Chinese Fuel Economy Standards and the Automakers

9 November 2004

A new report from the World Resources Institute outlines the impact the new Chinese fuel efficiency standards (earlier post) will have on automakers.

Overall, the Chinese fuel economy standards are slightly more stringent than the current regulations in the U.S. To meet Chinese standards, the US fleet average fuel economy would need to increase by 5% 2005 standards and by 10% for the 2008 standards.

Furthermore, the Chinese standards demand more improvements in the light truck segments than in cars. According to WRI,  66% of cars sold in China currently meet the 2005 standards (with 35% meeting the 2008 standard today) while only 4% of SUVs and minivans already meet the 2005 standards (with no light trucks today meeting the 2008 standard).

These standards are likely to get even tougher, as China tries to balance its energy supply and need to reduce emissions against the demands of its growing economy.

According to WRI, Toyota, Ford and PSA are best positioned, requiring little or no investment over a longer period to meet the standards. Ford already has 100 percent of its sales meeting the 2005 standards (with 72 percent for 2008). GM, however, has only 42% of its sales currently meeting 2005 standards (with 32 percent for 2008).

Canada is now also openly debating (earlier post) California-style efficiency and emissions regulations, which would put additional pressure on the automakers.

The report:

Taking the High (Fuel Economy) Road: What do the new fuel economy standards mean for foreign automakers in China?