Shanghai, China – A new report by J.D. Power Asia Pacific said that nearly 80 per cent of Chinese respondents have reduced their vehicle usage due to a recent increase in fuel prices, while 26 per cent who intended to buy a vehicle in 2008 have decided to delay the purchase.
On June 19, the Chinese government increased the price of fuel at the pump by approximately 17 per cent nationwide. With the increase, Chinese drivers pay approximately 6 RMB per litre, or US$3.36 per gallon, up from about US$2.85 per gallon.
Gasoline prices had already been rising steadily in China prior to the June increase. In 2004, vehicle owners spent an average of 7,716 RMB on fuel annually, which rose to 9,744 RMB in 2007; following the price adjustment, Chinese consumers are expected to spend an average of 12,500 RMB on gasoline annually.
Delayed vehicle purchases are already having an effect on overall sales, according to J.D. Power and Associates’ research. The company has revised its growth forecast to 5.95 million units in 2008, which is an increase compared to the 5.42 million units sold in 2007, but a decrease from the 6.2 million units originally forecast at the beginning of the year.
The survey also found that among respondents planning to buy a new vehicle in 2008, approximately 90 per cent say that the price increase will affect their future purchase decision; 30 per cent who currently own a vehicle are thinking about switching to a more fuel-efficient one; and 50 per cent who intend to buy in 2008 will consider a Japanese brand, because of perceptions of better fuel economy.