SHANGHAI -- However much the Chinese government would like domestic automakers to benefit from its subsidies for fuel-efficient vehicles, the biggest beneficiary is likely to be a foreign company.
And that foreign company happens to be General Motors.
Domestic Chinese brands are mainly small-car manufacturers. Thus, one might expect them to attract the lion's share of the 3,000-yuan ($442) sales subsidies which Beijing introduced on July 1 for vehicles with engine displacements of 1.6 liters or less.
The government clearly hopes domestic Chinese automakers will benefit. But their vehicles have to meet government fuel-efficiency standards, and that could be a real headache.
Chinese automakers are not yet good at designing fuel-efficient vehicles. Of the first 30 models to attain government approval for the subsidies, only 14 are domestic brands.
GM is the clear winner with six approved models: the Buick Regal, plus the Chevrolet Cruz, Aveo, Lova, New Sail and Spark. Volkswagen AG, Chery Automobile Co. and Jinghuai Automobile Co., each have three models that qualify.
Moreover, the Chinese government's sales subsidies for plug-ins and electric cars appear to be tailor-made for GM. In June, the Beijing announced plans to offer subsidies up to 50,000 yuan for buyers of plug-ins, and 60,000 yuan for purchasers of EVs.
The subsidies will be available in Shanghai, Changchun, Shenzhen, Hangzhou and Hefei. In theory, the six automakers based in these cities are positioned to reap the benefit.
Those companies include Shanghai Automotive Industry Corp., China FAW Group Corp., BYD Auto Co., Zhejiang Geely Holding Group Co., Zoyte Holding Group Co. and Chery Automobile Co.
While these companies are developing plug-ins and EVs, it isn't clear when they'll be ready for sale. By contrast, GM's Chevrolet Volt already has undergone road tests, and the Volt's Chinese debut is scheduled for 2011. Perfect timing!
General Motors' joint venture with SAIC can sell the Volt in Shanghai, thus qualifying for a generous subsidy. It may be awhile before SAIC – or any other domestic automaker – is ready to launch its own plug-in.
Once again, GM is ready to profit when Beijing goes green.