Rising fuel costs set to spark green run

Updated: 2011-04-15 11:24

By Wang Chao (China Daily European Weekly)

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Rising fuel costs set to spark green run 

 Volkswagen plans to introduce its Golf electric cars to the Chinese market in 2013. Provided to China Daily

Foreign carmakers look on bright side of latest increases

Some Western carmakers say the latest fuel price hikes will not affect their sales in China significantly and will prompt them to invest more on cleaner models to win over customers instead.

The price hikes will not impact General Motor's (GM) sales in China, says the US carmaker's public relations manager, You Jia.

"I believe the Chinese auto market will maintain its growth momentum and GM will continue to play a leading role in this market," You says.

GM sold more than 230,000 cars in China in March and 680,000 in the first quarter of 2011, the best record in its history despite purchase restrictions in many major cities in China.

"People may have held stereotypes toward American cars, that they used to be big, clumsy and gasoline-guzzling. But that is no longer the case, especially when we have formed joint ventures and localized our products in China," You says.

Fuel prices were increased on April 7, with prices of gasoline and diesel rising by 500 yuan (53 euros) and 400 yuan per ton after a previous increase in February by 350 yuan a ton for both the fuels. That means a taxi driver in Beijing needs to pay about 600 yuan more for fuel every month and a regular driver 100 to 300 yuan more, depending on the car model.

The fuel price hikes have weakened the purchasing power of many consumers, who have already been hit by vehicle-buying restrictions earlier this year.

Still, many automakers, especially those with strengths in efficient engines and electric technologies, say this is an opportunity to guide consumers toward "healthier" and more "mature" vehicle usage.

"New energy cars are the next trend in the auto industry and I believe every company is putting in great effort into the field, so is GM," You says.

GM itself is set to introduce the Chevrolet Volt, one of the first mass-produced electric cars in the world, to the Chinese market by the end of this year.

European automakers are also fully prepared for the price hikes in China because the increases are felt even more so internationally. Compared with the 20 percent hike in international crude oil prices since the beginning of this year, the price increases of oil in China that amount to 11 percent for both gasoline and diesel did not fuel anxiety among European automakers, which have been developing alternative fuel vehicles for years.

Stefano Nessi, manager of the electro-mobility department of Audi, says his company has been cooperating with the Shanghai-based Tongji University to develop its electric model "etron" with its "long range, safe and not too expensive" aim. The hybrid model Audi Q5 is also scheduled to debut in China this year.

The Touareg hybrid and Golf electric cars from Volkswagen are already being showcased as low-fuel-consumption and highly reliable commuting cars at the front gate of the National Museum of China.

"Golf will be the best electric car ever and we plan to introduce it to the market in 2013," says Thomas Lieber, head of electric-traction of Volkswagen. He says that driving electric cars will be a new trend, along with the increase in Chinese consumers' environmental consciousness and fuel prices.

The importance of electric vehicle development was also addressed last week in China when the government issued the 12th Five-Year Plan for the auto industry (2011-2015). The plan allows for the purchase of an electric car without a lottery for its license plate, with a rebate of up to 60,000 yuan a car. The driver would also not be subject to the driving restrictions based on license plate numbers.

BYD, a Chinese automaker known for its development of batteries and green vehicles, agreed that the fuel price hikes can be a great opportunity for automakers dedicated in developing small, low-emission, and electric cars.

Last month, the company formed a partnership with Daimler to develop electric vehicles in China.

"It creates an opportunity for our new joint-venture with Daimler, as well as for our other low-emission products," says Lin Mi, manager of the marketing department of the auto export trade division of BYD. "I don't think the price hike will have a big impact on the domestic car market. So long as there is demand, people will buy cars. But car owners in China will definitely phase out their big and oil-consuming cars and turn to smaller and eventually electric cars."

The market already has proved the increasing popularity of small, low-emission cars and automakers will expand their production capacity of smaller and more efficient cars with the government subsidies of green vehicles, he says.

"We are confident that these incentives will further encourage people to buy smaller cars," Lin says.

"The fluctuation of oil prices is normal in the market, although it means extra cost for consumers," You says.


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