China is getting more demanding in terms of market order and supervision, said Jack Cheng, vice president of Fiat Chrysler Automobiles APAC. According to Cheng, environmental protection, health and safety are determining the future development of the market.
Technologies of battery, electronic control and driveline of electric vehicle are becoming more mature, and Cheng believes that China is able to make breakthrough in battery technology in the next 2-3 years due to support and pressure from the government. China’s new Passenger Vehicle Corporate Average Fuel Consumption Standards (CAFC Standards) requests an average fleet fuel consumption of 5L per 100 km by 2020, and the automakers need to plan ahead in response to the new standards, said Cheng.
The industry is seeing breakthroughs in various aspects, for example, in transmission and automotive engineering with engines getting smaller. According to Cheng, intelligent vehicles, or self-driving vehicles are also on the way, and one of the key factors to make it a reality is the change of customer behaviors, and the breakdown of customer psychological barriers.
OEMs and dealers need to be positive in fulfilling customer demands under the “New Normal,” suggested Cheng. As the market is shrinking, all departments need to make change to get the business done. “It is impossible for customers to wait three hours or so for battery charging,” said Cheng. “Carmakers need to make battery charging as convenient as refueling a car at a gas station. The concept of customer first is also a protection to customers under anti-dumping and anti-monopoly policies of the country,” said Cheng.
Asked if OEMs will force suppliers to cut prices since the latter have high profit margins, Cheng said that it is not a problem between OEMs and suppliers, but a problem of commodities. “Competition in all businesses in China is getting intensified, and high development costs contribute to high prices,” said Cheng. “OEMs and suppliers are in the same boat and the company will not simply ask suppliers to reduce prices.”
According to Cheng, FCA is building its second plant in China in Guangzhou in addition to the first plant located in Changsha for the GAC-FCA joint venture, where Cheng used to be president. Capacity at GAC-FCA will reach 500,000 units after completion of the second plant. The Guangzhou plant will manufacture Fiat and Jeep models together with the Changsha plant. FCA sold around 200,000 vehicles in China last year and the company plans to sell 800,000 units in 2020.