Automakers fight for slice of Chinese eco-car market

BEIJING: Automakers in China face a war of attrition in the market for environmentally friendly cars as tighter regulations force heavy spending on development and production while a slowing economy leaves the demand outlook hazy.

Top vehicle manufacturers from around the world laid out plans for new green offerings at an auto show that kicked off here Monday -- a massive event featuring more than 1,600 companies and nearly 1,200 new models.

Volkswagen, still struggling to recover from an emissions scandal, was in the spotlight early on. It will invest more than 4 billion euros ($4.5 billion) in 2016 alone in such areas as environmental and safety technology, said Jochem Heizmann, who heads the German company's operations here.

China is VW's most important market. With the government planning to adopt the world's toughest emissions regulations in 2017, the automaker intends to roll out 15 eco-car models over the next three to four years. It will begin full-scale production of a plug-in hybrid based on the Golf around 2018.

Toyota Motor plans to build a plug-in-hybrid version of the Corolla starting that year. The company arranged the rollout schedule to coincide with a number of planned launches of plug-in hybrids by other automakers, said Hiroji Onishi, head of China operations.

Honda Motor  will begin production of an Accord hybrid this July and release a plug-in hybrid in 2020. Market leader General Motors plans to spend 100 billion yuan ($15.3 billion) over the next five years to promote sales of electric and other vehicles.

China led the world in new-car sales for a seventh straight year in 2015, at 24.59 million vehicles. Even if market growth slows, many still see plenty of room for expansion, given that the country has just over one car for every 10 people. Automakers are scrambling to roll out new models to take advantage of generous subsidies for eco-car purchases.

But "demand is strong now because of the tax break on compact cars that started last October," said Nobuhiko Watabe, an executive officer at Mazda Motor, adding that the true state of affairs is dire. Automakers' margins are narrowing as price wars become the norm on sales floors.