Auto Industry Updates

China Reviewing Whether to Restart its

The National Development and Reform Commission (NDRC) is considering resuming the "Clunker for Cash" policy to revive China's bleak auto market. This policy was first introduced in 2009 to encourage people to buy new cars.

The "Clunker for Cash" and "Go Countryside" are two of a series of measures that the government in Beijing plans on implementing to boost auto sales and bolster the automobile industry that is considered one of the country's driving industries.

But some market observers say that neither the "Clunker for Cash" nor the "Go Countryside" measures would have the same positive effects now as they did three years ago.

A major difference between the current and previous versions of these two measures is that this time there will be even more focus on encouraging consumers to buy small cars for environmental reasons. However, the subsidy for the "Go Countryside" measure will remain the same as before, 10% of the price of the car with a maximum of 5,000 RMB (around NT$23,000) to buy a new car.

According to data, car purchases account for one-tenth of the national consumer spending in China while auto parts and related after-sales services account for another one-sixth. This large percentage of vehicle and auto parts spending in national consumer spending is the major reason the government is considering implementing measures to revive the automobile industry whose sales have been sliding for several months.

Algeria Requires Authorized Reseller Certificate for Imported Auto Parts
Algeria is the largest country in Africa and its large size (2,380,000 square meters), well-developed transportation facilities and abundant crude oil and natural gas resources make it a major auto market in the region. Last year, Algeria recorded a 7% growth in car imports, most of which were shipped from the United States and Europe.

Most Algerian car dealers that provide quality after-sales services say the parts they use come from the original manufacturers.

For safety reasons the Algerian government requires dealers who use parts made by original manufacturers to provide an Authorized Reseller Certificate. Most car dealers welcome this policy saying that it ensures that their high-end customers receive top quality parts.

In recent years, the auto market in Algeria has grown rapidly thanks largely to the increase in consumer demand that is a result of the government's five-year economic development policy. Many Algerian car dealers have responded to the growing market demand by announcing favorable, low interest rate auto loans to further encourage consumers to buy.

Algeria imported 300,000 units of cars in 2011, up 7.3% from the previous year. France was the largest car supplier, accounting for 51.53% of the imported cars, followed by Japan at 10.59% and Germany at 9.17%. Italy was fourth at 5.06% and South Korea fifth at 5%.

According to reports, there are five million cars on the road in Algeria, and the majority of the heavy-duty ones are over 15 years old and in the highest risk category, requiring the most maintenance and repairs.

Annually, Algeria imports around US$500 million of auto parts that are used primarily by 16,000 auto parts suppliers and maintenance shops.

New EU Tire Regulations Become Effective in November
Due to concerns over traffic safety and environmental protection, the European Union (EU) will implement new regulations for auto tires, and starting on November 1, 2012, all tires for sale must bear a label indicating that the following three key performance standards have been met: fuel efficiency, wet grip performance and exterior rolling noise.

The label will make it easier for consumers to compare different brands and make an informed decision when purchasing auto tires, the EU says.

"The label helps people choose safer and more fuel-efficient tires, which has a positive impact both on general safety and economic and environmental efficiency," according to the new EU regulations that are binding in all EU member countries.

These stricter auto tire regulations have been supported by leading auto tire manufacturers such as Goodyear, which has stated it believes the label will guide consumers to buy safer and more fuel-efficient tires. "Since we always take great care in developing tires that meet the highest safety and environmental standards, we are confident you will make the right choice," the company said.

However, implementation of the label policy worries some tire importers that ship tires from markets with lower standards.

Indonesia Modifies its Gas Subsidy Policy
After estimating that its fuel subsidy for this year would amount to 43,500,000 myria-liters (one myria-liter equals to 10,000 liters), the Indonesian government decided to delay the planned termination of this funding.

Since the Suharto regime, fuel subsidies have been the Indonesian government's policy for securing the availability of cheap energy, especially for the power and transportation industries.

Thanks to the government's generous fuel subsidies, fuel costs have been effectively controlled and a higher number of people have been able to buy their own cars. The number of vehicles in Indonesia should more than double between 2010 and 2035, according to the Asian Development Bank (ADB). However, the economic costs associated with managing the increased traffic congestion and negative health effects are expected to be enormous.

Some economists have said that because Indonesia has been a net importer of both crude oil and refined products since 2004, its fuel subsidy policy has severely affected the government budget.

Heavy oil and electricity subsidies cost the Indonesian government US$9.78 billion in 2010, and this figure is estimated to increase to US$18.55 billion (17% of government expenditure) in 2012, according to the Ministry of Finance's Directorate General of Budget.

Although the Indonesian government decided in March to terminate its fuel subsidies for some consumer groups and industrial sectors, it later gave up on this plan and has continued offering funding for fuel that is estimated to hit a record high of 43,500,000 myria-liters this year.

Taiwan to Develop Intelligent EV Cities
With its own thriving auto parts industry and the country's advantages in electric vehicle technology, Tainan in southern Taiwan is one of the most active cities on the island in pursuing intelligent EV development.

With most of the auto parts manufacturers on the island located in the city, Tainan is the largest production center of auto parts in Taiwan. Counting on the city's industrial strength, Tainan City government is developing an intelligent EV transportation network that by the end of the year should include 110 completed power-recharging stations and another 100 in a couple of years.

"Our goal is to have 200 electric vehicles on the road within two years," said Tainan City Deputy Mayor Lin Chin-rong. Seventy-five would be for the government's transportation fleet and 125 for rental use by private rental car companies. Some of these electric vehicles will first be used at tourist sites in Tainan city, which boasts the highest number of national parks in Taiwan.

The planned power-recharging stations with 80-ampere J1772 plugs should be able to fully charge a car or motorcycle within an hour and a half.

　　

The U.S. Charges China with Levying an Excessive Auto Import Duty
In reaction to China's announcement last December that it would levy anti-dumping and anti-subsidy duties on both U.S. sedans and recreational vehicles with engine power of 2,500cc or less for two years (from December 15, 2011, to December 14, 2013), the United States has appealed to the World Trade Organization (WTO), claiming that China has levied excess import duties on cars shipped from the U.S..

In July, U.S. President Obama said the reason for the appeal to the WTO was that China's announcement had violated the fair trade principle. In response, China's Ministry of Commerce said that it would follow WTO procedures for a settlement in the case.

Nearly 80% of U.S. car exports are shipped to China, according to data. The anti-dumping and anti-subsidy duties that China imposed on US-made cars would affect the US$3 billion worth of U.S. car exports.

According to WTO procedure, the two parties involved in a dispute first negotiate with each other. If the dispute is not settled within 60 days, the WTO triggers the settlement mechanism that calls for a special investigation group to look into the matter before arbitration is considered.

Several U.S. senators are leading an effort to get President Barack Obama to confront Chinese policies that affect U.S. auto parts jobs and have sent him a letter with the signatures of 188 members of Congress.

The letter urges the Obama Administration to use the recently established Interagency Trade Enforcement Center in addressing China's alleged predatory auto parts policies. President Obama established this new trade enforcement center on February 28 to halt other nations' violations of trade rules.

Following are two excerpts from the letter sent to President Obama: "Recently released reports have highlighted the vast array of policies China's government uses to the advantage of its producers, such as limiting our exports to their market, subsidizing their exports to ours, and assisting their producers to the disadvantage of ours … The Chinese government also imposes restraints on the export of key raw materials needed for the production of parts."

In January, three reports claimed that 1.6 million jobs in the U.S. auto supply chain were at risk due to illegal Chinese trading practices.