The Ridiculous Reason Why The Chinese Are Buying More SUVs

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1st Gear: The Law Of Unintended Consequences In China


We've written a lot about how China is restricting car ownership by holding license plate lotteries and restricting new car registrations. I expressed that this was dumb because it doesn't address the larger issues.

I feel slightly vindicated reading the news this morning. Business Insider ran an article based on Morgan Stanley Research (who created the graphic above) pointing out that SUV sales are up 46% year-over-year, reaching about 20.8% market share for the first time ever.

They correctly point out that this seems connected to the rise in luxury vehicle sales. BI doesn't give a reason why, but The Wall Street Journal does. Let's play connect the dots!


Chinese cities restrict the number of cars to ease pollution and congestion -> Chinese buyers are limited in the number of cars they can own -> Chinese buyers buy the most car they can afford -> Streets fill up with polluting, space-hogging SUVs

Foreign car makers shrug off these moves. Martin Kuehl, a spokesman for Audi AG, said the restrictions are encouraging trade-ups. "Would you want to put a 100,000 yuan plate on a 50,000 yuan car?" he asked.


2nd Gear: Kia Working On New Supermini


Following in the tire treads of the Kia Provo is an as-of-yet unnamed B-segment design from the Korean company.


With congestion pricing, insurance, and fuel costs all weighing on European minds there's still a large market for the supermini class of cars in that market. And the car is for that market. If you didn't get that they weren't considering this car for the U.S. by its size, the press release should convince you.

Born out of Kia’s determination to seek new compact-car options for the individualistic and demanding driver for whom size is an issue, the concept features intriguing elements not always associated with smaller cars and has been created in Europe with European tastes and expectations very much in mind.



3rd Gear: Subaru Has To Contend With Its Popularity


The band Pavement was, in the '90s, on the verge of becoming as big as a Nirvana. All they needed to do was sign with a big label, soften the collegiate edges of their distorted sound, and maybe come up with a few lyrics that made sense. The neglected to do any of those things and now it's a popular indie band that few people can recognize.

Subaru, too, has been a popular niche brand for almost its entire existence. Not so much anymore. Now it's popular and that's bringing up all sorts of interesting questions.


Per Automotive News:

"We're standing at a major turning point for Subaru," Yoshinaga said in an interview this week in Tokyo. "It shouldn't just be about volumes. We should be making cars only Subaru can make that are a little more expensive and more profitable than the competition."


Not to get to slanted and disenchanted, but Subaru recognizes theres a bit of luck here. The Chinese were turned down from building cars in China and thus were spared that entire mess. The popularity of their cars, vehicles like the BRZ, a little luck with the yen, and no Chinese anger means profits, profits, profits.

Just don't go and cut your hair, do you think it's going to make him change?

4th Gear: Audi Wants To Break Into 150,000 Cars This Year


Audi wants to sell more than 150,000 new vehicles in the United States this year, Audi of America Prez Scott Keogh (pictured on the right) told The Detroit News yesterday. That's a lot of cars.

Of course, they make a lot of great cars. Maybe we're in the bag because they keep letting us borrow them for crazy adventures. Maybe it's because they're bringing us the Audi RS7.


Of course, a lot of those vehicles will be Q5 CUVs, but a boy can dream.

The goal is to hit 200,000 vehicles by 2020, which they think they can do early on the back of the Q3 and 2015 Audi S3 and A3.


5th Gear: No Dividend From GM This Year


GM, kind of stupidly, gave out dividends almost right up to their bankruptcy when they could have spent that money building cars that didn't blow. They seem to have learned their lesson.

Per Bloomberg:

“One of our strategic goals is to always have a fortress balance sheet and in doing so, we can invest in both up and down economic cycles,” Akerson said. “We have such good cash flow post exit from bankruptcy that our primary goal is to continue to develop great products.”



Reverse: And So It Begins

On August 9, 2000, tire manufacturer Bridgestone/Firestone Inc. announces that it is recalling 6.5 million of its model ATX, ATX II and Wilderness AT tires; the move comes two days after the National Highway Traffic Safety Administration linked hundreds of accidents and at least 46 deaths to problems with the tread on the tires.



Neutral: What Should Subaru Do?

You're in charge of Subaru, what advice do you give them?

Photo Credit: Getty Images

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