10 events highlight China 2008 auto market

Shanghai, December 17 (Gasgoo.com) The year of 2008 is an eventful year for China and its auto industry. The following ten events have served as the highlights of the Chinese auto market this year, among others such as the Beijing Olympics traffic control in August, the sales tax hike on big-engine cars, and sales target cuts near the year end.

1. Disaster relief

The devastating May 12 earthquake of 7.9-magnitude in western China's Sichuan province is a catastrophe to the Chinese nation. Automakers in the country responded rapidly to this national disaster. Homegrown brands such as Geely, BYD, Chery and Brilliance each donated more than 10 million yuan ($1.47 million) in cash to the relief effort, and some also added vehicles to the donation. Joint ventures including Shanghai GM, Shanghai VW, FAW VW, FAW Toyota, Guangzhou Honda (GAC Honda), and global brands VW, Honda, Toyota, Nissan, Daimler-Benz, BMW donated huge sum of money and a lot of vehicles.

2. Beijing auto show

The 2008 Beijing Auto Show in April was unprecedented in floor space and in the number of car makers, brands, models, and viewers. More than ten new models made their global debuts at the event, which showed the growing appeal of China's auto market. Home-grown Chinese auto brands, such as Chery, Geely, SAIC Roewe, Brilliance and Great Wall, hogged most limelight of the one-week show.

3. New energy vehicles

China initiated its new-energy (alternative-energy) automotive development programs in 2008. Shanghai GM has launched its Buick LaCROSSE hybrid model, and BYD has released its F3DM electric model. Changan Auto and SAIC have decided to invest heavily in technical centers for new-energy vehicles. The Chinese government has promised to earmark 20 billion yuan to subsidize the alternative energy vehicle development. The sci-tech ministry is promoting a project to put 5,000 hybrid buses, 20,000 hybrid taxis and 5,000 electric vehicles on the streets in 10 cities by 2012.

4. Fuel tax

According to the recently unveiled new fuel tax plan, vehicle owners in China would be required to pay the tax on gasoline that will be raised from 0.2 yuan to one yuan per liter, and diesel tax going up to 0.8 yuan from 0.1 yuan per liter. The plan, scheduled to take effect on Jan. 1, adds that six toll fees, currently being charged for road or waterway maintenance and management, would be completely scrapped. Fuel oil and lubricants will be included under the fuel tax structure.

5. Copycat models

The Shuanghuan CEO, not the Chinese carmaker's chief executive officer but a car model, is clearly fashioned after the BMW X5, though there are some styling differences. Despite the legal battle, however, Shuanghuan had been selling the CEO throughout Europe, including Germany. In addition, BYD F3-R hatchback looks like Daewoo Lacetti / Chevrolet Optra 5 hatchback. Great Wall Motor's Gwperi minicar was ruled by a German court in Sept. as copy of Fiat Panda.

6. Ten-million-unit sales

China's auto market had achieved sales of 8.8 million vehicles in 2007, and based on this great achievement, the country's auto industry agents were fully confident in the first half of the 2008 that the vehicle sales would surge to 10 million at least this year in the China market. But the market downturn and financial crisis since August have dashed the beautiful dreams. By the end of November, China had sold 8.6 million vehicles. No sales miracle is possible in the final month.
 
7. In-house development

This year, Shanghai VW has launched its Lavida and FAW VW the New Bora as their self-developed models for the Chinese market. More and more Chinese partners in joint ventures are seeking ways for independent innovation and own-brand development. Though self-developed models are believed to be cost-effective and benefit the buyers, the technological content, craftsmanship and popularity of China's new self-developed cars still leave much to be desired.

8. Restructuring / mergers

China's auto industry regulators have urged some Chinese automakers to restructure or merger themselves, but there are no results in sight yet. The planned mergers of Dongfeng and Hafei, of Changhe and Hafei, the restructuring of Changan and Brilliance, cooperation of GAC (Guangzhou Auto) and Changfeng have been hot topics this year, but there is no concrete action on the way.

9. Buying troubled U.S. giants or brands

SAIC and Changfeng were recently rumored to buy the troubled U.S. auto giants GM and Chrysler, and Ford is said to sell its Volvo brand to a Chinese buyer, but it is doubtful if Chinese auto companies have the financial and technical capabilities to buy the global giants or brands. Maybe the reported "talks to buy" are just some publicity stunt by the companies and the media.

10. Market downturn

The auto market meltdown recently worsened by the global financial crisis may spill over into the coming year 2009. The market is unlikely to recover until the second half of next year. Due to the market slump, many Chinese automakers are unable to reach their previously set sales targets of 2008 and are unwilling now to project their sales goals or growth rates for 2009.