There are many reasons for the current rise in gasoline worldwide, but many in the U.S. have suggested that the rise in gas prices could ultimately be the result of China’s insatiable appetite for energy.
China has a population of 1.3 billion people. With the relaxation of many old policies and the influx of more capitalistic practices, Chinese citizens are now taking advantage of new economic opportunities that have become available only recently. As such, the middle class in China is growing at a rapid pace, and many people are using their new found wealth to purchase cars. It’s estimated that about 1,000 new cars are added to the road each day in the Beijing alone, not to mention China’s other populous cities. With a growing number of drivers on the road, the demand for gas and oil has been increasing steadily in China, almost by a double digital percentage each year.
Gas Prices in Flux
Despite the growing energy demands in China, the prices of fuel there are relatively low. The current price of gas in China is lower than the average price worldwide, which needless to say has frustrated customers at Philadelphia Ford dealers as they shop for a replacement for their gas guzzling SUVs. But while the Chinese have received a deal on fuel despite the increasingly high demand for it, the international community is finally putting pressure on China, ensuring that Chinese drivers will be forced to comply with more appropriate prices. Part of what made the price of gas low in China was the government subsidizing of the cost of fuel, which the international community argues has led to some destabilization when it comes to the price of oil.
As a result of these international pressures, and the removal of government subsidies, the price of gas is now about $3 per gallon. To most Americans these days, $3 per gallon still sounds like a pretty good deal, but unlike the U.S., the gas in China doesn’t include additional state and federal taxes.
A Growing Car Culture
The rising middle class is a large factor that is fueling demand for gas in China. A growing middle class means that the standard of living is on the rise, which in turn means that the number of cars being purchased is also on the rise. As this trend continues, the demand for fuel is only going to increase. While the U.S. has fairly new government mandates that will enforce fuel efficiency standards in the coming years, China’s government may not be implementing such requirements any time soon. Currently, China’s automotive industry is booming and new automakers are focusing on expanding globally, especially to the U.S. As such, Dodge dealers Washington DC predict it’s not as likely that the Chinese government or Chinese automakers will be looking to place restrictions on their efforts any time soon.
Chinese drivers are eager for a Western-style car culture. Evidence of this is the number of sport utilities that have been imported into the country recently. Auto shows have become hotspots for young Chinese eager to see the latest and greatest offerings from the global auto industry.
American Cars in Vogue in China
Interestingly, American automakers have been fairing well in China. Here in the U.S., domestic automakers Ford, General Motors, and Chrysler, have been hit hard by declining sales due in part to their truck- and SUV-heavy lineups that have lost their popularity thanks to $4+ gas prices. A good example of a successful American brand in China is Buick. The Buick Regal is currently one of the highest selling vehicles in China and as a result GM’s success has helped to offset its bleak performance at home to some degree.
GM in particular has expanded its operations in China wisely says Alexandria Used Cars. The automaker is rapidly expanding their manufacturing base in the country, not to mention boosting the number of dealerships. Their marketing efforts have also paid off big, with American vehicles seen as status symbols, such as the Buick GL8 minivan that has generally done poorly in the U.S.
Chinese Cars Coming Stateside
While global automakers are scrambling to capitalize on the growing number of Chinese drivers, Chinese automakers are also looking to opportunities abroad. The United States, for now, is still the world’s largest automotive market, and many of China’s automakers are preparing to drive into the States.
Chery Automobile Co is one of the largest Chinese brands, and they may be the first to take hold in the U.S. market. Private investors are working hard to open dealerships to sell the Chinese-made vehicles, and the timing could perhaps be perfect. Between the weakened economy and rising gas prices, Chinese cars potentially offer an affordable alternative for American drivers. Demand has been steadily increasing for economic vehicles such as the Honda Civic and the Toyota Corolla which have seen tremendous success lately points out Santa Maria Honda dealers, but Chery could offer American buyers even more affordable cars.
Changing Auto Environment Worldwide
The influence China has on the global automotive market is staggering. New cars on the populous roads of Beijing, Shanghai, and other cities have not only potentially affected the global price of gasoline, but this has also spurred an interest by automakers to become more competitive in the country. Despite troubles at home, U.S. automakers remain incredibly optimistic about this developing market which is poised to become the world’s number one auto market soon.
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