The weight held by the car industry in global trade was highlighted yet again by the recent American campaigns against Chinese duties on car imports. A major debate is unfolding in the US on how to handle Chinese trade in relation to cars, and while the politics behind this story are beyond the scope of this article, its implications for the simple car-lover are interesting and warrant a discussion.
At the heart of the American move against these new car import taxes is the realisation that China is now a major market for the automobile industry. In particular, high-end SUVs are extremely popular (and profitable) in that part of the world, to the point that a third of the regional sales of Mercedes Benz are SUVs (and yes, these models are among those that would be affected by the new duties). These cars are the equivalent of what a Porsche or a Lamborghini were in Europe or the USA a number of decades ago – luxury products, targeted towards a very wealthy and prestigious consumer-base. There may be no concern about the taxes on Mercedes Benz trucks in China, but élite cars are a matter of much greater import (no pun intended).
The Chinese market for luxury cars is booming, in sharp contrast with the situation in the West. This is particularly true of the European countries. With the financial crisis looming, options for transport other than the car are becoming increasingly popular. The rise of cheap airlines, along with the relatively small size of the continent and its excellent interconnections (by rail, for example), all mean that travelling from one country to another is often easier without taking one’s own vehicle. Big cities are usually endowed with excellent public transportation systems – and Europe is a world of big cities, being by a distance the most urbanised continent in the planet. Last but not least, environmental concerns are a strong factor in Europe, leading several people to choose transport by train, tram or bus rather than by car. The lack of fuel economy of the SUV and also the high tax rates levied on them in Europe is also a factor in making people look at alternatives.
None of this implies that cars are no longer important in Europe, but the aspects that defined the Western car market are increasingly shifting towards the Chinese territory. This is not necessarily to say that China is “richer” or more fortunate – it could simply mean that they are still working towards reaching the saturation that has been developing in the West. Whatever the interpretation, though, they are in a state of transition not unlike what took place in Europe and the USA just short of a hundred years ago. Cars started out as luxury products, reserved for a clique of patrons and property owners, and rather suddenly – albeit at different moments in different countries – their doors were opened to normal people. It is completely plausible to imagine a similar process taking place in China in the near future. The concerns voiced by the American governments about the new import duties could someday appear short of ambition – there will be so much more to the Chinese car market than a highly profitable SUV.
