Sitting at a desk at the far end of an empty showroom, Zhang Ke, sales manager of Beijing Huasheng Lianyi Automobile, is pinning his hopes on the Shanghai International Auto Show.

Like thousands of dealers across the country, Zhang hopes the annual gala event will jump start the public's love of motor cars. As a front line salesman, Zhang has seen enthusiasm drop off as buyers become more and more hesitant about making deals.

"It's getting worse," Zhang said. "Fewer and fewer people are showing up in my showroom."

Cars remain objects of desire for the burgeoning middle-class in many mainland cities. But urgency to buy seems to have been dampened by escalating petrol prices and bargain hunting in a marketplace favouring the buyer.

Just ask Chai Chunrong. "Oil consumption has become a critical concern when it comes to buying a car," she says, while strolling with her husband around the Asian Games Village Automobile Exchange.

The couple are looking to buy a small car costing less than 100,000 yuan (US$12,000). "As that's all I am planning to spend on my car I don't see any sense in spending hundreds of yuan a month on petrol," she says.

Her concern about fuel economy has been further heightened by the prospect of yet more hikes in oil prices. "Talk about rising oil prices is all over the evening news," she said. "I want to be careful with my choice now, instead of regretting my decision later," she added. This is her third trip to the dealership, and she is in no hurry to make a deal. "I'd like to see more."

She is not alone in playing the waiting game. According to an online survey of more than 1,600 potential auto buyers carried out by cheshi.com.cn, 52.7 per cent of respondents said they had changed their purchasing plan due to the oil price rise in March.

More than 10 per cent said they had decided to put off their purchase, while 42.2 per cent said they had opted to buy a car with a less powerful engine.

The majority of those who said their decisions were affected by the oil price increase also stated their income fell within the middle class range, according to Hua Xue, general manager of cheshi.com.cn.

Auto dealers say the downtrend in new car prices has also had the effect of dampening sales. "Customers are just holding off because they expect prices to fall further so that they can buy at even cheaper prices in the future," said Qie Xiaogang, an official at the Asian Games Village Auto Exchange.

According to statistics from the auto information website cheshi.com.cn, the average price of cars manufactured in China fell by 0.08 per cent in March, compared to the previous month, while those for imported cars dropped by an average 0.75 per cent over the same period.

However, retail prices of many low-end models have actually increased in the first three months of 2005, from a year earlier. The price increase against an overall downtrend is seen by industry experts as an indication of the rising demand for models in the lower end of the price range.

(China Daily April 21, 2005)