Department of Science and Technology and State Environmental Protection Administration has introduced a new energy resource policy, which the Chinese government is implementing and supporting. Scope for compressed and liquefied NG CV manufacturers looks bright. NG CV (medium-duty and heavy-duty) sales volumes was reported at 78,200 units in 2013. This number is estimated to be at 246,000 units by 2020 at 17.8 pct CAGR.
Frost and Sullivan Automotive and Transportation Research Associate Ming Lih Chan says Shanghai, Chengdu, Xinjiang and Hebei have replaced more than 85 pct of their existing fleets with NG buses. Central government is promoting green transportation in more than 100 cities within China. Regional governments are adapting in accordance.
Supply of NG and automobile components for vehicles using the fuel continues to be limited. Owing to topography, gas reserves in China are deeper than in the US. Other technical problems include energy supply, quality control and assurance of fuel. As such, a number of fleets operate in tight conditions to keep pace with government’s NG infrastructure plan. High cost of NG technology components in CVs is a deterrent to expanded use.
Poor consumer perception and a lack of filling stations also affect the market. Improved performance of NG CVs and expected increase of filling stations from 4,000 in 2013 to 18,000 by 2020 will positively impact the market. Supply shortages will be catered to through large shale gas reserve base in China. This boosts value proposition of NG commercial vehicles and will reduce price. Market penetration of NG CV industry was 3.5 pct in 2013. Top 6 NG truck and bus OEMs accounted for more than 55 pct of market share.
NG market for medium and heavy duty CVs witnessed 203.5 pct growth in 2013. NG tech penetration is estimated to increase from 6.1 pct to 12.7 pct in the truck and bus segments by 2020. Liquefied NG tech is likely to lead Chinese NG truck segment, with 82 pct penetration in HD trucks by 2020 owing to safety and long-haul transit. Collaboration between domestic CV companies and international brands is likely to foster competitive rivalry within the forecast period.