Auto Market Expands in China

After the United States and Japan, China is the world's third-largest car market, and it continues to grow. Companies are excited about this young, mostly untapped market where consumers' tastes are just taking shape.

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While some Chinese are experimenting with Frappuccinos, others are interested in buying their first car. China has quickly become the world's third-largest car market, and it keeps getting bigger. Automakers like what they see and are looking to influence this first generation of car consumers. NPR's Lisa Chow reports.

LISA CHOW reporting:

In this Nissan TV commercial, a young couple dressed for work hops into a bright yellow sedan.

(Soundbite of Chinese TV commercial)

CHOW: They drive out onto a highway and emerge dressed to party, enjoying a lifestyle beyond all but a few Chinese.

Wu Jie(ph) is 37, ambitious, well-traveled and affluent, and she's ready to buy her first car. Her job as a communications manager at a US multinational firm earns her about $60,000 a year. That's more than 40 times the average salary in China. On this day, Wu Jie takes a cab to the outskirts of Shanghai. She walks into a Volkswagen showroom. With its spacious floor and high ceilings, it would look familiar to any car owner in America. But you won't find SUVs or pickup trucks. The offerings here tend toward sedans in subdued colors--white, shades of gray and blue.

Wu Jie eyes a Volkswagen Golf, selling for just under $16,000. If she buys it, she'll pay with cash out of her savings. She'll also have to pay $4,500 to register it and nearly $200 a month to park it. For Wu Jie, it's worth the expense.

Ms. WU JIE (Car Consumer): It's basically for a convenience and also for my style, because more and more people have car. And when we're hanging around till midnight, you cannot find a taxi. Sometimes the weather is awful. And especially during the holidays it's really difficult to get a cab.

CHOW: Wu Jie has done her homework. She wants a global positioning system and she wants a red car, but she's open to alternatives.

Ms. WU: Actually I was thinking green might be good, too, like dark green.

CHOW: While Wu Jie focuses on colors, she's not particularly interested in a test-drive. Although test-drives in America often make or break a deal, they seem more like an afterthought in China, an exercise just to make sure the car works.

Ms. WU: The more I look at it, the more I like it.

CHOW: Wu Jie is just the demographic the companies are going after. That's according to Kevin Lane(ph), a partner at the consulting firm McKenzie & Company.

Mr. KEVIN LANE (McKenzie & Company): They are an emerging what I would call consumer class, people who already have been able to afford to buy a broad range of consumer goods, have been making enough money to save and in some cases pool family resources to buy a car.

CHOW: Lane estimates that by 2010, China will surpass Japan, becoming the world's second-largest car market, a big step in a society that for generations has known only bicycles and buses.

Lisa Chow, NPR News.

MONTAGNE: And tomorrow, we look at China's burgeoning software industry.

This is MORNING EDITION from NPR News. I'm Renee Montagne.

STEVE INSKEEP (Host): And I'm Steve Inskeep.

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