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The Emerging Automobile Industry In China

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Since the end of 2009, China has become one of the largest auto manufacturers and markets in the world. The number of registered vehicles on the road in China reached 62 million in 2009, and is expected to exceed 200 million by 2020. Almost half of the cars manufactured and sold in China are Chinese vehicles, the rest are being produced by joint ventures with foreign car makers such as Volkswagen, General Motors, Hyundai, Nissan, Honda, Toyota,… etc.

The negative impact of cars in Chinese cities is already obvious. Congested roads, car accidents, fuel shortages, air pollution, parking difficulties,…etc, have already become issues. Government officials warn that overcapacity of the market will lead to negative market competitiveness, a loss in enterprise efficiency, factory stoppages and other problems. Analysts feel that the development of green energy vehicles is the best way for China to reduce the environmental impact the exploding auto industry will have on their country.

The green industry in China may seem like a good market to get into, but the hope that American workers will see their products exported to this rich foreign market are not good. China will only do business with companies who share their intellectual property and who manufacture in their country. A foreign company must enter a joint venture with a Chinese firm, and that the firm has to have substantial ownership of the intellectual property, otherwise, there will be a duty on making the car in China.

The White House has already got a jump start on electric technologies by encouraging construction of plants that make electric cars, batteries and parts that go into them. According to the Obama administration, the United States is on track to produce 40 percent of the world’s battery technology by 2015. The industry expects the American market to gobble up most of that supply. In order to keep jobs here, U.S. demand for EV components must rise, otherwise the risk of exporting yet another industry away from U.S. soil will be the result.

Stars On Cars – Rating Vehicle Safety

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The U.S. Transportation Department has announced their new 5 star safety rating system that will be used to rate the new 2011 automobile models. The safety rating program was first introduced in 1979, but changes were needed since almost 90% of vehicles tested under the old system received a five star rating. According to Transportation Secretary Ray LaHood, “Through new tests, better crash data and higher standards, we are making the safety ratings tougher and more meaningful for consumers.” “The new rating system will encourage auto makers to install crash avoidance technologies and will help shoppers buy a safer vehicle.”

The ‘Stars on Cars’ system uses an overall score rating. Different size test dummies are used and crash prevention technologies are included in the score. A new test that simulates a car striking a pole or a tree has also been added. The overall score combines the results of front, side and rollover tests and compares those results with average risk of injury and the potential for vehicle rollover. So far, of the 34 vehicles tested under the new program only two have received the top grade of five stars. BMW AG’s 2011 5 Series and a version of the 2011 Sonata from Hyundai Motor Co.

There will be a bit of confusion for consumers, when trying to compare safety of a 2010 model with a 2011 model, but automobile manufacturers expect consumers will embrace the new changes. The window sticker attached to vehicles in dealership lots will need to be redesigned and won’t include the overall score until the 2012 model year. Vehicles that haven’t been tested will be listed as “not rated”.

Here Come The Electric Vehicles

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As states across the country brace for the wave of electric plug in vehicles to hit the streets, utility companies warn that there could be glitches. A smarter electrical grid has been developed to accommodate the surge in power usage, and utility companies have been working with the automakers to ensure a smooth transition, but too many drivers trying to charge their vehicles at the same time, could lead to low voltage situations.

Executive vice president and chief operating officer of Novi-based ITC Holdings Corp., said that as plug-in use grows and more public charging stations are installed, substations or lines may need to be upgraded. Experts, however, don’t believe electric vehicles will be widespread until 2020, giving utilities at least a decade to figure out ways to handle new loads and educate consumers about scaling electricity during peak times.

For now, utilities are installing smart meters in homes and businesses to help consumers better manage electricity use. The meters allow utilities to charge rates based on peak and off-peak use and track that data. This will encourage drivers to charge in off peak hours as well as give information on where upgrades need to be made. As technology advances, cars plugged in for recharges could actually help the grid, said Scott Miller, director of Coulomb Technologies’ ChargePoint America. “These can act as remote storage units, transferring some of the energy from the cars back to the electrical grid in times of need.”

BMW and Rolls-Royce Recall For Brake Problem

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BMW has announced a world wide recall on almost 350,000 BMW 5, 6, and 7 series models built since 2002. The German car maker announced that some high mileage vehicles with 8 or 12 cylinder engines may experience brake fluid leakage into the hydraulics, preventing pressure from building up. The brakes will continue to work, but the driver will notice that more pressure is required on the brake pedal. A spokesman for BMW’s luxury brand Rolls-Royce said that they have not had any complaints regarding their Phantom models, but will ask Phantom customers to bring in their vehicles for inspection as well.

Honda Fit Investigated For Headlight Failure

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After eight complaints, the National Highway Traffic Safety Administration (NHTSA) have opened an investigation into Honda’s Fit for low beam headlights that stop working. Many of the drivers who have complained of the problem say that they had wiring harnesses, connectors and headlight switches replaced as a repair. If the investigation should lead to a recall, over 130,000 2007-2008 Honda Fit cars could be affected. There have been no reported traffic accidents because of the problem.

Improving Safety On The Road

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The death toll on U.S. highways for 2009 has been the lowest in 50 years, according to a federal Department of Transportation report earlier this month. We might think that we have become better drivers, but there are many factors that have contributed to this decline.

  • Safety features on cars have significantly improved in recent years. Technology like multiple airbags, electronic stability control, automatic tightening seat belts….once found only on expensive cars are now becoming standard, even on economy cars. Historically it is the luxury vehicle consumers who pay for this technology. Luxury car manufacturers develop the technology making it cheaper for other manufacturers to obtain.
  • Competition between manufacturers means better deals. Once one car manufacturer starts offering a certain safety feature, it isn’t long before the competition offers it as well. Each manufacturer wants to sell the most cars, so the competition will keep prices low while offering the most. Most recently, car manufacturers are competing to develop infotainment systems, like Ford’s “Sync” and Kia’s “UVO”, to prevent drivers from becoming distracted while driving.
  • Online shopping makes it easy for the consumer to see what every car manufacturer has to offer. They can research crash test results to see which automobile is the safest. Recalls and technical service bulletins are much easier to obtain, making it easy for the consumer to get safety issues repaired before they cause problems.
  • Finally, pressure from government regulators have also played a big role in the safety of our vehicles. Ever since seat belt laws were made mandatory, the government has set standards to improve safety. As the technology becomes more affordable, government standards become higher. For example, in 2006, the government proposed a rule to require stability control as standard equipment in all 2012 model cars.

It’s good to know that auto manufacturers have our well being in mind, but we must remember that they are not a replacement for safe driving practices. While new technologies may cut out human error factors, they are prone to their own glitches as well.

Hyundai Steering Problem Recall

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The National Highway Traffic Safety Administration (NHTSA) is recalling almost 140,000 Hyundai 2011 new generation Sonata’s. The complaint is that the vehicles can sustain a separation in the steering shaft assembly that results in loss of steering. Regulators are blaming the problem on a bolt in the steering system which was not tightened or not assembled properly. The vehicles involved were manufactured during the same month at the Hyundai factory in Alabama and each had fewer than 600 miles at the time of the alleged incident.

Hyundai spokesman Jim Trainor said the automaker has seen only two reports of the steering problem. There have been no reported injuries or accidents linked to the complaints. Owners of affected vehicles can go to their dealers for inspection and repairs. Dealers also will update the power steering software. Owners may also call NHTSA at (888) 327-4236 for more information.

Chinese Company Seeks G.M. Stocks

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G.M. is planning to hold its first public stock offering in late November, giving the Treasury Department its first opportunity to begin selling off the 61 percent stake in G.M. How many shares the government decides to sell will be determined by the price offered. In order to break even, the Treasury Department estimates that the stock must sell for almost $135.00 per share.

Last week, the Treasury Department said it would not seek special deals with large investors to buy big chunks of its stake to ensure that small investors get a fair chance at buying GM stocks. “We expect that a large and diverse group of institutional investors will be offered an opportunity to participate, with no single investor or group of investors receiving a disproportionate share or unusual treatment.” the Treasury said.

But concerns about foreign influence over the largest American automaker are growing as Chinese automaker, the SAIC Motor Corporation, expresses interest in buying a stake in GM. The Shanghai-based company has had a longtime partnership with G.M. in China. They are one of China’s largest automakers and recently bought half of G.M.’s India division.

There was no comment from the Treasury about the possibility of a foreign company buying a big stake in G.M.