% in 2007.
At present, there are 30 cars for every thousand people in China, which is far below the world average of 120 cars, says Peoples Daily.
The China Association of Automobiles says that China’s top ten local brand cars are:
7. Free Cruiser
9. Changan Benben
10. Geely King Kong.
Top 10 cars sold in China:
1. / Santana / Shanghai VW / 203,100
2. / Jetta / FAW-VW / 201,100
3. / Excelle / Shanghai GM / 196,800
4. / Camry / Guangzhou Toyota / 170,300
5. / Xiali / FAW-Tianjin Xiali / 132,500
6. / QQ / Chery Auto / 130,200
7. / Focus / Changan Ford / 125,000
8. / Elantra / Beijing Hyundai / 120,300
9. / Accord / Guangzhou Honda / 11,800
10. / Family / FAW-Haima / 11,370
In 2006, china had 25,480 miles of expressways: by 2020, it is expected to have 53,000 miles of expressways.
China relies on coal for close to 2/3 of its total energy needs
China’s emissions, in the past 7 years, have grown by 120%, US emissions by 7% at the same time.
As of 2006, China surpassed the US as the largest emitter in the world.
China produces 1/3 more CO2 per unit of energy than does the US.
Does this make products made in China have an unfair trade subsidy, and is there a desire to countervail those subsidies, translating into a tariff of around 17% increase, $50 B carbon tariff – will this matter more than wage rates in the future?