Rising cost

"Compared with passenger cars, commercial vehicle makers have less risk of losing sales if they increase prices because market competition is less intense," said Rao Da, secretary general of China's Passenger Car Association.

"They were forced to increase prices to offset the rising cost of raw materials," he said.

Makers of pickups and minibuses would be affected most by rising costs because of narrow profit margins, he said.

The commercial vehicle market faces a possible sales slump in the second half of the year because buyers rushed to buy older models before the price rise.

"In the long term, the truck market will continue to grow although it may slump in the next few months," said Eric Labat, president of Volvo Trucks China.

He also noted that the higher emission standards would give foreign commercial vehicle makers a more competitive edge against domestic players, because overseas companies have already developed the technology to make more efficient engines.

"All regulations that help the environment and safety are good for us," the president added.

How China developed emission standards

Vehicle emissions include carbon monoxide, hydrocarbons and nitrogen oxide. China's emission standards have been revised four times since 2000.

China I

China's first generation of standards was implemented in 2000, and are equivalent to the Euro I standard.

China II

China applied the second generation of motor emission standards nationwide in 2004. The standard, equivalent to Euro II, reduced carbon monoxide emissions by 30 percent and hydrocarbons by 55.8 percent compared to earlier regulations.

Major cities acted much earlier, with Beijing enforcing China II standards in 2002, and Shanghai in March 2003 as a trial operation.

China III

China introduced new motor vehicle emission standards in July 2007, which further lower exhaust wastes by nearly 30 percent on average.

The new standards, equivalent to Euro III standards, limit sulfur dioxide to a maximum 150 ppm (parts per million).

Car makers must also install an on-board diagnostics system to monitor gas emissions. The new standard was approved by the State Environmental Protection Administration in April 2005.

China IV

China plans to introduce the updated emission standards nationwide by 2010, but Beijing began to enforce the stricter rules in March 2008 as part of its commitment to create a greener Olympic Games. Since then, all new vehicles sold in Beijing must meet China IV standards.

The nation also plans to introduce a revised lead-free gas standard at the end of 2009, which will halt sales of gas with sulfur levels of above 500 ppm.

(Shanghai Daily July 9, 2008)