Serving the World's Largest Emerging Automobile Market
Home > EDITORIAL > Urbanization and automobile demand

Urbanization and automobile demand

A recent visit to my in-laws living in Lishi, a prefectural-level city in Shanxi Province, sheds some light on China’s urbanization drive and demand for automobiles.

The population of the city of Lishi, tucked in China’s Yellow Mountain Range, has increased from 230,000 to 330,000 over the past 10 years. Counting migrant population not registered in the 2012 national census, Lishi’s population may have doubled in 10 years.

The increased population comes directly from surrounding counties, townships and villages. The population of Lijiayan, a mountainous village where my wife grew up for example, has declined from 500 to less than 100 today. And there are villages that are no longer inhabited today.

Rural people have been moving into cities and giving up on farming, especially in mountainous areas where farming depends heavily on “the heaven.” Increased city population has given rise to demand on housing and motor vehicles, making a 4th-level city such as Lishi as crowded and polluted as a 1st– or 2nd-level city.

High rises are being built in the valleys of Lishi to accommodate increasing housing demand. The city’s automobile parc (not including two-wheelers) has almost doubled in the past three years from 22,000 in 2010. Automobiles are parked full along the sides of most of the city streets and in some residential courtyards cars are packed overnight and residents have to work with neighbors in the daily chores of moving out their vehicles.

And the sad fact is that most of the drivers work at walking or bicycling distances. While drivers are daily jammed on the city streets, very few of them would be traveling on expressways to nearby cities. Empty expressways and crowded city streets are the reality of today’s China.

China’s new leaders have envisioned that urbanization would continue to be an important driver in the coming years for the country’s economic growth. While this may be true, the current pattern of urbanization is hardly sustainable as life in the cities, though more convenient in terms of living, education and health care compared to rural areas, is becoming increasingly difficult with congestion, air pollution, traffic accidents and street crimes.

The example of Lishi also poses a question for optimists that believe China’s demand for automobiles may increase to 30 or 40 million in the next 5-10 years, pinning high hopes on demand in the 4th– and 5th-level cities.

The potential may be there given China’s low rate of per-capital ownership of automobiles. But such a potential may not be realized given the current pattern of urbanization.


Leave a Reply