At Sina Auto's recently held New Voices of the Future discussion summit, two major issues took the spotlight: the future development trend for automobiles and automobile industry policies. A statement made by China Association of Automobile Manufacturers Deputy Secretary Li Wanli was especially revealing, in which he commented that relevant departments in the State Council are discussing with other departments on how to loosen restrictions placed on manufacturers. Some have taken this as a sign that the over 30-year old legislation that requires Chinese parties to have a 50 percent stake in a joint venture enterprise may change in the future.
When discussing subsidy policies for new energy vehicles, Mr. Li recommended that policies shift from providing grants to manufacturers to directly granting consumers subsidies. Mr. Li pointed out that such a policy shift would better reward product competiveness while also helping break regional monopolies which benefit from current subsidy policies.
The following is an excerpt of the discussion panel with Mr. Li, BMW Greater China Region President and CEO Karsten Engel, Volvo Cars Senior Vice President of Research and Development Peter Martens and Vroom Magazine Chief Publisher Wu Yingqiu.
Topic: What changes should be made to automobile industry policies?
Mr. Li: "We believe that the current model of the automobile industry is not suitable in helping the market open up."
"For example, aspects concerning production enterprises need to be reformed. In accordance with government policies, production enterprises must have an approved national industry certification. According to my recent investigations, there are four to five departments involved with approving the entrance of automobile products to the market; among them, many departments lack the authority to issue certificates, but are still involved in executing these tasks."
"I suggest keeping the nationally certified Ministry of Industry and Information Technology's management of automobile production enterprises and entry of products to the market, while at the same time optimizing and perfecting the management processes regarding safety, environmentally friendliness, energy consumption and other aspects for automobile enterprises and products. Ideally there should be just one approval department."
Mr. Wu: "I believe that all aspects should be relaxed or phased out [as necessary]. The 1994 and 2004 industry policies were made according to those time periods, were aimed towards products and issues from those time periods and assisted with the development of the industry of those time periods. However, after 2004, the Chinese automobile market experienced an extremely large transformation, with many new factors appearing. Using 2004 policies in 2014 is a flawed [idea] by itself, so it is inevitable that these automobile industry policies will change."
"I predict that future policies will be more market-oriented and more open, as well as be simpler. Furthermore, policies definitely need to be more democratic. For example, concerning the new energy vehicles we just discussed, why are the many controversies regarding new energy vehicles ignored? This is highly likely related to the openness of current policies."
Topic: Where are new energy vehicle subsidy policies lacking?
Mr. Li: "When it comes to new energy vehicles, current subsidy policies ought to be changed. Preferential policies should shift from providing grants for production enterprises to directly providing subsidies for consumers."
"Giving grants to enterprises is beneficial to the development of enterprises' products. However, by giving these subsidies directly to consumers, you are giving them the knowledge and authority to choose new energy and energy-saving vehicles. This helps strengthen the invisible hand of the market [as well as] break regional monopolies."
Mr. Wu: "On the topic of problems with electric vehicles and new energy vehicles, there is a line of thought that is already gaining national consensus. [That is,] by fully relying on electric vehicles to drive all new energy vehicle development is a problem in itself."
Topic: What trends are they regarding automobile development in the future?
Mr. Engel: "In regards to automobile drivability, the entire world is constantly making new developments. Different people have different demands when it comes to drivability, [therefore] we cannot absolutely know which direction it will develop towards. However it is definitely changing. The consequence of it not changing is unbearable [for enterprises] to consider. For example, Kodak was once a leader in the film industry for many years, however it was unable to pick up on the rapid changes that were happening globally. There is no person or company that is free from the change of time. By not [evolving with the times], bankruptcy is the only option."
Mr. Martens: "Looking at the current state [of the industry], there are three major [development] trends: electric vehicles, connectivity and driverless vehicles."
"What we need to acknowledge is what the real demands of our customers are. For example, driverless vehicles are not something that will happen overnight, but they are an emerging concept. We need to make some attempts by operating vehicles over limited areas. For example, for vehicles in a city like Beijing to become fully automated may take another 15 years."
