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Beijing car show focus on EVs spotlights growing importance of China market

Honda Motor Co. vehicles are seen at the Beijing International Automotive Exhibition, in Beijing, on April 25, 2018. (Mainichi)
Nissan Motor Co.'s first EV version of its popular Sylphy model is seen at the Beijing International Automotive Exhibition, in Beijing, on April 25, 2018. (Mainichi)

BEIJING -- The focus is squarely on electric vehicles (EVs) at this year's Beijing International Automotive Exhibition, one of the world's largest car shows that opened here on April 25 with roughly 1,200 domestic and foreign firms displaying their latest models.

Though the event is a boost for the Chinese car market, foreign investors are slightly concerned about the future of the Chinese auto market due to recent trade tensions with the United States and other factors.

Among the auto executives present on day one of the show was Toyota Motor Corp.'s Kazuhiro Kobayashi, the firm's senior managing officer for the China region. Kobayashi stressed Toyota's commitment to speeding up development of new models in China, which is further down the electrification road than any other country in the world. The executive also announced Toyota's plan to launch 10 new electric models in China, including EVs and plug-in hybrids (PHEV), by 2020.

Similarly, Nissan Motor Co. revealed plans to mass-produce and sell EVs in China starting this year, and unveiled the EV version of its Sylphy sedan, a hugely popular car in China. Nissan is aiming to launch six models in China by 2019 in an attempt to expand its market share there. Honda Motor Co. also unveiled an EV for the first time, and plans to kick off mass-production by year's end.

In 2019, Chinese environmental regulations will enter force stipulating the ratio of "new energy" cars coming off domestic factory lines, including EVs. This, plus the size of China's auto market -- 1.7 times that in the U.S., and 5.5 times that in Japan -- has fueled major car makers' rapid shift to EVs.

However, there are concerns about the future of the Chinese market, triggered partly by recent high tariffs slapped on Chinese goods by the administration of U.S. President Donald Trump that in turn prompted Chinese tariffs on U.S. products. If the U.S. and China got caught up in a major tariff battle, it would inevitably have an effect on cars.

However, the Chinese government has also announced plans to lift restrictions on auto sector investment by foreign firms. It is also looking into lowering tariffs on vehicles, which could have a knock-on effect on overseas firms, including Japanese ones.

In such complicated circumstances, it is difficult for major auto companies to read the future of the Chinese market. One senior Japanese auto executive commented on U.S.-China trade frictions, "Until restrictions are actually brought in, it is difficult to gauge the impact."

Meanwhile, an executive of a Ford Motor Co. subsidiary in China said the company hopes the U.S. and Chinese governments can resolve any trade issues as best as possible.

U.S. Treasury Secretary Steven Mnuchin is set to visit China soon and discuss the issue with Chinese officials. If negotiations go well, China might be able to change regulations in a way that would be more advantageous to foreign firms. However, prevailing opinion holds that "no major change will happen soon" on policies to open up the Chinese market.

Despite this, Yasuhide Mizuno, Honda's executive officer for China operations, says, "Major Japanese firms have developed a good relationship with Chinese counterparts, and are not thinking of changing their capital injection rate." This is because Japanese auto companies have built up cooperative partnerships with Chinese firms in sales and parts procurement, and if relationships concerning capital injection rate break down, it could negatively impact various business enterprises.

Meanwhile, Chinese firms are working hard on enhancing the quality of their own brands, following years of auto joint ventures. "The quality of Chinese brands has increased considerably, and as rivals, they have become tough to beat," explains Nissan President Hiroto Saikawa.

(Japanese original by Kiyohiro Akama, China General Bureau)

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