Automotive sector in Hong Kong

An Expert's View about Automobile in Hong Kong SAR

Posted on: 6 Sep 2010

Latest overview of market potential for the automotive sector in Hong Kong.

Automotive ? Hong Kong Mini Sector Report AUTOMOTIVE Hong Kong Produced by: Claire Ip Assistant Trade Commissioner British Consulate-General Hong Kong Updated 29/06/2009 Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business Innovation & Skills and the Foreign & Commonwealth Office), accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. Published July 2009 by UK Trade & Investment. Crown Copyright ©. Page 1 of 7 Automotive ? Hong Kong Table of Contents OVERVIEW 3 OPPORTUNITIES 5 EVENTS IN THE REGION 6 CONTACT LISTS 7 Page 2 of 7 Automotive ? Hong Kong OVERVIEW Automotive Sector in Hong Kong In the very congested urban environment of Hong Kong (an area slightly over 1,100 sq. km with a population of 7 million), the following are various types of licensed transport vehicles (Source: Transport Department, March 2009) Types of Vehicles Licensed Private Car 383,729 Taxi 18,124 Public bus (owned by 5 major bus companies, not 5,777 including non-franchised public bus & buses owned by MTR) Public Light bus 4,349 Light Goods Vehicle 68,625 Medium Goods Vehicle 36,747 Hong Kong consumers are brand-conscious and British automotive brands including Rolls Royce, Bentley, Land Rover, Jaguar, Aston Martin, Lotus and Mini Cooper etc are enjoying a substantive market share. Yet the private car market is dominated by Japanese brands such as Toyota and Nissan, while the high-end private car market is dominated by German brands e.g. BMW and Mercedes-Benz. For public transport vehicles, LPG taxi vehicles and public light buses are dominated by Japanese brands. British brand Alexander Dennis is the major supplier of public buses in Hong Kong. There are some 4,000 Alexander Dennis buses in Hong Kong while the remainder are from Wright Bus (Expotech). Public buses carry about 4 million passengers per day. The growing numbers of private cars, taxis, trucks and public buses pose tremendous challenges for the transport planning in Hong Kong and are a growing concern for the Government. There is also growing concern over Hong Kong?s roadside air quality. Excessive, first registration taxes, for private cars have been imposed but it has not stemmed the organic growth of urban traffic. The demand for cars in Hong Kong is cyclical in line with the economic environment. Due to the recent global economic downturn, sales are down for both vehicles and components. The sales figure in January 2009 declined by 36.3% when compared with the corresponding period last year. The Hong Kong Government, unlike the U.S., does not fund public bus companies and there is no incentive for bus companies to import green buses belonging to Euro IV or even Euro V standards. The three main bus operators; CityBus, First Bus and KMB, are only operating with marginal profits. There has been pressure for them to look for solutions to cut costs, such as cutting down a number of unprofitable routes. Electric Vehicles (EV) In the Policy Address in February 2009, the Financial Secretary of the Hong Kong SAR Government, John Tsang announced the introduction of electric vehicles (EV) in Hong Kong. He proposed to extend the exemption for EV from First Registration Tax for a five-year period. Mr Tsang expressed his wish in introducing EV?s into the government car fleet when the related technology has matured and the vehicles are available on the market. By promoting the use of EV?s, Mr Tsang also hoped to create additional business opportunities for the Hong Kong Automotive Parts and Accessory Systems R&D Centre, established in 2006. Page 3 of 7 Automotive ? Hong Kong Through the research efforts of local universities, some local companies have started to produce electric vehicles for sale in the UK and European market. He would like to see the industrial sector grasp this opportunity to develop and produce parts and accessory systems for EV?s in collaboration with the centre. The Financial Secretary is leading a steering committee to study a wider use of EV?s in Hong Kong. The committee will carry out in-depth studies and make recommendations from the perspectives of economic development, town planning, industry, technology, environmental protection and transport to take the first step towards a cleaner, more efficient transport technology. The steering committee comprises representatives from various sectors such as property, energy, telecom, financial and the Hong Kong Government. The Environment Bureau is responsible for reinforcing the promotion of the EV project. The next crucial step is to set up and expand the infrastructure such as the charging stations for electric vehicles in Hong Kong. Re-charging facilities are crucial for the wider use of EV?s. The government will examine the feasibility of providing re-charging facilities in government multi-storey car parks and explore ways of encouraging the business sector, including property developers and private car park operators, to set up such facilities. CLP Power is forming a joint venture with Wilson Parking and Link Management to open ten stations in housing estates and shopping mall car parks for a trial period for five years mainly in Kowloon, New Territories and Lantau Island. Hong Kong Electric, another major utilities company welcomes Hong Kong property developers or car park companies to join partnership with them to provide charging points. Hong Kong is only the second region in Asia, after Japan, to give EV?s top priority. In April, 2009, Mr Edward Yau, the Secretary of Environment signed a Memorandum of Understanding th with Nissan as a partner to promote the use of EV?s during his visit to Japan. On May 12 , 2009, the Financial Secretary launched Mitsubishi?s electric vehicles, iMiEV in Hong Kong. The Government has secured a number of iMiEVs from the first batch of a limited production run, which will be delivered later during the next phase of larger-scale testing in Hong Kong. The government is currently testing the electric cars, which will become available to drivers in a year. The EV model designed in Hong Kong, MyCar, was a concept developed by a Hong Kong company EuAuto. This was the first automobile manufactured by a Hong Kong company. It is a project funded by the Hong Kong Government, co-developed with the Hong Kong Polytechnic University and designed by an Italian automobile designer. MyCar is manufactured in Europe and is now available for sale in UK. Companies from the commercial sector are starting to take a more active approach in promoting a green economy. Recently, China Resources Group has announced that they will renovate their office tower in Wanchai. The renovation work is expected to be completed in 2012, and it will be Hong Kong?s first old building to have the internationally recognised ?green label?. About 30 parking spaces (out of 600 spaces) will be assigned for hybrid and electric cars. From a promotion angle, there will be an electric vehicle stand in the Eco Expo Asia which takes place in October 2009, for further information about the trade fair. please refer to the ?Events in the region? in this report. Auto Parts Market in Hong Kong Though auto parts and accessories is not a significant industry, a large variety of auto parts and accessories are exported from Hong Kong (total export was US$1.74 billion in 2008). 98% of the total exports of auto parts and accessories in Hong Kong were re-exports to Mainland Page 4 of 7 Automotive ? Hong Kong China. This reflects the importance of Hong Kong as a trading centre for auto parts and accessories especially for markets such as Mainland China. As a result of the Chinese government?s effort to further develop the automotive industry, there are an increasing number of manufacturers who are interested in the production of auto components and accessories and have identified the potential of Mainland market especially in the electronic components sector and high value-added products. A wide range of auto parts and accessories ranging from electric appliances and electronics, metal or plastics parts or mechanical components are exported. This includes consumer electronics such as audio-visual equipment for automobiles, as well as tyres, safety glass, side mirrors, locks, car seats, security systems, compressors and navigational equipment. In terms of product categories for auto parts and accessories, the largest single items exported are car radios. Multidisciplinary organisations such as the Hong Kong Productivity Council support the automotive parts and accessories industry by providing consultancy and other support services in a number of areas such as R&D of Automotive Parts and Accessories System and Technology & Product Development. The Hong Kong Productivity Council hosts the Hong Kong Automotive Parts and Accessory Systems (APAS) R&D Centre, funded by the Innovation and Technology Commission of the Hong Kong Government collaborated with strategic partners from local universities and industries to carry out R&D projects. HKPC also actively supports the Hong Kong Auto parts Industry Association (HKAPIA) who have about 170 members. The Federation of Hong Kong Industries has set up an ?Automobile components Group? to promote the interests of the auto parts and accessories sector. The group is comprised of members from major automotive or related companies in Hong Kong. OPPORTUNITIES Opportunities for Electric Vehicles In answer to the policy addressed by the Financial Secretary in his Budget 2009-10, Electric Vehicles will be a direction to promote a green environment. This presents a number of opportunities for UK companies: 1) Manufacturers of zero emission urban delivery vehicles. 2) Batteries manufacturers/suppliers (for electric vehicles) in the UK. 3) UK companies who can provide advice or services for the charging infrastructures or maintenance of electric vehicles. There should be potential for zero emission urban delivery vehicle manufacturers compared with electric cars since Hong Kong Government has already signed agreements with some Japanese automobile manufacturers. In parallel, the Hong Kong companies and the Government are actively exploring the potential of a zero emission urban delivery vehicle in Hong Kong. There are already some well-established EVs? manufacturers for zero emission urban delivery vehicles in the UK. Camden Council serves as a good model for the Hong Kong Government in terms of its advanced development of EV?s infrastructure. Companies in Hong Kong which are likely to use EV?s are large companies who promote green corporate image as part of their corporate social responsibility. In fact, the Hong Kong International Airport is now operating a fleet of 14 electric vehicles in the restricted area to carry passengers to and from the airport. During a meeting with the officials from the Environment Bureau, they also expressed a keen interest in learning more from the UK suppliers for EV?s especially for the commercial vehicles. Page 5 of 7 Automotive ? Hong Kong Nonetheless, there are challenges in promoting EV?s in Hong Kong. The public should be brought an awareness of the value of a green environment. Consumers may also be put off by a relatively high initial cost of an EV and its limited range. It will take time to change the mindset of the Hong Kong people to accept the electric vehicles and build a user-friendly infrastructure in battery-recharging stations. Opportunities for Automotive Sector ? UK companies can source from the Hong Kong manufacturers auto parts and accessories (though the product facilities are mostly based in Mainland China) especially for the high valued-added products such as audio-visual equipment for cars and car security systems. ? Co-operation or joint ventures with the Hong Kong partners to explore the Chinese market such as to jointly set up production facilities in Mainland China. There are an increasing number of automobile assemblers which set up joint ventures in Mainland China. ? Provide consultancy services in the Research & Development area especially in terms of advanced information technology and in areas such as the environmental management system for the automotive sector due to the increasing concern of the manufacturers for environmental friendly production. UKTI publishes international business opportunities gathered by our network of British Embassies, High Commissions and Consulates worldwide. These opportunities appear in the Opportunities portlet on the relevant sector and country pages on the UKTI website. By setting up a profile you can be alerted by email when relevant new opportunities are published. New or updated alert profiles can be set in My Account on the website. EVENTS IN THE REGION September 2009 - Automotive Testing Expo at Shanghai, China Enquiries: Dominic Cundy UKIP Media & Events Ltd Tel: +44 (0) 1306 743744 Email: Website: October 2009 - Eco Expo Asia at Hong Kong (with a designated pavilion on Electric Vehicles) Enquiries: Hong Kong Trade Development Council Vanessa Tung Tel: 852 2584 4433 Email: Website: UK Trade & Investment?s Tradeshow Access Programme (TAP) can help eligible UK businesses take part in overseas exhibitions. Attendance at TAP events offers significant benefits: ? possibilities for business opportunities both at the show and in the future ? a chance to assess new markets and develop useful contacts ? grants are available if you meet the criteria ? UKTI staff overseas will be available to assist delegates Find out if you are eligible to apply to attend this event, and more about the support UKTI can offer. Details of TAP events can be found in the Events portlet on the Hong Kong page. Other Market Visit Support may be available via your local International Trade Advisor. Page 6 of 7 Automotive ? Hong Kong CONTACT LISTS Claire Ip Assistant Trade Commissioner British Consulate-General Hong Kong Tel: +852 2901 3154 Fax: +852 2901 3066 Email: Winnie Lee Commercial Assistant British Consulate-General Hong Kong Tel: +852 2901 3093 Fax: +852 2901 3066 Email: Ian Lockhart Head of Automotive, Advanced Engineering Sector Tel: +44 (0)141 228 3654 Email: Jean Gray Hong Kong & Macau Unit China Market Unit UK Trade & Investment Tel: +44 (0)20 7215 8589 Fax: +44 (0)20 7215 8797 Email: Environment Bureau- Environmental Protection Department- Federation of Hong Kong Industries- Financial Secretary?s Office- Hong Kong Productivity Council - Hong Kong Auto parts Industry Association - Hong Kong Automotive Parts and Accessory Systems (APAS) R&D Centre - Transport Department - UKTI?s International Trade Advisers can provide you with essential and impartial advice on all aspects of international trade. Every UK region also has dedicated sector specialists who can provide advice tailored to your industry. You can trace your nearest advisor by entering your postcode into the Local Office Database on the homepage of our website. For new and inexperienced exporters, our Passport to Export process will take you through the mechanics of exporting. An International Trade Adviser will provide professional advice on a range of services, including financial subsidies, export documentation, contacts in overseas markets, overseas visits, translating marketing material, e-commerce, subsidised export training and market research. Page 7 of 7
Posted: 06 September 2010