In spite of pollution, hybrids struggle to gain a foothold in China

While new car sales have stagnated or shrunk in most of the established markets in recent years, one of the big exceptions has been China. Sales there spiked 22 percent, up to 8.8 million last year and might go over 10 million units in 2008. Of course that has also contributed to the choking air pollution in cities like Beijing and Shanghai. Nonetheless Chinese car buyers have yet to migrate toward hybrid vehicles. Apparently the emissions benefits are insufficient incentive to overcome the huge price premium. To date most of the hybrids available in the Chinese market have been imports like the Prius and Civic hybrid. Unfortunately, high tariffs on imported cars and components mean that a Prius costs $15,000 more in China than it does elsewhere and the government isn't offering tax breaks like they do here to offset the difference. Chinese domestic producers like BYD are just now starting to get into the hybrid arena and GM has recently introduced a version of their popular Chinese market Buick LaCrosse with the belt-alternator-starter mild hybrid system. That less expensive system will likely prove more popular than the Prius which has only sold 2,500 in two years on the market.

[Source: BusinessWeek]