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Stricter fuel-efficiency rules mulled
Latest Updated by 2004-02-02 09:25:44

The Chinese government is close to adopting more stringent automobile fuel-efficiency standards to keep oil consumption in check and make sure the country has the latest auto-production technology.

That means auto manufacturers in the United States and elsewhere may have to spend money to modify some vehicles they plan to produce in the world's fastest-growing auto market.

China has become a key market for the future of the industry and is soon expected to overtake Germany as the third-largest national automobile market, behind the United States and Japan.

The new regulations, now in a draft stage, will likely go into effect in July 2005, according to the China Automotive Technology & Research Center, a government body that develops all of China's automobile-related regulations. The agency expects a second phase of standards to be adopted in 2008.

The new rules would cover all passenger vehicles weighing less than 3.5 tons, including sport-utility vehicles (SUVs). The standards, set by weight, would allow heavier vehicles to be slightly less fuel efficient.

An SUV weighing 2400 kilograms (about 5,300 pounds) would be required to use no more than 15.5 liters of gasoline per 100 kilometers (getting about 15.5 miles per gallon in 2005). That would go to 14 liters per 100 kilometers (about 17 miles per gallon) by 2008, the official said.

For a one-ton car, the 2005 requirement would be 8.2 liters per 100 kilograms (nearly 29 miles per gallon), moving to 7 liters per 100 kilograms (more than 33 miles per gallon) by 2008.

An official with the government agency stressed that the draft numbers could be changed before they get final approval.

While most smaller vehicles can meet the new standards with few, or no changes, rules for heavier vehicles may require carmakers to invest in research and development.

David Cole, chairman of the Center For Automotive Research in Ann Arbor, Mich., said he thought auto manufacturers in the United States and elsewhere would have no problem complying with new fuel-efficiency rules.

In the big picture, he said, U.S. worries over its trade imbalance with China had put pressure on the Asian giant to import more U.S. goods. New agreements last year to import U.S. automobiles show that China is committed to remaining on a good trade footing with the United States, Cole said.

China is relying on foreign investment in things like auto-manufacturing plants to fuel its rapid economic growth.

Ford Motor Co. expected a minimal effect from higher fuel-efficiency standards, said spokesman Ken Zino.

In China, Ford now sells small cars that get good gas milage. The company operates a single China manufacturing plant now, with plans for a second plant, and an engine plant. Ford hasn't said which vehicles will be made at the new plant, Zino said.

A Ford spokesman in Shanghai said the new fuel standards come as no surprise to carmakers.

"The standards have been in discussion for at least a couple of years," said Kenneth Hsu. Ford and "most of the key players in the China market were all invited" to talk with Chinese officials about the new rules, Hsu said.

General Motors Corp. has a strong presence in the country with its Buick brand.GM plans to export Cadillacs this year and next year to address a growing market for luxury vehicles. Spokespeople weren't immediately available to talk about the specific impact of the fuel-rule changes on GM's manufacturing in China. The world's largest carmaker said recently it had an 8 percent share of the Chinese auto market.

DaimlerChrysler AG, parent of the Chrysler Group in the United States, in September signed an agreement for a joint venture to begin manufacturing Mercedes-Benz sedans in China in 2005. The company expects to sell 10,000 of the luxury cars there this year.

Officials couldn't immediately be reached to discuss the impact of fuel-standard changes on DaimlerChrysler's Chinese business.

Most cars manufactured in China are produced through joint ventures between Chinese and foreign companies. Volkswagen AG has been the dominant participant, but Asian and European companies are catching up.

As reported, a study released in October by an environmental group estimated that making cars more fuel efficient for markets worldwide would cost all carmakers more than US$8 billion over the next 12 years.

Per vehicle, the three most heavily affected companies would be Bayerishche Moteren Werke AG, US$649, DaimlerChrysler, US$459 and Ford, US$403, according to the report by World Resources Institute, Washington, D.C., and SAM Sustainable Asset Management, Zurich.

Stricter fuel-efficiency standards will help China keep oil imports down, said an official at the China Automotive Technology & Research Center.

"The Chinese Government didn't want the foreign carmakers to dominate the Chinese market with old technology," he said.

In fact, "the new standards will help China export more cars in the future as the international carmakers bring their best technology to China, and produce better cars," he said.

Editor: Donald

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By: Source:szdaily
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