Chinese-made cars will make their way to European roads in "five to seven years," Ivan Hodac predicts. The EU's most promising markets are its new members, says Hodac, secretary general of the European Automotive Manufacturers Association (ACEA), in Beijing to open a China office.
"China . . . will export and build cars in places like Poland, Hungary and Slovakia. These countries are also close to the entire EU market and they've got cheap labour forces."
Eight years from now Chinese know-how will be as good as Europe's, he predicts. "Local car makers got the knowledge through technology transfer to joint ventures. Japanese cars were laughed at when they first arrived in Europe. But Japan learned how to produce high-quality cars, and China will do the same."
Back in China, surging car sales appear to be slowing after government moves to tighten credit to buyers but the cooling off isn't a long-term worry, says Hodac. There are, however, potential flies in the ointment he admits. The snag list: road safety, infrastructure and energy supplies.
European car makers in China, faced with fierce competition from local producers and questionable government policy on intellectual property rights, were joined by an import ally when the ACEA opened its Beijing office.
Vehicle safety and the environment are the organisation's two top priorities in China and worldwide according to Hodac. But he has a message for environment and transport ministers in the EU and China: "Stick to realistic proposals. . . improvements must be affordable."
The ACEA decided to open an office in Beijing because China is a vital market for European automakers, several of whom have formed joint ventures with leading Chinese car makers.
"There's double digit growth in the market here, and you can't see that anywhere else" says Hodac, a 58-year-old Czech-born Dane who headed the European office of AOL Time Warner before taking over at the helm of the ACEA in 2001. "China will be the third largest car market worldwide by 2010. Most of our members have production bases here. If they're not here then they're coming."
In Brussels the ACEA communicates the car industry's line to policy makers. Similarly in Beijing the organisation wants to get the ear of the Chinese government. While also building up its own contacts, the ACEA will liaise with the EU Commission in Beijing and in Brussels as well as national governments' representations in China.
ACEA contacts with the EU Commission are already extensive, explains Hodac. "Catherine Day, the director of the EU Commission's Environment Directorate General was here in China recently. We work with them all the time. The chain is never closed."
Common positions on industry issues are essential if the Chinese government is to act on wishes of European car makers, says Hodac. "Companies don't always bring the same message. If you go to legislators anywhere in the world . . . better that you go there as one rather a lot of different groups each with their own story. If we have a common position we will succeed."
The Europeans are also intent on building ties with local and Japanese car makers groups in China. Since the ACEA announced it would open a Beijing office the China Automotive Network (CAN) has "expressed interested in collaboration," says Hodac. Its new Beijing office is also part of the ACEA plans to liase with Japanese automakers in China.
Listening to the ACEA is in China's interest, says Hodac, as the country becomes an exporter of cars. "The Chinese are beginning to be better listeners. They have to become more and more part of the global economy. You have to listen to other partners. The Chinese will start to export cars soon but local manufacturers will first have to work on harmonisation and . . . align themselves with normal practice," says Hodac.
Road safety, according to Hodac, hinges on the car maker, the driver and infrastructure. "China's poor record for passenger safety is the fault of all three. Industry can put safe cars out but someone has to educate the driver. There are seatbelts but people don't wear them."
Outdated local-made cars are also a problem: "Here many cars don't have modern safety equipment. But new cars do." The ACEA is putting road safety "near the top of our agenda," he says. The ACEA has created a Global Road Safety trust fund to fund road safety initiatives around the world, including China.
Taking old cars off the roads will make for cleaner, safer roads, he believes, suggesting China look at a government-led programme such as the End of Life initiative in the EU. The average life of a car in the EU is eight years, compared to the Baltic states, where 15-year-old wrecks are common. China should scrap old cars, but don't put the onus on the manufacturers, Hodac warns.
Infrastructure is a stumbling block to the smooth growth of the auto industry in China, but he insists the ball is in the government's court: "The Chinese government needs to build more roads faster, but the problem isn't insurmountable."
On Beijing's car-polluted skies he is equally firm. Industry is doing its best, he says, but someone has to ensure clapped-out polluters are taken off the roads.
Rising oil prices make it more costly for Chinese car owners to run their vehicles but oil prices won't always be high, suggests Hodac. Research costs and higher price tags on reluctant buyers means any switch to non-fossil fuels will be slow, he says.
"We're getting there but non-fossil fuel use is going to be very costly. There will be new cars on the road using hydrogen by 2010. But the energy cycle means you'll still need to burn some fossil fuels. And you have to create infrastructure for hydrogen Cars need to be more environmentally friendly, but the key is making them affordable."
Pushing the car industry to reform at all costs won't work, he warns.
On environmentalism European car makers compare well with their American and Japanese counterparts: "In the EU 24 per cent of R&D spending comes from the auto industry. But for industry to invest in innovation it has to remain competitive . . . It's up to legislators to strike the right balance."