Simanaitis Says

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CHINA AND THE AUTOMOBILE

THE LATEST Automotive News, June 11, 2018, has a fascinating piece on a complex subject: China and the automobile. Hans Greimel, the industry weekly’s Tokyo-based Asia Editor, titles his article “The Reckoning: China Takes Wheel as True Driver of Global Auto Industry.”

Here are tidbits from Greimel’s analysis, arranged under the article’s cogent subheads.

China as Customer. China eclipsed the U.S. as the world’s largest auto market in 2009. Its light-vehicle sales this year are expected to be around 28.5 million, on their way to some 32 million in 2022. By contrast, U.S. sales are expected to remain level at around 20 million; Western Europe, around 16 million.

There’s scads of room for Chinese growth: Car ownership there is currently around 121 vehicles/1000 people. The comparable figure in the U.S. is 814 vehicles/1000.

Right now, China is GM’s biggest single market; it is Volkswagen’s as well. Indeed, Chinese consumer taste in things like expansive rear seating has already influenced international design. Another quirk is integrated tissue-box holders.

China as Exporter. Geely bought Volvo from Ford in 2010 and started exporting its Chinese-built Volvo S60 sedans to the U.S. in 2015; it began shipping the S90 to Europe in 2017. GM exports its Chinese-built Buick Envision compact crossover to the U.S. In fact, Chinese marketers did away with any “Buick” script on the car; only the three-shield emblems remain. (Beginning in 2019, U.S.-built Buicks follow suit.)

This Buick bears nary any “Buick” script, only emblems.

China as Rival. Beijing has a “Made in China 2025” campaign, but quality is still seen as a limiting factor. Even in its home market, Chinese brands command only 40 percent of total sales. Greimel quotes one Chinese marketer as saying, “It’s pretty obvious the local players are still trying to catch up.”

China as Partner. Geely is a good example of this: It has stakes in the British maker of London black cabs, Malaysian automaker Proton, Lotus, and 9.7 percent of Daimler AG, maker of Mercedes-Benz.

Benefits of these global partnerships work both ways: Geely spent $500 million on a new Volvo factory in South Carolina. Opening this year, the plant will employ 2000 people and produce 100,000 cars annually.

The supplier side of the industry is similar: Last year, a Chinese company making exterior trim pieces opened a South Carolina facility that supplies BMW’s assembly plant there.

China as Innovator. Greimel notes, 
“No longer a mere knockoff artist, it is pioneering global trends in several fields, from low-cost EVs and next-generation batteries to online retailing, big data management, ride-hailing, and other new-mobility models.”

China’s technical triumvirate is Alibaba Group, its Amazon; Baidu, its Google; and Tencent, its Facebook. Like their U.S. counterparts, these three are involved in automotive matters such as vehicle electrification, autonomous driving, and even “auto vending machines.” For example, as reported in Telematics Wire, September 19, 2017, Tencent and Guangzhou are collaborating on Internet-connected cars.

Image from Telematics Wire of the proposed Tencent/Guangzhou link.

China as Dictator. Greimel writes, “Beijing wants annual production of so-called new-energy vehicles to reach 2 million by 2022. New-energy vehicles include electric cars, plug-in hybrids, and green alternatives such as fuel-cell vehicles.” And, if Beijing wants it, Beijing gets it.

Chinese state-owned Beijing Automotive Industry Holding Company produces the BAIC EC180, the world’s top-selling EV (available only in its home market).

The government will require automakers to earn 10 carbon credits for each 100 vehicles produced in 2019. As currently configured, a plug-in hybrid earns two credits; an EV, from two to five depending on range. Required credits rise to 12/100 vehicles in 2020.

Among government spiffs for buyers are preferential treatment in auto licensing. Apparently things haven’t changed dramatically since the SimanaitisSays “Chinese Plates” item in 2013. I am reminded as well of SimanaitisSays “Software Pirating, Big Time.” And also of the ever-more relevant “May you live in interesting times,” which, by the way, may not be an ancient Chinese curse. ds

© Dennis Simanaitis, SimanaitisSays.com, 2018

One comment on “CHINA AND THE AUTOMOBILE

  1. Michael Rubin
    June 16, 2018

    And here comes the happy trade warrior to muck things up. Must be fascinating in the mindless being’s nest of a brain.

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