The Ministry of Industry and Information Technology's recently released list of selected models for use as government vehicles in 2012 has met with a great deal of suspicion across the industry. The MIIT released the report late last week, and will continue collection opinions until March 9, China Business News reported.
"I don't dare believe this policy is real," Chinese Academy of Engineering professor and industry expert Guo Konghui was quoted as saying in an interview with the paper.
The vehicles in the report are divided into four categories: diesel powered sedans (all of which have engine sizes of 1.8 L or less), minivans, SUVs and new energy sedans. Chinese made own brand vehicles constitute almost the entire list, with BAIC being the only large manufacturer not listed. FAW Group's Hongqi and Xiali, SAIC's Roewe and MG, Dongfeng's Fengxing and Fengshen, Changan's Hafei and GAC's Trumpchi were listed aside Chery, Geely, BYD, Great Wall, Brilliance, Haima, Zotye and Lifan. Several other domestic brands were included as well.
China Passenger Car Association Secretary General Rao Da was supposedly not at all surprised by the list. Mr. Rao recommends domestic manufacturers and others not to set their hopes too high, stating that the policy "has more symbolic than practical use." He questions how much the policy will actually help own brand manufacturers, adding that foreign joint ventures would not easily abandon the lucrative government vehicle market.
Government vehicles made up approximately ten percent, or about 1.8 million, of the over 18 million vehicles sold in China in 2010. Own brands vehicles constituted less than seven percent of that number. "If government bodies purchase vehicles [in accordance with the policy], it will greatly help promote sales and brand image for own brand manufacturers," Great Wall Spokesman Shang Yugui said. "However, how it is implemented is still a question."
Similar policies have been announced in the past. Some manufacturers, such as Chery, have been included in such lists since 2005, but have still not seen a large increase in purchases from government organizations. Although Great Wall has had a significant number of purchases from authorities in townships, it still does not receive many orders from bodies in counties or cities. Meanwhile, Chevrolet, VW, Toyota and Honda branded government vehicles are a regular sight on city streets.
"The foundation of our domestic brands is still relatively weak and requires support," Mr. Guo stated. "If only pure market competition is emphasized, own brands may face the danger of being entirely wiped out," he warns.
Many worry about the declining performance of own brand manufacturers, with the majority resigned to competing in the market for low-end vehicles.
Source:gasgoo