What Frankfurt tells us about Chinese car makers

At a time when the fate of Opel is still unclear, and the company from Ruesselsheim has become a victim of political interests just before the German elections, the biggest auto exhibition, the IAA, has nearby opened its gates. For 10 days the city of Frankfurt has become the center of the automotive world.

Amid the most severe economic downturn, the automotive industry is in a significant period of transition, and clearly car manufacturers seek their way into a brighter future with environmental topics and green technology – reduced emission and electrical powertrains are this year’s major themes. This may sound somehow ironic, as in times of economic slowdown consumers usually are less sensitive to environmental concerns and rather look for highest value for their money.

Frankfurt is above all the show of the European car manufacturers, while notably Honda and Nissan have decided to stay away. They propose to the public hybrid powertrains, mainly in the larger car segments as well as pure electrical transmissions mostly the lower vehicle segments. All these propositions are prototypes or showcars, not yet ready for mass production, and supposed to hit the market not before 2011 – far behind Toyota and even behind BYD’s F3DM. This unmistakably signifies that the European car makers still have quite a lot of homework to do in order to make alternative vehicle technology marketable. Indeed, performance and costs of batteries as well as synchronization of two different powertrains (in case of hybrid) remain to be a headache. And it indicates which opportunities alternative car technologies offer to Chinese car manufacturers to rise at eye-level with the international auto industry.

Frankfurt also shows, though, where the European car makers have a clear advantage. It is the increased fuel efficiency of their vehicles with conventional combustion technology, which directly translates into lower fuel consumption and, thus, cost savings. From a consumer’s point of view, decreasing expenses for car usage without higher purchase prices (such as for hybrids) are quite attractive, in particular in difficult times like these. Environmental advantages are a welcome addition to a better value for money in the first place. In this case, European car buyers show a lot of similarities with Chinese car buyers. The European car manufacturers have therefore a trump card in the short term, which establishes a solid basis for the development of a comprehensive green image in the longer term.

From our surveys among Chinese car buyers we know that the refinement of conventional technology is an essential pre-condition to be perceived as credible “green” manufacturer. This is at the moment the missing element for Chinese car makers, who have already accomplished a relatively advanced position in the development of alternative powertrains, but still face a gap when it comes to today’s technology. Supposing that a noteworthy penetration of alternative powertrains is still many years if not decades away, they must have an interest in continuously investing into conventional technology, and should not just seeing latter as a transit stage for producing electrical cars. The homework for Chinese manufacturers lies in improving their gasoline-powered vehicles in order to prepare sustainable success in the future.

Although the show of the Europeans, this is what Frankfurt tells us about the Chinese car makers.

About the authour: Klaus Paur, Gasgoo's columnist, is Regional Director Automotive for North Asia at TNS China who has over 20 years of experience in marketing and market research, 13 of which have been spent specialising in the automotive industry.

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