Year of Horsepower: Car industry shifts gears

A new-energy car at Tsinghua University in Beijing. The new-energy cars will enjoy more preferential policies in China. [Wu Changqing/For China Daily]

Opportunities, hurdles to arise in changing market

Editor's note: Ending two years of stagnation, the Chinese auto industry achieved double-digit growth in 2013. In the same year, the government released groundbreaking regulations on warranties, and car manufacturers showed a growing concern for quality as demonstrated by their increased willingness to issue broad recalls. Though the market faces challenges from local efforts to restrict car purchases, the government's renewed commitment to subsidies for green vehicles offer hope to this emerging sector. 

Surge in sales ends yrs of stagnation

China's passenger vehicle sales recovered from nearly two years of stagnation to surge 17 percent on an annual basis in 2013.

Last year, sales totaled more than 17.18 million units, far exceeding the industry's earlier expectations of single-digit growth.

Statistics show that China's passenger vehicle sales hit new monthly records consecutively in November and December, pushing total vehicle sales to beyond 20 million units.

However, analysts predict that the sector will see a relative slowdown in 2014 as more cities across China implement vehicle restrictions to combat rising pollution.

The China Passenger Car Association forecasts more than 12 percent annual market growth for 2014 if there are no big policy changes.

IHS Automotive predicts this year's light vehicle sales - 76 percent contributed by passenger vehicles - will rise 11.76 percent year to 20.77 million units, and total vehicle sales will grow 9.04 percent to 22.65 million unit.

Though it admitted that the market is cooling down, KPMG still remains confident about the picture in the long run.

Number of recalls hits new records

The General Administration of Quality Supervision, Inspection and Quarantine said that as of Dec 26, the authority has helped carmakers announce 130 batches of vehicle recalls involving 3.76 million vehicles in China, 17.37 percent more than last year, hitting a record high.

However, the second day, on Dec 27, General Motors added 1.46 million units and Ford Motor Co 80,857 units to the recall record.

Chen Xitong, spokesman for the country's quality watchdog, said that of the previous amount without GM and Ford's latest announcement, 52.17 percent of the recalled vehicles - about 1.96 million units - were recalled after investigations by the administration and that 3.28 million vehicles were voluntarily recalled by domestic automakers.

It included the long-awaited recall issued by Volkswagen Group China in March for its 384,181 vehicles equipped with seven-speed DSG transmission, finally resolving a dispute between the German company and consumers that had lasted for several years.

The company later in November recalled another 640,309 vehicles with oil problems in the seven-speed double-clutch gearboxes.

Analysts said that the big increase in recall batches and numbers in 2013 can be partly attributed to the implementation of the new 3R - repair, replacement, refund - policy which effectively regulates the recall sector.

Japanese brands recover from boycotts

Japanese automakers' sales in China increased in 2013, recovering from a sharp decline a year earlier.

The slump in 2012 was caused by anti-Japanese sentiment among Chinese consumers following escalated territorial disputes between the two countries.

However, analysts said doubts remain for Japanese car producers in the world's largest automobile market because of fluctuating Sino-Japanese relations.

Major Japanese automakers - including Toyota, Honda and Nissan - all reported high sales increase in 2013.

However, analyst said that the sales increases, especially the high figures for the fourth quarter seem particularly large in proportion to the low sales seen since tensions broke out in September 2012.

Statistics from the China Association of Automobile Manufacturers show that in September 2012, Japanese producers' combined sales fell by 29.5 percent from August and by 40.8 percent from a year earlier. Sales remained tepid for months.

Analysts said Japanese Prime Minister Shinzo Abe's recent visit to the controversial Yasukuni war shrine will probably cause another flare-up of anger from Chinese consumers and possibly renew the backlash against Japanese products.