Costs thwart efforts on car emission standards
The mainland has been criticised for not moving fast enough to meet Euro IV vehicle emission standards, which take effect tomorrow. But industry experts say the reason is not foot-dragging or technical problems but rather the high cost and short supply of necessary parts that have held back carmakers.
'Euro IV involves old technology that Europe implemented [in 2005],' said Lawrence Ang Siu-lun, an executive director of Geely Automobile Holdings. 'It's not difficult for Chinese carmakers to learn those techniques [from global carmakers].'
But it was hard for them to pay, Mr Ang said. 'It's not possible to lift car prices in the Chinese automobile market, where price reductions don't stop,' he said.
The Euro standards require carmakers to progressively refine engines to minimise sulphur and carbon monoxide emissions.
Each new standard means the requirements for exhaust gas get stricter and carmakers must add more components - such as exhaust gas re-circulation equipment and diesel particle filters.
'That increases the material cost of the carmakers,' said Kenny Wong Siu-wai, the principal consultant of environment management at the Hong Kong Productivity Council. He said costs rose dramatically from Euro III to Euro IV, from a few thousand dollars to tens of thousands of dollars.
Mr Ang said mainland carmakers would not buy parts outside the country because domestic sourcing was cheaper. But not all required parts were available on the mainland.
Industry players point to another problem. In the past, the country's fuel did not work well in lower-emission engines. That was part of the reason the mainland missed its target to fulfil the Euro III standard, which was expected to be fully implemented by July last year.
JD Power estimates that China will fully implement Euro IV by 2010. By then, developed countries will have already been under the Euro V standard for two years.