China Readies Rigid Auto Investment Rules for 2019
Despite spending a fortune supporting burgeoning automotive manufacturers and opening its door to foreign enterprises, China’s state planner has approved strict new regulations on investments within the industry.
Following a handful of draft proposals earlier this year, China’s National Development and Reform Commission (NDRC) announced it will ban new independent businesses that make only traditional combustion engines while continuing to push for more “new energy” vehicles.
The People’s Republic has what some might call a bit of a pollution problem. But it’s also one of the largest and fastest-growing battery producers in the world; state policy aims for the widespread adoption of electric vehicles. Unfortunately, this left China with hundreds of automotive startups that will never become profitable just as the country enters an economic downturn and its first year of negative car-sale growth in decades.
The NDRC’s decision is likely intended to help amalgamate the country’s overgrown and fractured auto sector while simultaneously making it harder for foreign businesses to move in after China “opened up” its market earlier this year. According to Reuters, the new rules should come into effect on January 10th.
From Reuters:
A draft of the policy released earlier this year alarmed some foreign carmakers, who worried Beijing was trying to trigger consolidation of the country’s flabby auto industry through mergers and strategic cooperation.
The regulation puts the tightest restrictions on new capacity in traditional combustion engine cars, but also adds hurdles for companies investing in electric vehicles.
It could, however, open the door to new plant approvals for [new energy vehicle] makers, which have, in effect, been suspended since the middle of last year when the last approval was granted.
The China Association of Automobile Manufacturers (CAAM) predicts flat vehicle sales through 2019 — though some foreign analysts expect a drop akin to what we’ve seen this year. Regardless, CAAM believes the NDRC’s new regulations will help cull the more feeble auto businesses that were allowed to proliferate.
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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And I am still a proponent of importing into the US cheap Made-In-China disposable cars that peeps can afford as their DDs. A long time ago it started with the VW bug. Then the Japanese cheapie imports followed. And after that it was the el cheapo South Korean- made cars. There's no reason why we in America cannot import cheap EV and ICE cars from China, and apply the same tariffs to these Chinese-made cars that the Chinese apply to American-made cars imported into China. There aren't any affordable cars sold in the US any longer. And Base models are few and far between because the automakers lose money on every one they make.
"The People’s Republic has what some might call a bit of a pollution problem. But it’s also one of the largest and fastest-growing battery producers in the world" No kidding. When you have zero constraints on working with the toxic materials that make up batteries (not to mention labor is free and expendable and replaceable), and to that you add the backing of the state to acquire said materials, what else do you expect to happen. "China Readies Rigid Auto Investment Rules for 2019" Every man wants a Ridgid tool.