Large hybrid buses are also proving popular in China and are grabbing market shares. This January, Guangzhou-based Beiqi Foton Motor Co. Ltd. (Foton) put its first 30 EuroV hybrid buses into use-a landmark stride for the Chinese automotive industry. The company has projected that its annual hybrid bus sales will surpass 500 units by 2010 and that its annual production capacity will reach 1,500 units by 2012.

The hybrid ambitions of Foton, Chery and others are not unfounded.

An online survey conducted in April by TNS Inc., the world's largest customized research company, highlighted the huge potential of China's hybrid automobile market. Of the 1,251 potential hybrid vehicle purchasers surveyed in 24 cities nationwide, 76 percent said they were well acquainted with hybrid engine technologies and would prefer buying hybrids over the fuel-powered automobiles at the same price. Wang of Tsinghua University said he believes that China's hybrid automobile market would peak around the year of 2010.

Government support

The Chinese Government has supported the research and development of new-energy vehicles, demonstrated by favorable policies enacted last November to encourage and help fine-tune the country's automakers into the sector.

In May, the National Development and Reform Commission (NDRC) approved seven hybrid vehicle varieties for production. It is the first time that automakers have been allowed to produce so many hybrid vehicle brands.

According to Chen Quanshi, Director of the Automobile Research Institute at Tsinghua University, hybrid vehicles become a top priority for the government because they are the most instrumental in easing power shortages that are crimping the country's automobile industry. While China still lags behind such developed countries as the United States and Japan in developing fuel and diesel vehicles, it has been almost on equal footing with them in producing hybrid engine technologies, he said.

Automakers could get a further boost if the government reduces or cancels its 10-percent vehicle purchase tax on new-energy automobiles later this year as part of its energy-conservation endeavors. The draft policy adjustment has been submitted to the NDRC for approval.

Problems ahead

Despite all the good news, the country's hybrid automakers are still concerned about sagging sales. A recent report in the Automobile Observation newspaper said China's sales of Toyota Prius in July decreased a monthly 15 percent to 32 units. Jia Xinguang, chief analyst at the China Automobile Industry Consulting and Development Corp., attributed the wilting sales to the car's high price, which is unaffordable for most domestic consumers. High maintenance costs and patchy after-sale services also have upset consumers, he added.

As an emerging alternative to established traditional automobile brands, hybrid vehicles still need time to be embraced by consumers both in China and around the world in terms of their quality and prices, Jia said.

But it is widely believed in the industry that hybrid vehicles will not become a mainstay in China's automotive market over the next 50 years, because their high prices will remain a barrier to sales.

"The price cannot be lower, as it costs more to have double power systems after all," Jia said.

Even if the government reduces or exempts the tax on the sales of hybrid vehicles, their prices will still be higher than comparable fuel-powered cars, Jia said. That would remain unacceptable for domestic price-sensitive customers.

Meanwhile, expensive maintenance costs that have mainly resulted from a lack of hybrid vehicle part suppliers, also have hindered demand, said Zhang Chao, General Manager of Beijing Zhonglian Auto Market, in an article in Automobile Observation. It has been imperative for the country to fill the gap in hybrid vehicle part supplies, Zhu Jun, a manager in the technology center at Shanghai Automotive Industry Corp., told the newspaper.

Chen Qingquan, President of the Asian Electric Vehicle Association, echoed Zhu's opinion, saying that China should make further efforts to ensure part supplies for hybrid vehicles and higher-quality batteries for the autos.

Jia Xinguang said domestic automakers should not expect instant success in promoting hybrid vehicles, but focus on exploring the market's potential. He added that their current promotional efforts amount to preparations for future development and sales. The more they pump into developing the hybrids now, the more returns they will be rewarded in the future, he said.