Business / Auto China

Demand for cars moving into a slower lane

By Shi Jing in Shanghai (China Daily) Updated: 2014-05-29 06:52

As the inventory of passenger vehicles and prices of bulk commodities such as steel will remain steady in 2014, it can be expected that the profits of the Chinese vehicle industry will be largely unchanged this year, Hou said.

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Demand for cars moving into a slower lane

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However, shares of listed vehicle producers have been underperforming because investors have lost some confidence in the country's economic outlook. Many investors have also shifted focus to technology, media and telecommunications companies, as well as the pharmaceutical sector, which they think offer steady growth.

With the success of Tesla Motors Inc's vehicles, China is moving faster to develop the electric vehicle market. A number of favorable policies are supporting the sector, such as more subsidies in a larger number of cities and opening the market in Beijing and Shanghai to EVs produced elsewhere.

Shanghai's first charging station, built by Shanghai World Expo (Group) Co Ltd and State Grid Shanghai Municipal Electric Power Co, opened on Wednesday.

However, according to a report by consulting firm Roland Berger Strategy Consultants Holding GmbH, China has "failed to show any technological progress at all" in terms of EVs.

"We can see that the authorities have plans for electric vehicles. If China can succeed in this area, it can achieve the goals of industrial upgrading and controlling pollution.

"Current technology can be commercialized, even though it's not very advanced. As a result, electric vehicles sold now do not have an ideal cost performance," said Hou.

"If the industry is to thrive, consumers should change their habits voluntarily", without regard to subsidies, Hou added.