Automotive News Europe - January 2013 - 18

AUTOMOTIVE NEWS EUROPE

OEM

China mulls more diesels
Slow take rate for EVs has country looking at alternatives
NICK GIBBS
lciferri@crain.com

China is ready to support the launch of more clean diesels as it seeks to find fuel-saving alternatives to electric vehicles and hybrids, according to the country’s biggest domestic carmaker. “Diesel technology is being promoted by the China government,” David Lindley, head of SAIC Motor Corp.’s Europebased technical center, told Automotive News Europe. Unlike Europe, where diesel-burning light vehicles outsell gasoline-powered models, the powertrain of choice in China is gasoline. But that is changing. Lindley said the first diesel engineered by SAIC’s Birmingham, England, technical center, a 1.9-liter four-cylinder unit, would be fitted to cars sold in China as well as Europe. The engine debuted in the mid-sized MG6. Now SAIC is working on a family of smaller diesels destined for the MG5 compact and other future models. “The engines will be sold in the China market in the short term,” Lindley said. As well as MG cars, the engines can be fitted in mechanically identical sedans from sister brand Roewe in China.

The MG6 (shown) is the brand’s first model fitted with the automaker’s UKdeveloped 1.9-liter four-cylinder diesel. The factory is set to start production this year to serve customers such as Chinese SUV specialist Great Wall Motor. “We also believe there is great potential for growth in diesel vehicles in China,” Steven Kiefer, president of Delphi’s powertrain divisions, told the Xinhua news agency. vehicles, leaders in Beijing are having a second look at alternatives, including both hybrids and diesels,” China automotive analyst Michael Dunne, head of Dunne & Company, told Automotive News Europe.

Fuel quality problem
The stumbling block is the quality of diesel, SAIC’s Lindley said: “The fuel that’s on sale now is not good enough to run through these engines. It needs a shift in the refinery industry.” High-sulfur diesel can damage particulate filters in modern diesel engines. Currently, China is struggling to meet the low-sulfur standards required by clean diesels. Only Beijing has introduced ultra low-sulfur diesel, with retailers required to sell fuel with sulfur levels of 10 parts per million as of May last year. Dubbed the Beijing 5 standard, it matches Euro 5 European fuel-quality ratings. The rest of the country is slow to catch up, Lindley said: “There are signs that this is changing, but I wouldn’t like to predict when that will happen.”

Rising demand
Robert Bosch, the world’s largest auto parts supplier, expects the market share for diesel-powered new cars to rise to 4.5 percent by 2015 from less than 1 percent last year. The biggest growth will come in SUVs and minivans, the partsmaker predicted in a report published last September. Late last year Bosch started work on a new diesel-injector factory in Qingdao, in eastern China’s Shangdong province. Scheduled to start production in 2018, the factory will make injectors for both cars and trucks. Another supplier betting on increased diesel demand is Delphi. The U.S.-based partsmaker announced last October that it had begun work on a diesel-injector factory in Yantai, also in Shangdong province.

‘Hard road’
China has poured resources into encouraging buyers to switch to electric vehicles and hybrids as a way of reducing the country’s dependence on imported oil. The 2012-2020 New Energy Vehicle Industrial Plan published in July targeted cumulative sales of 500,000 electric vehicles by 2015 and 5 million by 2020. Despite generous purchase subsidies of up to 60,000 yuan (7,300 euros) in Beijing and incentives such as exemption from license plate lotteries in Beijing and Guangzhou, just 13,000 electric vehicles were sold between 2009 and 2011, according to research from analysts Bloomberg New Energy Finance. “Now that China has come to terms with the hard road that is electric

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