Vehicles Blog

Updates from April, 2012

• BEIJING — As more and more Chinese buy cars, automakers say consumer tastes in the Asian nation have a growing influence on vehicle design the world over.

  China emerged as the world’s top car market in 2009, and though the sector stalled last year, with sales rising just 2.5% to 18.51 million, carmakers are convinced it is where the industry’s future lies.

  Manufacturers at this week’s Auto China 2012 exhibition in Beijing said they have started to include features that appeal to the Chinese consumer — from large grilles and highly visible chrome fittings to luxury back seats for the in-laws.

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  “We want to have more China elements in our design for global cars,” said Shen Li, spokeswoman for Nissan China.

  “The designers find inspiration in traditional paper cutting, or in Tang [dynasty] paintings representing opulent women. Every model in the future has to have a good potential in China.”

  

  Graeme Fletcher for National Post

  China also played host to the world premiere of the Nissan Sylphy.

  The car penetration rate in China is still relatively low compared to more mature markets in North America or Europe, but last year, even with the sales slowdown, more cars were sold in the Asian nation than in the United States.

  Until recently, foreign car manufacturers adapted existing models sold in Europe or North America to the Chinese market. But with the rise of China and its global footprint, the trend is the other way round.

  “In the future as China grows, we will increasingly need to take into account the weight of the Chinese market,” said Frederic Banzet, director at Citroen.

  “We will work from a design with Chinese characteristics and adapt it to other markets,” he said.

  To this end, PSA Peugeot Citroën set up a design studio in Shanghai in 2008 aiming to understand the Chinese market and launch targeted products to increase its market share.

  The studio now counts some 650 employees, and the company plans to increase the headcount to 1,000.

  Volkswagen Group has also invested heavily in two design studios — one in Shanghai and another in the northeastern city of Changchun.

  “The chrome finishings, the interior wood work…. We are delivering the whole package to the United States,” said Walter de Silva, head of design for the group, which owns a total of 11 brands including Audi and Lamborghini.

  Volkswagen’s new Passat was designed and launched in China last year, and hit the roads in North America a few months later.

  Simon Loasby, director of design for Volkswagen in China, said designs from China had a growing influence on Volkswagen cars globally, while many Chinese designers were also working on projects in Germany.

  “It is amazing how much of what is started here can fertilise the rest of the world,” he said.

  Agence France-Presse

  
  

  

  
  2:13 pm on April 30, 2012
   

• BEIJING • Ford, seeking to tap into China’s growing appetite for brawny sport-utility vehicles, will quadruple its offerings in that segment over the next year.

  The U.S. automaker, a late-comer in the world’s largest automotive market, will add the Kuga — the Chinese version of the Escape — and EcoSport small SUVs, and the larger Explorer to its sparse China SUV portfolio, Ford Asia chief Joe Hinrichs said on Sunday.

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  Ford currently sells only the Edge in China, leaving it under-represented in a category that offers higher profit margins for automakers.

  “The next phase of our product portfolio growth really is the three SUVs, and it’s so important to China because of the SUV segmentation growth we’re seeing,” he says. He declined to identify when each of the SUVs will go on sale in China.

  Ford, which makes the Fiesta, Focus, Mondeo and other vehicles in China in a three-way tie-up with Chongqing Changan Automobile and Japan’s Mazda, is joining a growing number of automakers pushing out SUVs to meet the rising demand for the vehicles. The rollout is part of Ford’s plan to introduce 15 new vehicles into China by 2015.

  Chinese consumers bought 2.1 million SUVs last year, an increase of 25% and representing almost 12% of total light vehicle sales, according to J.D. Power and LMC Automotive. That total is about half the 4.1 million SUVs sold in the United States, where such vehicles make up almost one third of the market.

  Buyers and industry officials have said the desire of drivers to sit above China’s crowded traffic in an expensive off-road vehicle is a strong draw in the status-conscious society, especially for younger buyers. In addition, female SUV drivers, mostly young professionals, have been increasing steadily in China, to 19% last year from 14% in 2007, J.D. Power and LMC say.

  Analysts also say the surging SUV sales indicate the Chinese market is maturing.

  SUVs have a long history in China, dating back more than two decades to when Chrysler built Jeep Cherokees at a joint venture with Beijing Automotive. However, the market today is led by Japanese and South Korean automakers in the compact segment, and the German brands in the luxury market. Honda’s CR-V led the way last year with overall sales of some 160,000.

  Ford’s Chinese dealers, which have been limited to selling only five vehicles before this month’s rollout of the new Focus, cannot get the SUVs fast enough. At a dealership in Shanghai last Saturday, salesman Hu Jun said the reasons for consumers’ growing desire for SUVs were no surprise.

  “It’s high and big and safe, and it’s very convenient if the family wants to go out,” he says.

  
  

  

  
  1:00 pm on April 23, 2012
   

• By Bill Savadove

  Import and domestic automakers are struggling to sell environmentally friendly vehicles in China, the world’s largest auto market, even as Beijing pumps billions into clean energy.

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  China wants five million “new energy” vehicles on the streets by 2020 to ease chronic pollution and reduce reliance on oil imports, but high prices, lack of infrastructure and consumer reluctance are creating major roadblocks.

  The number of electric and hybrid vehicles in the country is tiny at about 100,000, mostly in government fleets, according to an industry estimate.

  A salesman at the main Shanghai showroom of Chinese automaker BYD says the dealer sold only one electric car and two hybrid cars — which combine a conventional internal-combustion engine and an electric motor — last year.

  BYD, which is backed by United States investment titan Warren Buffett, launched a fully electric vehicle for private buyers in October priced at 370,000 yuan (US$60,000), though subsidies cut the cost by at least 16%.

  “People hesitate to choose cars with a high price,” says BYD sales manager Zhang Jiankun. “Although the government can provide subsidies for alternative-energy cars, the lack of charging stations is a main concern.”

  China had an estimated 243 charging stations at the end of 2011, but Beijing plans to invest 100-billion yuan over the next 10 years to build up the new-energy vehicle sector as a whole, focusing on electric models.

  Import automakers are also promoting the new technology in China.

  General Motors imported its first Chevrolet Volts into China in December and will begin selling the hybrids in early 2012 at 13 dealerships in eight cities.

  But the Volt could suffer a potential image problem even as sales get underway in China as the vehicle faces a U.S. government probe after damaged lithium batteries caught fire following crash tests. GM says it has addressed the safety issue by reinforcing the battery.

  The company is also developing a separate electric vehicle with its Chinese partner, domestic auto giant SAIC Motor, which itself launched five new energy vehicles in November.

  “It seems every major company has its own electric vehicle program,” Ray Bierzynski, executive director for electrification strategy of GM China, told reporters last year.

  China overtook the U.S. to become the world’s top auto market in 2009, and is increasingly important for global players as economic turmoil hits demand in developed markets.

  But the push for clean energy cars comes as China’s overall sales slow. Auto sales rose just 2.5% to 18.5 million units last year, compared with an increase of more than 32% in 2010.

  China had hoped to vault its car companies into the top ranks of electric vehicle producers, but in recent months has reconsidered that strategy given the technological lead of foreign firms, and is now focusing more on hybrids.

  The government is keen to build up its domestic auto industry so it has slapped import tariffs on some U.S. passenger cars and sports utility vehicles, and says it will “withdraw support” for foreign investment in the sector.

  “At the beginning the objective was, literally, to leapfrog. They have realized this is far too over ambitious,” says Klaus Paur, director for automotive analysis at market research agency Ipsos in China.

  “Currently, the government is re-visiting the strategy on [fully] electric vehicles. This is why they push more into the hybrids,” he says.

  However, one industry executive says the move does not indicate a “dramatic shift” in China’s commitment to electrification.

  “As we move down that path, there’s a more realistic view of how quickly people can move and how some of the challenges can be addressed,” says Kevin Wale, president and managing director of GM China Group.

  The challenge includes building the infrastructure for charging batteries and convincing consumers to trust the technology. China has set up 15 pilot zones for electric vehicles across the country to this aim.

  But in a country where car culture is only two decades old and fuel prices are controlled by the government, flashy luxury brands carry more appeal.

  “To me, the performance of a car is the top priority, including how powerful it is,” says marketing manager Gu Jiahuan, who is shopping for a car.

  “Alternative energy cars are not mature enough. And pure electric cars cannot go very far.”

  
  

  

  
  12:09 pm on January 18, 2012