Roads Widen up for Small Cars

        China Aviation Industry Corporation II (AVIC II) will continue to work closely with its foreign partners to develop "safe, economic, energy-saving and environmentally friendly" small cars for consumers both at home and abroad.

        "The future development of the small car sector will mainly focus on technical upgrading and the introduction of new models through co-operation with foreign companies," said Song Jin-gang, deputy general manager of AVIC II.

        AVIC II, which owns Hafei Automotive Co, the Changhe Automotive Co, Ltd. and Shaanxi Hanjiang Automobile Co, produced 49 per cent of China's small cars last year. During the first five months of this year, the three companies produced 164,000 small cars and sold 161,000, which represents a year-on-year increase of 25.5 per cent and 18.4 per cent respectively.

        Jia Xinguang, chief analyst of the China National Automotive Industry Consulting and Development Corp, said China's small car-makers should try to improve product quality and services to beef up their role on the domestic market.

        "China's auto manufacturers should not give up the country's huge small car market because of the price wars," he said.

        The mini car has become popular among Chinese people because of its small size cheap price and flexibility, he said.

        Experience from Western countries suggests that demand for vehicles speeds up when a country's per capita gross domestic product (GDP) reaches US'l,000. China's per capita GDP is expected to reach this level in about two years.

        Different from developed countries, China has a-large population mainly consisting of medium to low income groups. Therefore, demand for low-priced small vehicles will be higher than for medium-and high-priced vehicles, Jia said.

        According to an official surnamed Du who works with the China Automotive Industry Association, the Chinese small vehicle industry has already generated one third of the country's total auto output.