Geely, Baoshan Steel cutting car weight to compete with market leaders

Baoshan Iron & Steel Co., supplier of half of China’s auto steel, is working with Chinese carmakers to cut vehicle weight by as much as 10 percent to compete with market leaders including Volkswagen AG.

Chinese cars are about 5 percent to 10 percent heavier than competing models, and reducing the weight will shave 6 percent to 8 percent off fuel consumption, said Wang Li, head of auto sheet research and development at Shanghai-based Baoshan Steel. Geely Automobile Holdings Ltd., whose parent bought Volvo Cars, and four Chinese carmakers are part of the project.

Automobile sales in China surged 46 percent last year, as demand for Volkswagen and General Motors Co.’s vehicles helped the nation overtake the U.S. as the world’s biggest market. The rising sales add to pollution and fuel consumption, making it harder for the Chinese government to meet energy efficiency and gas emission targets.

“To cut the car weight and make them more energy efficient is to make the industry stronger in competition with their European and Japanese rivals,” said Tianshu Xin, a Shanghai- based managing director at consulting company IHS Global Insight. “China wants its car models to catch up with global peers in 5 to 10 years.”

Of the top 10 car models in August, three are designed by domestic automakers. The rest, including Volkswagen’s bestselling Jetta, were made by joint ventures of General Motors, Volkswagen, Hyundai Motor Co. and Toyota Motor Corp.

Car Alliance

An alliance of Baoshan, Geely, FAW Group Corp., Chery Automobile Co., Dongfeng Motor Corp. and Chongqing Changan Automobile Co. will contribute 500 million yuan ($75 million) to the weight reduction project, Wang said in an interview in Shanghai. Southwest Aluminum (Group) Co., a unit of Aluminum Corp. of China Ltd., will also take part, he said.

“We aim to cut their car weight to match overseas rivals by 2013,” Wang said. “Our work is to make automotive steel thinner and stronger.”

On average, just 28 percent of the steel used in vehicles sold in China are high-strength material, compared with 50 percent to 60 percent globally, Wang said, citing his own calculations. New car models made by Chinese ventures of foreign carmakers would have a similar quantity of high-grade material as their overseas counterparts, he said.

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