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Quiet but phenomenal sales for Henan electric vehicle

22 Aug 2008

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A corner of the market.

From its founding in 1998, the Henan Yuzhou Electric Vehicles Market has been growing. The third-phase mega city completed in 2007 has more than 700 shops, 200 or more offices, and 10,000 sqm of warehouses. Over 1,000 businesses are operating.

The electric car is very much a growing sector, with a streamlined marketing network covering vehicle and spare parts sales, maintenance and services. All kinds of parts are available, including battery chargers, controllers, engines, batteries, brakes and locks. Most shops sell between 300 and 400 vehicles a month wholesale, and well over 1,000 vehicles in a good month. So much for the myth perpetuated in the West that electric vehicles don't sell.

Situated on the eastern section of Hanghai Road, Zhengzhou, this burgeoning market for logistics, warehousing, wholesaling and retail is home to over 600 brands of vehicles and parts. They arrive from Tianjin, Jiangsu, Nanjing, Shanghai, Chongqing, Wuxi, Changzhou and Guangzhou, and that's not including the leading Henan brands. More than 200 electronics, battery and spare parts manufacturers have outlets in the market.

Big transactions, large service area

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Different models for sale.
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This foldable lithium battery bike weighs 17 kg.

Standard and deluxe electric vehicle models are selling at this market by means of direct marketing and distributorship. Standard vehicles are retailed at a unit price of between Rmb980 and Rmb1,400, while deluxe versions are priced at between Rmb1,500 and Rmb2,900. Some light electric vehicles are retailing at between Rmb3,000 and Rmb4,500. Manufacturers show profit margins of around 12% while dealers make about 9%.

Li Hanping runs a company that's been in this business for six years. He says that as a province with a large population and huge demand for electric vehicles, the Henan market is in rapid development.

In the electric car's favour is the fact that Henan is relatively flat topographically. People also have high disposable incomes, while a ban on motorcycles is enforced in many cities. The electric vehicles market is expanding at an annual rate of 60%, with annual transactions in Henan hitting Rmb2 billion, equivalent to 10% of the national total.

The market serves more than 30 provinces and municipalities as its influence expands. Cars and related products are distributed as far away as Inner Mongolia, Xinjiang and Tibet. Major export destinations reportedly include Russia, Mexico, the UK and Germany.

Reputable location and service

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Yuzhou Electric Vehicles Market.
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A shop sells spare parts.

Located on the eastern section of Hanghai Road, a major artery in Zhengzhou, the Yuzhou Electric Vehicles Market is easily accessible, with more than a dozen public bus routes nearby. It's connected to a network of expressways and the Zhengzhou Xinzheng Airport via National Highway 107 to the east.

The market is served by over 20 logistics companies, many of which have overland cross networks with key parts of the country. There are also hotels providing accommodation in the neighbourhood.

After-sales services distinguish good brands, so the market has its Quick Repair 100 Command Centre, the first joint organisation offering repair and maintenance service for electric vehicles on the Mainland. Over 300 quick repair service centres have now been set up in the city.

The market regularly holds sales promotions, such as lucky draws and offers of free gifts with purchases. For example, pumps, bike locks and knee braces are given away to attract buyers. Every now and then, shops will join hands and invite artists to give performances to promote sales.

Since battery life is a major yardstick for judging the performance of electric vehicles, the market organised a contest to test the durability of batteries at the beginning of this year. Electric vehicles fitted with more than 10 battery brands embarked on a race from the Yuzhou market and headed for a designated place in Kaifeng - and back again. Six or seven brands still had power left in their batteries after this round-trip journey of nearly 100 km.

In order to make the Yuzhou market better known nationwide, an electric bicycle business association in Henan held its first national joint exhibition for famous brands of electric vehicles in the autumn of 2006.

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Exhibition hall for electric vehicles.
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A six-gear electric bike for export to the US.

The show attracted nearly 200 brands from Jiangsu, Tianjin and Jiangxi. The organiser then held China's largest exhibition of electric vehicles and spare parts in 2007 and 2008.

The 2008 show brought together over 1,000 manufacturers worldwide and grossed several billion yuan worth of orders. Some 30,000 contracts were signed on-site and nearly 100,000 vehicles changed hands, including over 20,000 vehicles sold to countries like the US, Germany, the UK, France, New Zealand and Mexico.

Sunrise industry holds promise

The electric vehicles industry has witnessed rapid growth within a few short years. In 2004, there were about 1,000 manufacturers with an annual output of 6.75 million units. Annual output increased to nearly 20 million units by 2006. The production and sales volumes of light electric vehicles are expected to increase to between 30 million and 40 million units by 2010, with export volume increasing to between 5 million and 6 million units and output value hitting Rmb70 billion.

Together with upstream and downstream industries, sales of second-hand vehicles, spare parts and repair service, this is a market worth Rmb130 billion gross.

There are over 14 million electric vehicles in China. Electric vehicles are light, inexpensive and safe to operate, as well as being virtually noise-free and causing very little pollution. They're particularly useful and economical for short trips.

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Over 20 million electric vehicles produced.

In fact, electric cars are perfect for office workers. A survey shows that 46% of urban residents in major cities want to use electric vehicles as a means of getting around.

There's also great market potential in rural areas. Many villages were not easily accessible in the past. With the completion of local road projects by the authorities in recent years, over 90% of villages in the country are now served by reasonably sound roads.

Products more diversified

China's electric vehicle production is developing in the direction of brand name and standardisation. Market consumption is also becoming more rational. Products are becoming more diversified, with a greater range of models and functions to choose from.

In addition to bikes, there are now electric tricycles for passengers and cargo, three- or four-wheeled vehicles for handicapped riders, sightseeing vehicles, golf carts, four-wheeled cargo vehicles and four-wheeled multi-functional cars.

Electric vehicles are set to develop in distinct directions over the next few years. Deluxe versions will be designed with the needs of consumers who go after speed, personal character and trendiness in mind.

Besides being stylish in appearance, these are equipped with new frequency conversion motors, digital locks, anti-charging techniques, instantaneous acceleration and amazing crawl control. These are, of course, more expensive. Standard versions are strictly functional and more affordable in price.

Since traditional lead-acid batteries cause a lot of pollution in production and recycling, some manufacturers are concentrating on the development of lithium batteries.

The environmentally-friendly, energy-efficient, durable, light-weight and fashionable lithium products are generally welcomed by consumers.

The unit price of lithium battery-driven vehicles ranges from between Rmb2,000 and Rmb3,000. They're expected to become the hot spot of the electric bike industry in future, with market share soaring nationally by more than 30%.

from special correspondent Wang Yongji, Zhengzhou

(Images courtesy of Shen Zhong)