CHINA leadership in vehicle connectivity is fun-damental to our quest to redeine the fu-ture of personal mobility.” As part of this global strategy, GM Chi-na has adopted a two-pronged strategy to succeed in the rapidly changing automo-tive industry. he irst prong is to strengthen and grow its core business of building and selling great cars, trucks, and crossovers. he second prong is to deine and lead the future of personal mobility through the creation of an entirely new transpor-tation business model, and to lead the de-velopment of the technology necessary to support these new business models. In addition, domestic market condi-tions will also inluence future leet sales. For instance, the central government of China announced two reforms that will be beneicial to leet sales in China. Central Government Mandates Ve-hicle Reform for State-Owned Enter-prises: The vehicle reform mandate for State-Owned Enterprises (SOE) is part of a broader anti-corruption movement in China. The vehicle reform mandate has prompted many SOE companies to revise their company car policies so only a few top managers are now given a company car. Previously, there was concern that the eligibility criteria to receive a company-provided vehicle at SOEs was too liberal. Who will be impacted by the new SOE vehicle mandate will be mid-level man-agers, who in the past were provided with a company vehicle and, in some cases, even a driver. With the reframing of the eligibility criteria many of these mid-level managers will no longer receive a company vehicle, but instead will be ofered a driv-er allowance or reimbursement program. he reform is lexible whereby some mid-range managers may instead opt to pur-chase their leet vehicle or lease it through a leasing company. Tax-Free Vehicles for Students Re-turning from Overseas Studies: he third reform ofers Chinese students who have studied abroad the ability to purchase a tax-free vehicle when they return to Chi-na. his has the potential to be a signif-icant volume of purchases since more than 300,000 students study abroad each year. When a student returns to China af-ter graduating from a university abroad, they will have three months to buy a tax-free vehicle in China. Each year, 10,000 students return to China following graduation. hese stu-dents represent a big group with purchas-ing power who are becoming a focus for our leet eforts in the future. customers as are their counterparts else-where in the world? Currently, leet sales are very low to pharmaceutical companies operating in China. Usually, a pharma rep in China is not assigned a company vehicle and in-stead uses public transportation or motor bikes to meet with customers. he predic-tion by some leet observers is that even-tually (and gradually) these representa-tives will begin to expect a company car and not be satisied with their current transportation options. Forecast of Chinese Market he near-term forecast for China’s auto industry is that its growth rate will mod-erate in relation to prior growth. In 2018, Beijing will restore the sales tax for vehicles with engine displacements of 1.6 liters or smaller to 10% from 7.5% this year presenting an economic headwind to the Chinese leet industry. In addition, it is anticipated that there will be new sustainability programs mandated to leets to reduce automotive emissions. For instance, China has set a goal for EV and plug-in hybrid vehicles to make up at least a ith of the country’s light-vehicle sales by 2025. he Chinese government ofers gener-ous subsidies to makers of new-energy ve-hicles. It also plans to require automak-ers to earn enough credits or buy them from competitors with a surplus under a new cap-and-trade program to boost fuel economy and lower emissions. ■ Pharmaceutical Fleets in China A frequent question about the Chinese leet market deals with the local pharma-ceutical industry. he question is whether pharmaceutical leets in China will even-tually mirror the leet practices of pharma leets elsewhere in the world. In particu-lar, will Chinese pharma reps be assigned a company-provided vehicle to call on The 2018 Buick Regal made its oficial debut at the 2017 Shanghai Auto Show. The Chinese version of the Regal retains a traditional four-door sedan layout with a sealed trunk. In 2017, General Motors’ SAIC-GM-Wuling joint venture launched the Baojun 510, a compact SUV, which is a very popular segment in China. Baojun is one of China’s fastest growing vehicle brands. The new Baojun 310W is a 5+2 seater wagon based on the Baojun 310 hatchback. It melds together three different vehicle styles — hatchback, wagon, and MPV — into a single vehicle. 8 AUTOMOTIVE FLEET I Q3 2017
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