The Chinese government hopes to boost the number of clean vehicles on the road 10-fold by the end of the decade through the spending billions on research grants, steep subsidies and new infrastructure — such as charging stations — to encourage consumers to go electric.

However the problem is that the eco-unfriendly sport-utility vehicles have not caught the fancy of the consumers who rather prefer to buy eco-unfriendly sport-utility vehicles. Accounting for roughly a third of all car purchases, the Chinese drivers bought 6.2 million SUVs — up 52 percent year-over-year in 2015. A mere 189,000 plugin vehicles or less than 1 percent of total purchases were ade by consumers at the same time.

Consumer preferences are running ahead of well-intended government policy.

Chinese roads and byways often have a Mad Max flavor to them as there are very few traffic cops in China and one key reason for the SUV boom is a simple desire for safety. More than 17 million cases of road rage reported in 2015 alone along with more than 200,000 traffic fatalities in Chinese roads. Therefore in such an environment, a bigger car can feel like an insurance policy, reports Bloomberg.

Another reason for the growth of SUN segment in China is the enhanced capability of the consumers to upgrade to better rides given the more affluent condition of Chinese consumers. China’s most popular passenger vehicle, as recently as 2012 was the unsafe Wuling Sunshine microvan costing about $4,500. But in recent months, as rural Chinese trade up for budget SUVs, the Sunshine’s sales have declined precipitously.

An era of cheap gas has also fuelled the rise of China’s SUV car like their US counterparts. Prompting China’s government to overhaul its system for setting fuel prices in an effort to curb consumption, in 2015 gasoline demand grew by about 10 percent over the previous year.

However China still have only about one car on the road for every five people, compared with one for every 1.3 people in the U.S even if Chinese stopped buying SUVs entirely. That gap is destined to narrow as its economy grows and its population gets richer.

Hence it is important for China to curb the growth in gas guzzlers. Strict enforcement of traffic laws would save lives and help convince drivers that they’re safe packing their families into fuel-efficient cars could be one of the measures that the Chinese government can take.

The government could also apply subsidies solely to non-plugin hybrids for cars like the Toyota Prius that have proven popular around the world. Hybrids would acclimate car buyers to the idea that eco-friendly doesn’t have to mean unsafe or inconvenient and would be certainly better than SUVS in terms of saving fuels even though they won’t save as much fuel as all-electric plugins.

(Adapted from Bloomberg.com)

Categories: Economy & Finance