China - Holiday round-up (EV subsidies; Dongfeng Renault; BMW; Qoros; Shanghai-GM)
3 January 2017 | News | Source: Tony Pugliese
The Chinese government is imposing higher standards on new-energy vehicle manufacturers and has cut subsidies on electric vehicles in a move designed to weed out companies that lack product quality, technology and resources to succeed in this sector.
The new rules are aimed at eliminating a large proportion of the 200-plus manufacturers of electric vehicles which have come into existence in recent years due to generous government subsidies.
New standards for energy consumption and single-charge range will be introduced, while subsidies on electric vehicles and plug-in hybrids were cut by 20% at the beginning of January. A subsidy cap also has been imposed for provincial local governments.
Central government subsidies are now capped at CNY44,000 (US$6,331) for electric vehicles with a range of 250km or more. Provincial governments will not be allowed to provide subsidies valued at more than 50% of those offered by the central government. Electric bus subsidies also have been cut to CNY300,000 from CNY500,000 previously.
BMW confirmed at the end of December that it is recalling close to 200,000 passenger vehicles in China due to airbag problems. The recall affects 169,000 passenger vehicles imported between 2005 and 2011 and a further 25,000 units produced locally in the same period.
The problem related to faulty gas generators, which could rupture unexpectedly and cause a risk to passengers. The recall comes in additional to the 22,500 BMW and Rolls Royce vehicles recalled earlier in the month also due to airbags flaws.
Dongfeng Renault Automotive Company expects significant volume growth in 2017 due to stronger brand marketing, dealer network expansion and new products.
The company aims to expand its dealer network to 200 outlets by the end of 2017, from 150 at the end of November 2016. Each will have a monthly sales target of 40 vehicles. The company said it is focused on offering value-for-money products of good quality and high specifications.
The company enjoyed strong sales last year of the locally-made Kadjar, based on the Nissan Qashqai SUV, with monthly sales close to 4,000 units. The model went into production at a new plant in Wuhan, which has an initial capacity of 150,000 units/year, last February.
The company also launched the Koleos SUV in the second half of last year, which has also been received well by the local market - where demand for low-cost SUVs continued to boom.
Struggling Chinese electric vehicle maker Qoros expects to receive a CNY500m (US$72m) loan from its main shareholders Chery Auto and Kenon Holdings as it looks to complete the first stage of its new-energy vehicle strategy.
The loan will allow Qoros to bring to production a new electric vehicle model by the end of 2017. The Qoros 3, with a range of 350km on a single charge, was displayed at the Guangzhou auto show in November.
Qoros' sold less than 16,000 units of its existing electric vehicle model, which was first launched in 2013. Low volumes and rising costs meant that Qoros incurred a CNY1.35bn loss in the nine-month period.
Shanghai-GM was fined US$29m by Chinese anti-trust regulators at the end of December following charges it suppressed competition by enforcing minimum sales prices at its dealers.
This is the latest in a string of penalties imposed on foreign auto joint ventures under China's anti-monopoly law. Companies such as Volkswagen group, Fiat-Chrysler, Mercedes-Benz and Toyota-Lexus have also been penalised in the last two years following price-fixing charges.
In a follow-up statement, GM said it "fully respects local laws and regulations wherever it operates" and that it will provide full support to its Chinese joint venture to ensure that actions are taken with respect to this matter."