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Green Cars Take Slow Lane To Popularity

Kandy Wong – SCMP – Updated on May 12, 2008

Hybrid car owner Liu Gang drives home the message – it will take him 10 years to recover his investment in Toyota’s Prius, but the “green” car saves him fuel costs on a daily basis.

As market watchers question the industry’s commitment to environment-friendly vehicles, senior management at various motorworks have said gradual technological improvement instead of swift replacement probably will establish the popularity of green cars over time.

They were speaking on the sidelines of the Beijing Car Show held last month.

“It’ll not be a big bang of a change,” said executive vice-president Soh Weiming of Volkswagen China, which will put more focus on diesel-engine cars domestically. “But [the switch to green cars] will go on from region to region.”

Cynics remained unconvinced, however, as to how carmakers could promote green cars in a market where pollution is part of daily life, as they did not unveil any solid marketing plan.

“If I tell you that you can recoup the investment in a green car in less than two years, then you may be persuaded to buy,” said Cheng Mei-wei, vice-president of Ford Motor.

“But nowadays, it takes up to 12 years for consumers to recover their investment in a hybrid”, which commands a price premium of as much as 100 per cent over a conventional car.

Mr Cheng added it was not necessary to have a completely brand-new model but just the installation of green technology in existing models.

More than a dozen green cars – with fuel cells, diesel and electric engines – were featured in the show last month with the theme, “Looking into a green future”.

In sharp contrast to reality and the theme, Mr Liu said fewer than 50 hybrids were running on the roads of Beijing “because carmakers are not keen to promote their green cars”.

Many analysts are sceptical about the focus on going green. They believe that green cars are probably just a marketing gimmick rather than a practical move by car manufacturers.

A Prius is priced between 250,000 yuan (HK$279,350) and 300,000 yuan, about twice the price of models such as Toyota’s 1.8-litre Corolla and Honda’s 1.5-litre Civic, which are both popular with mainland consumers.

The state is expected to play its part to promote the green revolution, such as offering tax concessions, but that often takes time to implement.

Mainland media reported recently that the government is discussing the possibility of slashing the 17 per cent value-added tax in the second half to lower the cost of buying a hybrid or diesel-engine car. Customers may only have to bear a 10 per cent consumption tax in the future.

Shi Yaobin, chief director of the Ministry of Finance’s Taxation Department, said at a motor conference in Tianjin in September last year that the government was working on preferential tax policies to promote low-fuel-consuming and environment-friendly vehicles.

Mr Liu touted the concept that a hybrid does not have less power than a conventional car but said green cars should target young consumers who are fascinated by new technologies.

Carlos Ghosn, chief executive of Nissan Motor, may have shared that vision when he said: “Young consumers should be the real targets for green cars as `zero emission’ may not be an issue for this generation.”

Global carmakers such as General Motors, Toyota and Honda, displayed their green models at the show, while local carmakers, including Anhui-based Chery Automobile, Hangzhou’s Geely Holding Group, BYD Auto of Shenzhen, Chongqing Changan Automobile and Jilin-based First Auto Work Group also showcased theirs.

However, the domestic carmakers did not disclose details of their new technologies.

Shanghai General Motors, the 50-50 joint venture of SAIC Motor Corp and General Motors China, will launch its first hybrid Buick LaCrosse next month. Nissan will launch electric vehicles in the United States and Japan by 2010, and globally by 2012. Honda, meanwhile, started selling its Civic hybrids at its joint venture with Dongfeng Motor at end of last year.

Besides the models and their launch schedules, carmakers have yet to announce plans on production capacity, sales targets and prices.

The 50-50 joint venture FAW-Toyota was the earliest to launch a hybrid on the mainland, unveiking it two years ago. Last year, it sold 414 Prius units in a market where about 6 million passenger cars were sold.

“The company will take steps to move hybrid technologies as China continues to drive a fuel-efficient economy,” said Kevin Wale, General Motors China’s managing director.

Similarly, Mr Ghosn said: “There are no obstacles to introducing green cars in China, [particularly since] the Chinese government talks about harmonious development.”

But until something more encouraging develops, carmakers will maintain a trial mentality.

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