Tougher emissions standards are having an effect on China's OEMs.
China's Ministry of Industry and the Ministry of Environmental Protection have both released statements saying the rollout of the National V emissions standards will be going ahead on schedule.
While good news for residents of China's more polluted cities, the rules are having a knock-on effect for regional engine makers struggling to keep up.
A wide-ranging survey of Chinese engine makers, conducted by cnautonews.com, showed mixed responses from OEMs to the new regulations .
Larger concerns like FAW Wuxi and Dongfeng Chaoyang Diesel Engine Co reported they had a comprehensive stock of products that meet the National V criteria. Furthermore, both companies have been investing heavily in R&D, meaning they were actually able to complete the upgrade from National IV to V in a shorter space of time than National III to IV.
However, many regional producers believe the turnaround time for improvements is too severe. Many had expected National V to be rolled out fully by 2018 and had allocated R&D spend accordingly. The economic impact of ramping up R&D and shortening product life-cycles could spell trouble for smaller producers.
Even sophisticated joint ventures like JAC Navistar, who had been building Euro IV standard engines for the Chinese market since 2014, have been struggling to catch up. If smaller OEMs fail to keep up with the new regulations there will likely be a lot of consolidation in the industry, which may lead to fewer engine types.
The implications for the lubes industry could be mixed.