Share Story
Send to KindleRelated News
Today's car craze can be tomorrow's calamity
January 22, Tuesday
|
Print Edition
Print Edition
THOUGH the high growth of China's SUV market is underpinned by consumer tolerance of rising fuel prices, history shows that the Chinese do care about a vehicle's running costs. It may just be a matter of time until cost-consciousness becomes a game-changer.
When Detroit's big three automakers were racking up record profits from SUVs during a period of low oil prices in the 1990s, few would have guess they were at the top of fortune's wheel and about to fall off.
In the mid-90s, major Japanese rivals found a way to nose into the market by rolling out car-based SUVs with lower prices and better fuel economy. That turned out to be insightful strategy. The US car industry fell victim to the spiraling oil prices of the 2000s, and Detroit's pickup truck-based SUVs were soon replaced by the city SUV models pioneered by the Japanese.
Detroit's slowness in seeing the writing on the wall where fuel efficiency was concerned was partly to blame for the near-death of the industry during the financial crisis of 2008, requiring the government to bail out some companies.
That should serve as a warning bell to China's auto industry as its now bets its future on SUVs. People change and so does the market. Even best-selling models have their use-by dates. Cars hailed as a symbol of luxury one day may become the pariahs of excess the next.
The SUV is still all the craze in China, but there are signs its heyday may be starting to cool a little along with the slowdown in the economy and the general auto market.
One way for SUV makers to prepare for a soft landing is to ease underlying consumer concerns about fuel economy, whether they are for practical reasons or out of environmental consciousness. To that end, China's auto industry has been experimenting in three directions: downsizing engines while improving their fuel efficiency, replacing gasoline engines with diesel models and powering cars with electricity instead of pure fossil fuels.
Home-made diesel engines sputter
Diesel engines may conjure up an image of loud, dirty and cumbersome, but they can be indeed quiet, clean and sleek with modern technologies, and even deliver more kilometers per liter. According to China's Huatai Automobile, one of the few diesel SUV makers in the country, diesel can save up to 30 percent of the cost of running a gasoline engine. The 2.0 T diesel SUV Huatai Bolgari consumes only 6.2 liters per 100 kilometers, outperforming most of its 2.0T gasoline competitors.
Still, Chinese consumers have shown little interest in diesel SUVs or diesel passenger cars, for that matter. Diesel vehicles now account for only about 1 percent of the market.
Maybe negative stereotypes of diesel are implanted too deeply in the Chinese psyche. The word on the street is that the quality of domestically produced diesel isn't good enough for imported car technologies. Great Wall Automotive has reportedly retuned its vehicles to run on domestic grades of diesel.
Then, too, China suffers from a dearth of diesel at retail gas stations because the fuel is in high demand for farming and public transport.
Will eco-friendly SUVs have a market?
In China, electric-powered SUVs are aimed at the luxury sector for the foreseeable future. Only customers with cash to splash will be able to afford this eco-friendly but expensive concept as the nation's green car industry struggles for commercial acceptance.
Despite steady sales growth of electric vehicles in public transport and government fleets, China's green auto market has been lackluster in attracting average motorists, despite generous government incentives and subsidies.
High sticker prices and inadequate charging facilities have stymied popularization of the sector.
But when it comes to the high-end of the market and costly SUVs, the price difference between a model's electric and gasoline versions is not very wide.
The hybrid variant of the Audi Q5, for example, is priced only 7 percent higher than its top-level gasoline model.
Energy performance becomes focal point
More fuel-efficient compact or small SUVs are catching on in China, thanks to turbo-charging technologies that can reduce an engine's displacement without compromising its performance too radically. The turbo-charged engine in such vehicles can be as small as 1.0 liter, while mainstream SUV models are equipped with engines ranging from 1.8 liters to 2.5 liters.
This new niche segment will no doubt be the focal point of future competition in China's SUV segment because mid-range and high-end models have already reached a deep degree of market saturation and because smaller models with cheaper sticker prices may extend SUV affordability to first-time buyers on tight budgets.
A typical success story against this background is General Motors' Buick Encore, which made into China's top 10 SUVs by sales last November, just one month after its introduction.
Rival Ford's EcoSport is now on track for launch this year.
When Detroit's big three automakers were racking up record profits from SUVs during a period of low oil prices in the 1990s, few would have guess they were at the top of fortune's wheel and about to fall off.
In the mid-90s, major Japanese rivals found a way to nose into the market by rolling out car-based SUVs with lower prices and better fuel economy. That turned out to be insightful strategy. The US car industry fell victim to the spiraling oil prices of the 2000s, and Detroit's pickup truck-based SUVs were soon replaced by the city SUV models pioneered by the Japanese.
Detroit's slowness in seeing the writing on the wall where fuel efficiency was concerned was partly to blame for the near-death of the industry during the financial crisis of 2008, requiring the government to bail out some companies.
That should serve as a warning bell to China's auto industry as its now bets its future on SUVs. People change and so does the market. Even best-selling models have their use-by dates. Cars hailed as a symbol of luxury one day may become the pariahs of excess the next.
The SUV is still all the craze in China, but there are signs its heyday may be starting to cool a little along with the slowdown in the economy and the general auto market.
One way for SUV makers to prepare for a soft landing is to ease underlying consumer concerns about fuel economy, whether they are for practical reasons or out of environmental consciousness. To that end, China's auto industry has been experimenting in three directions: downsizing engines while improving their fuel efficiency, replacing gasoline engines with diesel models and powering cars with electricity instead of pure fossil fuels.
Home-made diesel engines sputter
Diesel engines may conjure up an image of loud, dirty and cumbersome, but they can be indeed quiet, clean and sleek with modern technologies, and even deliver more kilometers per liter. According to China's Huatai Automobile, one of the few diesel SUV makers in the country, diesel can save up to 30 percent of the cost of running a gasoline engine. The 2.0 T diesel SUV Huatai Bolgari consumes only 6.2 liters per 100 kilometers, outperforming most of its 2.0T gasoline competitors.
Still, Chinese consumers have shown little interest in diesel SUVs or diesel passenger cars, for that matter. Diesel vehicles now account for only about 1 percent of the market.
Maybe negative stereotypes of diesel are implanted too deeply in the Chinese psyche. The word on the street is that the quality of domestically produced diesel isn't good enough for imported car technologies. Great Wall Automotive has reportedly retuned its vehicles to run on domestic grades of diesel.
Then, too, China suffers from a dearth of diesel at retail gas stations because the fuel is in high demand for farming and public transport.
Will eco-friendly SUVs have a market?
In China, electric-powered SUVs are aimed at the luxury sector for the foreseeable future. Only customers with cash to splash will be able to afford this eco-friendly but expensive concept as the nation's green car industry struggles for commercial acceptance.
Despite steady sales growth of electric vehicles in public transport and government fleets, China's green auto market has been lackluster in attracting average motorists, despite generous government incentives and subsidies.
High sticker prices and inadequate charging facilities have stymied popularization of the sector.
But when it comes to the high-end of the market and costly SUVs, the price difference between a model's electric and gasoline versions is not very wide.
The hybrid variant of the Audi Q5, for example, is priced only 7 percent higher than its top-level gasoline model.
Energy performance becomes focal point
More fuel-efficient compact or small SUVs are catching on in China, thanks to turbo-charging technologies that can reduce an engine's displacement without compromising its performance too radically. The turbo-charged engine in such vehicles can be as small as 1.0 liter, while mainstream SUV models are equipped with engines ranging from 1.8 liters to 2.5 liters.
This new niche segment will no doubt be the focal point of future competition in China's SUV segment because mid-range and high-end models have already reached a deep degree of market saturation and because smaller models with cheaper sticker prices may extend SUV affordability to first-time buyers on tight budgets.
A typical success story against this background is General Motors' Buick Encore, which made into China's top 10 SUVs by sales last November, just one month after its introduction.
Rival Ford's EcoSport is now on track for launch this year.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
