“There will be no next China”, said Rupert Stadler, CEO of Audi AG, in a recent interview with Reuters. This is certainly true, but what’s more, after the era of unbridled expansion China has undergone there will be no “next China” in China either.
The nation will continue to grow rapidly, by stimulus or indeed by private investment – a fact that the world’s automakers have not overlooked. At the 2014 Beijing International Automotive Exhibition more than 2,000 companies released 118 new models as both domestic and foreign brands tried to woo an increasingly important market.
Robust growth will be a boon for automakers and lubes producers, but accelerated growth will only serve to increase pollution, which in turn will lead to reactive emissions control policies as the governments strives to curb it.
According to Larry Summers, a pre-eminent US economist, when the US was the world’s fastest growing country it took 30 years for living standards to double. China has doubled living standards in 10 years for each of the last three decades. Following that logic, it will not take China long before emissions standards are on a par with counterparts in the EU and the US.
In June last year, OATS ran an article outlining the major challenges small to mid sized producers would face as a result of the National IV standards to be implemented in the following month. Less than one year later, Beijing has timetabled National VI diesel emissions standards to come into effect by 2016. Some will be able to adapt to rapidly changing standards faster than others.
A similar situation faces China’s automotive industry. Discouraged by lacklustre EV and NEV sales and the lack of cheap, accessible and proven technology, many of the nation’s carmakers have shied away from the sector.
Nonetheless, China is now ramping up its EV drive and has renewed subsidies worth as much as $9,650 off the purchase price of new energy vehicles in Beijing, Shanghai and Tianjin. A ‘perfect storm’ of increased investment in charging infrastructure, massive subsidies, worsening pollution and cheaper NEV technology could lead to a rapid expansion in this sector as well.
In the luxury market, however, FAW has wheeled out its 3.2 ton gas-guzzling Hongqi H5, which will do a voracious 20 litres per 100km. Meanwhile, BMW and Audi both released upmarket NEVs, and the latter has announced plans to release 10 green models by 2018.
In the world of commercial vehicles, too, emissions will play a large role in determining the dominant players. Some local producers, like JARN, who have just released a highly versatile National V standard diesel lube, are already getting themselves ahead of the curve.
Staying two steps ahead of emissions regulation will be critical for both lubes producers and automakers alike. Fortunately, OATS’ very own Diana Shen will be speaking at the 8th ICIS Asian Base Oils & Lubricants Conference in Singapore, which takes place from the 24th - 26th June 2014. Diana will be sharing some of her insights on the key issues facing China’s lubricants market.
To find out how OATS can help you maximise growth in China's rapidly changing marketplace, or to comment on items in this month's Bulletin, simply contact Diana Shen.
Sebastian Crawshaw
Chairman, OATS