China's small-displacement vehicle industry may die, official warns

Shanghai. September 13 (Gasgoo.com) - If the Chinese government does not take actions to protect small-displacement vehicle industry, the industry may die by 2010, said a senior official yesterday.

Rao Da, secretary-general of National Passenger Cars Association made this statement after Shanghai authorities has announced a string of technical hurdles that aim to restrict the use of small-displacement cars in the city.

By December 1, 2007, small-displacement vehicles (under 1.5 Liter) whose peak power output is below 45 KW/L will not be allowed to run on city streets in Shanghai, according to the restrictive regulations made by the municipal government.

However, a recent survey shows that nearly 60 percent of such vehicles in Shanghai could not meet this requirement.

During the first half of this year, the market share of China's small-displacement  vehicles dropped from 21.67 percent to 11.67 percent, according to China Association of Automobile Manufacturers. Meanwhile, the average displacement of the passenger vehicles during the same period rose 9.5 percent to 1.68 Liter, a clear sign that people are turning away from small-displacement vehicles.

“If the trend continues, the road congestion will get worse and more oil will be imported and the development of home-grown automakers will be impacted,” Rao said.

He added that the development of energy-efficient and environment-friendly small-displacement vehicles is beneficial for China and its auto industry.

However, other experts believe that Shanghai government's move will not hurt the growth of China's small-displacement vehicle industry; on the contrary, the move will force small-displacement vehicle manufacturers to work on technological improvements which will make their products better in saving energy and protecting environment.