By staff reporter LU RUCAI

Collecting auto snaps by digicam.

MR. Wang waited two years to buy a car in the expectation that prices would fall on China's entering the WTO. This was not, however, the case. Cars are as costly as ever. Auto trade dealers know all too well the consumer wait-and-see approach to car purchases. One dealer at the Beijing Yayuncun auto trade market told our reporter: "Although crowds of people come to the auto market every week, they keep their purses tightly shut."

Now that standards of living in China have generally improved, it is not so out of the ordinary to buy a private car. In 2002, the number of cars in civil use reached 2,510,000, 60 percent of which were privately owned -- a figure that jumped to 90 percent in Beijing. According to experts, China's prime time for private car ownership is imminent, but consumers do not agree. They have strong reservations about the fancy prices of cars in China. Beijing Yayuncun auto trade market, China's biggest, held an online survey on the auto market in China, in co-operation with eight Internet websites and seven media agencies. Results showed that 87 percent of consumers believe that car prices in China are too high. People have a strong desire for cars, but lack the necessary cash to buy.

Overseas motorists have expressed surprise at the price of cars in China, as the cost here is at least double that overseas. The new Honda Wagon, for example, retails for RMB 259,800 in China, while in the US it costs only USD 15,000 -- about RMB 121,000. Does this mean that Chinese people have become so rich they can buy a car as a matter of course? Not according to the State Statistics Bureau. During the first quarter of 2003, the per capita monthly disposable income of urban residents was about RMB 784.8, indicating a per capita yearly income of no more than RMB9,000. A household must, therefore, save for eight or ten years in order to buy a car priced at RMB 100,000.

Why are prices so high?

For one thing, China's application of taxes on cars does not follow international practices. The price of a locally manufactured saloon car includes 17 percent VAT, 3-8 percent excise, 10 percent purchase tax, as well as import tax on accessories and local tax. This means that 30-40 percent of the purchase price goes on tax of various kinds. As to imported cars, taxes constitute 60 percent of a car purchase price.

Another reason is that China's automobile industry has long been a protected monopoly. The absence of a basic competitive mechanism has made car prices abnormally high. According to the State Planning Commission, the auto market sales volume in 2002 reached RMB 151.5 billion, with profits of RMB 43.1 billion. The average profit margin of the entire industry is 28.45 percent -- highest in the world. Experts have pointed out that Volkswagen earns RMB 2,000 on the sale of a car in Germany, but that this profit margin increases to RMB 20,000 in China!

Yet despite high prices, the majority of people still yearn for their own car. China's automobile tenure amount is growing quickly, but there are still relatively few people that possess cars. In Beijing, for example, there were 276,000 additional cars in 2002, with a tenure amount of more than 2 million. Bearing in mind the huge population base of more than 14 million, however, most people are still waiting to buy a car. This is even more the case in smaller cities. The automobile is still a luxury in China, and most people will have to wait a long time before they can own one.

A Mr. Liu expresses the people's common wish: "I hope car pricing will soon follow international practices. I wouldn't want car manufacturers to suffer a loss, but it seems unfair that the price of a car in China should be so much higher than in the West."