March 3, 2021

China Carmakers Are Told to Seek Fuel Efficiency, Not Sales

A succession of government officials at a weekend conference called for China’s automakers to shift their focus from making ever more cars and toward producing more fuel-efficient and more advanced models, including gasoline-electric hybrids and all-electric cars.

“The government must take the leading role in controlling unrealistic growth” of the auto industry, Jiang Kejun, the influential director of the Energy Research Institute at the National Development and Reform Commission, China’s top economic planning agency, said Sunday during a speech at the conference.

Li Shize, the director of pollution control at the Ministry of Environmental Protection, echoed Mr. Jiang, saying that “for the auto industry to develop, we should not try to sell more, but to improve the units sold.”

The government officials did not say how they would restrict growth. But growth has already slowed partly because of limits on the number of new cars that can be registered each month in Beijing, and mostly because government incentives expired at the start of this year. Those incentives were subsidies for rural buyers and a two-year reduction in the sales tax on new family vehicles.

The officials’ remarks strongly suggested that the Chinese auto industry’s lobbying for the reinstatement of the incentives would fail and that restrictions on registering new cars would be extended to more cities.

Any slowdown in growth is likely to shock the world’s automakers. Practically every American, European, Japanese and South Korean automaker is expanding in China, including General Motors, Ford Motor, Nissan Motor and PSA Peugeot Citroën. Chinese automakers are building assembly plants even faster.

Years of double-digit expansion have increased Chinese auto production to almost 17 million cars, minivans, pickup trucks and sport utility vehicles last year, from fewer than two million in 2000, making it almost twice the size of the United States or Japanese industries and far larger than any European country’s auto manufacturing sector.

Growth in China culminated in a burst of sales in 2009 and 2010 as the government cut taxes on car sales to stimulate the economy during the global economic downturn.

J.D. Power Associates, the global consults, estimated last month that China would have a manufacturing capacity of 31 million vehicles by 2013. Yet the domestic market has decelerated sharply this year, with sales of family vehicles up just 5 percent in the first seven months, compared with the period a year earlier. By contrast, sales had soared 33 percent in 2010, compared with 2009.

Much slower sales growth this year has prompted strong lobbying by the auto industry for a renewal of government incentives. But if anything, policy makers seem to be leaning toward more limits to address China’s steeply rising dependence on imported oil and its traffic jams, air pollution and shortages of land in many areas for more road construction.

Officials in Beijing have urged the industry to improve technology for years. But they clearly shifted their tone at the conference this weekend in calling for curbs on the industry’s overall growth in sales and production.

Many Chinese automakers are partly or entirely owned by municipal or provincial governments, however, and these lower tiers of government have pushed their manufacturers to expand as fast as possible to maximize jobs and economic output.

But limits on car sales in big cities may pressure Chinese automakers to slow down. The municipal government of Beijing, China’s largest single market with 4 percent of sales last year, stunned the industry last December by imposing stringent limits on the number of new-car registrations each month, effectively imposing a decline in sales of close to 70 percent.

Industry executives argued that this was purely a response to severe traffic jams in Beijing and lobbied for the central government not to let other cities take the same course.

Article source: http://feeds.nytimes.com/click.phdo?i=d7685d4ad761b1c47976296104028ef8

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