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New energy public transport bus procurement faces obstacles

by Zheng Manning

The 2010 New Energy Public Transportation Bus Classic concluded in Beijing on July 28. The event was launched by several local public transportation companies, with the hope to test the actual serving performance of new energy bus models. Meanwhile, experts have pointed out that the event also reflects the public transportation operators’ confusion on claimed specifications from OEMs. China has launched its new energy vehicle pilot program since January 2009, in which the public transportation sector is playing a key role. However, the new energy bus market is filled with too many models but no authoritative performance standards. Public transportation operators have found it hard to determine vehicles’ actual performances to carry out batched purchase.

Purchasers confused

Up to now, 25 cities are listed in the country’s new energy pilot program. Before 2012, each pilot city is required to equip 1,000 new energy automobiles for demonstration operation, with public transportation buses as a key execution funnel. However, local operators reported that choosing the right models can be a headache, since there have been no official evaluation on new energy vehicle performance. “There are too many bus manufacturers in the market. Their claimed fuel efficiency and stability of bus models are too fancy to be true. We have no clue what to purchase,” according to Wang Xunyue, vice president of Hangzhou Public Transportation Group.

As a result, most public transportation companies need to consult a lot of busmakers during purchasing. Hangzhou Public Transportation Group invited over 10 bus OEMs in its first trial bidding for new energy buses three years ago. Kunming Public Transportation Group also had to include 12 new energy bus models into its trial operation test first and then pick six into the later official green bus service. Although the government has published official testing standards for new energy buses, most of the local operators said that the fuel efficiency data in actual service are distinct from the numbers reported by manufacturers.

“Most public transportation companies consider a 10 percent fuel saving to be acceptable in the new energy vehicle operation. However, busmakers label their products with much higher fuel efficiency rates, some even over 40 percent. The numbers are too fancy to be true,” said a representative from Zhengzhou Public Transportation Company.

Before the 2010 New Energy Public Transportation Bus Classic was held, the event organizer announced that an evaluation result for each bus at the event would be available to the public, which drove many busmakers away from participating. Only five OEMs enrolled in the event at last.

Regional protectionism

When interviewed, busmakers noted their difficulties to promote new energy products. A representative from one of the busmakers attending the event pointed out that although the company has proved its product qualities through this bus event in Beijing, it still does’t bring actual sales.

The central government has guaranteed subsidies up to ¥600,000 ($88,000) for 10-meter-and-above new energy bus purchase through the pilot program. However, local authorities prefer to allocate the funding to their homegrown automakers instead of OEMs from other regions. Beijing has almost 1,000 hybrid buses from the pilot project, 90 percent of which are from its home bus manufacturer, Beiqi-Foton. Meanwhile, Wuzhoulong Motors from Shenzhen, Sunwin Bus from Shanghai, Zhongtong Bus from Jinan and Hengtong Bus from Chongqing are all privileged in local government purchases.

Analysts noted that the domestic bus market is still filled with regional protectionism issues. As a result, there are several hundred busmakers in China, but overall bus sales are only 300,000-400,000 units a year.

Price battles

Price battles have also given both busmakers and public transportation operators headaches during new energy vehicle deals.

As introduced by market experts, biddings of public transportation orders have always been price oriented. In order to be selected as a supplier, some busmakers cut corners in manufacturing to lower down production cost, which might lead to safety and liability concerns on their bus products. When it comes to new energy bus making, the consequences can be even worse. Some OEMs, without much experience in new energy bus manufacturing, are willing to tag their products at prices lower than cost, in an attempt to get an instant entry into the market.

Public transportation companies in the pilot cities, which are under pressure to meet volume requirements from the government’s new energy vehicle pilot project, are easily influenced by price tags in the procurement, especially when ideal operational data, from bus builders, are not referable.

Rewritten by Toni Li based on author’s article in

 Zhongguo Qiche Bao or China Automotive News

 

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