BEIJING -- Recently imposed taxes on large engines in China are boosting business for companies that produce turbochargers.
"This will help multinationals rather than local companies because the multinationals have the technology, but the local companies haven't been able to successfully develop it," says Freeman Shen, president of BorgWarner China.
In March, the government imposed higher purchase taxes on cars with engines larger than 1.5 liters. An annual tax based on engine size is expected as well. The aim: to push consumers toward more fuel-efficient cars.
"The smaller engines are encouraged, so you put turbochargers on them to boost the power," Shen says.
Keith Ma, marketing director of Honeywell Turbo Technologies, Asia, in Shanghai, says: "The turbocharger market in China is projected to grow an average of 15 percent in the next few years. The drivers are power performance, fuel economy and emissions regulations."
Numbers for the size of the domestic turbocharger market were not available. But China imported 65,980 engine turbochargers valued at $18.2 million in the first six months of 2006, according to the China Automotive Industry Network. This is the first year that separate figures have been released for turbochargers.
BorgWarner now imports turbochargers from Germany, Shen says. But the company opened a plant in the east China province of Zhejiang in March to assemble turbochargers.
Honeywell provides turbochargers to Chinese customers from its tech center in Shanghai, which has more than 150 engineers, Ma says. The center was established in 2005.
In the past, most customers for turbochargers were commercial-vehicle makers. But the Shanghai center has a growing number of light-vehicle manufacturers as customers, Ma says.
Engine design companies are getting more requests for small-displacement turbocharged engines.
Michael Laske, president of China operations for engine designer AVL List GmbH of Austria, says: "The Chinese market is very sensitive toward power, so a turbocharger is a natural (for this market). It allows you to meet emissions and fuel efficiency standards and get the torque."
Suppliers say General Motors is developing a 1.5-liter turbocharged engine at the Pan Asia Technical Automotive Center in Shanghai, an engineering joint venture with Shanghai Automotive Industry Corp. GM declined to confirm the project.
You may e-mail Alysha Webb at [email protected]