The Straits Times
Green cars to shift China market
The Trumpchi GS4 electrified car from GAC Group displayed at the Shanghai Auto Display in April. PHOTO: REUTERS
The segment is flourishing, thanks to enlargened interest in fresh energy vehicles and support from the Chinese government
CHANGCHUN • Discounts are visible everywhere at the ongoing China Changchun International Automobile Expo in Jilin province, as challenging auto firms scramble to make sales.
Slower growth was seen in car sales in the very first half of this year in China than last year and, faced with the increasingly competitive market, many carmakers are channelling time, effort and money into fresh energy vehicles.
Statistics from the China Association of Automobile Manufacturers (CAAM) demonstrate that China’s auto output and sales in the very first half of the year rose Four.6 per cent and Three.8 per cent year on year respectively – 1.9 and Four.Three percentage points lower than the same period last year.
“Buyers are worried about more than just the price nowadays. As well as having an enlargened interest in fresh energy vehicles and brainy cars, many buyers want after-sales services,” said Mr Wang Enze, a sales consultant for Trumpchi, a brand produced by domestic carmaker GAC Group.
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In addition to adjusting to the fresh requests of customers, carmakers need to reduce their high inventories. Thus, they have turned to creative methods to shift stock, such as promotions or discounts, and begun to incorporate the requests of the market into the design and production of clever, electrical or hybrid models.
“In the current environment, carmakers must look for opportunities in second- and third-tier cities, and proceed to develop fresh energy and clever cars,” said Mr Xiao Zhengsan, secretary-general of the Chinese Automobile Dealers Association.
While the slowdown has hit traditionally fuelled vehicles, the fresh energy auto market is thriving, thanks in part to central government support in the way of financial incentives and favourable policies.
According to CAAM, China produced 146,000 unspoiled electrical passenger vehicles in the very first half of the year and sold 132,000, up 70.Three per cent and 60.9 per cent year on year.
“The positive signs in the fresh energy and clever automobile sector is one reason why global auto giants remain certain in the Chinese market,” said Mr Fu Yuwu, head of the Society of Automotive Engineers of China.
A market the size of China offers opportunities few auto producers can afford to miss. Industry giants such as Volkswagen, Toyota and Ford have released fresh energy car development strategies, featuring plans to increase production and upgrade products and services.
Volkswagen China has signed agreements with China’s JAC Motors that will see it channel six billion yuan (S$1.Two billion) into a fresh joint venture. The partnership will produce fresh energy cars under a fresh brand and include a factory capable of churning out 360,000 cars annually. It also plans to cooperate in areas such as big data and second-hand car sales.
Meantime, Beijing Benz Automotive, BAIC Motor’s joint venture with Daimler, has gone from strength to strength. The two sides will pump in five billion yuan to support the establishment of facilities capable of producing unspoiled electrified cars and batteries.
In addition to enlargening production, fresh car models are being designed and tested.
FAW-Volkswagen plans to introduce thirty fresh car models by 2020. By 2025, fresh energy cars will account for about twenty five per cent of the company’s car output.
Domestic brands are not content with playing 2nd fiddle, as statistics published on newenergy.org.cn showcase. By 2020, nine Chinese brands propose that almost four million fresh energy cars in circulation will have been produced by them.
Minister of Science and Technology Wan Gang said hydrogen fuel and electro-therapy would coexist and complement each other in the future. This will be supported by the central government, and controls on the number of petrol and diesel vehicles produced.
Mr Fu believes that as Chinese car brands innovate, they will reduce their dependence on government policy and become strong competitors in the market.