Hybrids may win 2nd& 3rd Tier Markets

　　According to the Private Subsidy Rules for New Energy Vehicles which have been disclosed, some industry insiders believed that the rules was obviously inclined to support electric cars and the intensity of subsidies for hybrid vehicles was weakened. Some media said that hybrid vehicles may be "eliminated". According to the some contents of regulation rules which have been disclosed, pure electric vehicles have been identified as the main development path of new energy vehicles. However, hybrid vehicles are also recognized by authorities since they are equipped with power-saving technologies to upgrade traditional vehicles.

　　Some executives of automakers said that electric vehicle technology was not mature enough and it would take some time to achieve industrialization. High subsidies may lead automotive businesses to develop electric vehicles. But automakers are still far away from real benefits. On the contrary, though the subsidies for hybrid vehicle models are not that high, those automakers with mature technologies can obtain benefits.

　　Now auto market is waiting for the official version of Private Subsidy Rules for New Energy Vehicles. Some of its details are being disclosed.

　　According to the latest news, Chongqing, Beijing, Shanghai, Shenzhen and Wuhan will become the first batch of cities to implement Private Subsidy Rules for New Energy Vehicles policy. The subsidy ranges from 3000 yuan to 60,000 yuan.

　　According to the source familiar with senior staff of National Development and Reform Commission, three categories will enjoy three kinds of subsidies in those five cities. First category is the vehicles with 1.6-liter or smaller engines and emission level can meet China IV standard and Passenger Car Fuel Consumption Limits. Those passenger cars and non-plug-in hybrid cars can get 3,000 yuan subsidies. Second category is plug-in hybrid vehicles. Subsidies will range from 4,000 to 50,000 yuan based on different volumes of batteries. The last category is pure electric vehicles which can get up to 60,000 yuan subsidy.

　　According to the amount of subsidies, we can tell that China attaches more importance to the development of pure electric vehicles. However, automakers have another kind of interpretations.

　　Economical and practical factors promote the popularity of hybrid vehicles.

　　Jin Yibo, the Assistant of General Manager of Chery told Cnstock.com that Chery had a pure electric car which was enlisted in the catalog of Ministry of Industry of Information. However, the production and sales need the support from development of infrastructure such as charging stations. Once the electric car is produced, Chery will carry out a test run in the base in Wuhu or provide those cars for local tax companies. Currently charging facility is still the largest obstacle for the promotions of electric cars. Jin Yibo pointed out that hybrid had both cost advantages and government subsidies. For auto market, hybrid vehicles can win more acceptances and the pace of industrialization will become faster.

　　The advantage for Chery hybrid model-BSG is low price. For example, the non-hybrid version of A5 1.6L is 55,800 yuan. The hybrid model with BSG system is 74,800 yuan. Local government will provide 4,000 yuan subsidy for buyers of A5 hybrid model and central government will offer another 3,000 yuan subsidy. Therefore the intensity of preferential policies is considerable. Therefore, Jin Yinbo believed that consumers cared about cost. With more and more hybrid vehicles entering families, owners can observe the substantial reduction of fuel consumption. Therefore hybrid vehicles will become more and more popular.

　　A senior executive from a foreign automaker said: “I got the news that as to national subsidy for new energy vehicles, private customers who buy a car equipped with idling stop device will enjoy 3,000 yuan subsidy. That foreign company called the idling stop as "weak mixing". The auto industry believed that the fuel-saving rate would be around 10% with the device.

　　It is foreseeable that the sales of hybrid models will step onto a new level, which is driven by policies. Duan Wucheng, the analyst of the United States Global Link Co., Ltd. (Shanghai), believed that subsidy policy would promote the sales of hybrid vehicles in the year of 2010 and 2011-40,000 units and 300,000 units respectively. Last year the sales of hybrid models totaled 5,000 models. For domestic automakers, Chang'an Automobile has mastered the most advanced hybrid vehicle technologies. Chang'an has achieved mass production of hybrid CV9 in 2009. Zhu Huarong, the Vice President of Chang'an told the Shanghai Securities News that with the arrival of state subsides, by 2012 the sales of new energy cars will account for 12% of Chang'an total sales.

　　Based on subsidy policy of new energy cars, government attaches more significance to electric cars. As to the question which one should implement industrialization, there has been a debate within the industry.

　　Chu Yanhui, auto industry analyst of AJ Securities told the Shanghai Securities News that the cost of pure electric vehicles remained higher compared with plug-in electric vehicles due to the implementation of new technologies. And average consumers are not able to afford it.

　　In fact, the debate about so-called new energy vehicles is more heated. People are more concerned about the whole process of energy production. A senior executive from a foreign automaker said that the amount of carbon dioxide emitted by a car with 1.4T engine within its life cycle was roughly the same as that of an electric car with same power. The generation of electric power will result in the emission of carbon dioxide. Based on the current technological level of electric vehicles, emission problem is inevitable.

　　Hybrid car manufacturers are chasing for second and third tier cities.

　　It is not clear when the subsidy rules for new energy vehicles will be carried out. However, some automakers which have already introduced hybrid models are devising layouts. Their eyes even turned to those second and third tier markets with greatest potentials and vast areas.

　　Guangzhou Toyota is running ahead of other rivals. Last week Guangzhou Toyota launched Camry National Exhibition in Zhuzhou which will cost a great amount of funds and several years. The event will cover all the major second and third tier cities in China. Camry hybrid model which is to be introduced in April will further carry out promotion work.

　　According to the sources from marketing department of Toyota, Toyota is waiting for the permit for the sales of hybrid Camry in cities. Now the permits in 11 provinces and 9 cities are available. Now auto industry is embracing a fever of new energy and hybrid vehicles. However, since many consumers are lack of knowledge about technologies, consumers may not be able to offer warm responses and feedbacks to automakers. Such kind of phenomenon is particularly prominent in second and third tier cities.

　　Toyota staff said that the exhibition of Camry in second and third tier cities would not only extend brand space, but also get preparations for the promotions of hybrid cars. Under a general atmosphere that government promotes the development of new energy vehicles, Toyota has paved the way for Camry hybrid model.

　　At the same time, in 2010 Chang'an plans to promote hybrid mini-cars in countryside. The first hybrid mini car focusing on rural market will make its debut in September and win certain shares in the vast rural market. Wang Jun, the Director of Marketing Department of Chang'an Auto revealed that the price was similar to normal mini car.

　　In the second half of 2010, Chang'an will produce hybrid versions for major mini models. By 2012 all the models will have hybrid types. (Translator: Qinghua/Hanxin)

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