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China’s SUV boom is rolling strong—just ask the metal-makers

SUV Concept car at the Shanghai International Auto Show
AP Photo/Eugene Hoshiko
Making obeisance to the SUV gods at the Shanghai International Auto Show.
By Matt Phillips
AsiaPublished Last updated This article is more than 2 years old.

China seems to be getting the hand of this consumption thing just fine. The latest bit of evidence?

Comments earlier this week by Klaus Kleinfeld, boss of aluminum firm Alcoa, whose aluminum is used in car production. The company expects sales in its automotive segment to grow 7% to 10% in 2013. “This is mainly driven by stronger SUV sales,” company executives said on the conference call. “The wealth[y] or middle class plays into it as well as the general uptick in the Chinese economy.”

SUVs should remain the fastest-growing bit of the Chinese car market, “as it is ‘under-penetrated’ and caters to the preference of Chinese consumers for roomier vehicles, while smaller cities will become more important for sales,” Steve Man, a Hong Kong-based analyst at Nomura Holdings, recently told Bloomberg. And any number of manufacturers—both domestic and foreigners such as GM’s Cadillac brand—are aiming to capture their fair share of the boom.

But what’s driving (sorry) the demand for SUVs in China? The Guardian offered some nice color on how Chinese car buyers make their decisions in a story last month.

Chinese motorists know they must impress, whether they are seeking partners for romance or business. Roll up in an Audi and you ensure a basic degree of respect. Arrive in a domestic Chery QQ hatchback and you are doomed before you get through a client’s door. “People don’t really think about whether they need a car, but feel they have to have one to show their status,” Zhang’s friend Zhao Cihang tells me at the Mini showroom. Until recently he edited a car website and, although he is a year younger than Zhang, already owns two BMWs, an Audi and a Honda. But, he adds, “I still think about new ones. I’d like an SUV—the biggest kind.”

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