Chinese cars are 5 percent to 10 percent heavier than competing models, and reducing the weight will shave 6 percent to 8 percent off fuel consumption, said Wang Li, head of auto sheet research and development at Shanghai-based Baoshan Steel. Geely Automobile Holdings Ltd., whose parent bought Volvo Cars, and four Chinese carmakers are part of the project.

Automobile sales in China surged 46 percent last year, as demand for Volkswagen and General Motors Co.'s vehicles helped the nation overtake the United States as the world's biggest market. The rising sales add to pollution and fuel consumption, making it harder for the Chinese government to meet energy efficiency and gas emission targets.

"To cut the car weight and make them more energy efficient is to make the industry stronger in competition with their European and Japanese rivals," said Tianshu Xin, a Shanghai-based managing director at consulting company IHS Global Insight. "China wants its car models to catch up with global peers in 5 to 10 years."

Of the top 10 car models in August, three are designed by domestic automakers. The rest, including Volkswagen's bestselling Jetta, were made by joint ventures of General Motors, Volkswagen, Hyundai Motor Co. and Toyota Motor Corp.

An alliance of Baoshan, Geely Automobile, FAW Group Corp., Chery Automobile Co., Dongfeng Motor Corp., Chongqing Changan Automobile Co. will contribute 500 million yuan ($75 million) to the weight-reduction project, Wang said in an interview in Shanghai. Southwest Aluminum (Group) Co., a unit of Aluminum Corp. of China Ltd., will also take part, he said.

Stronger Steel

"We aim to cut their car weight to match overseas rivals by 2013," Wang said. "Our work is to make automotive steel thinner and stronger."

China increased the number of cars eligible for a subsidy for fuel-efficient car models in August, according to J.D. Power & Associates. The world's biggest emitter of carbon dioxide is giving buyers a rebate of 3,000 yuan for energy-efficient cars, as it seeks to cut output of the gas per unit of gross domestic product by 40 percent to 45 percent by 2020 from 2005 levels.

The government wants to reduce fuel consumption to 6.6 liters on average for every 100 kilometers driven in three to five years from an average 8.13 liters, Xin from IHS said.

Carmakers are also seeking lighter material substitutes, including using aluminum alloy for the cover of engines and plastics for some pipes, Xin said.

Supplying Overseas

General Motors and Chrysler Group LL are testing high- strength steel made by Baoshan in U.S. laboratories for use as anti-collision components including the B-pillar, a vertical roof support between the front and rear doors, Wang said.

The Chinese company may supply such products to overseas factories of the carmakers should they pass tests, Wang said. The evaluation process may take a few years, he said.

"We're trying to take the leadership in technology development among our global peers," Wang said, identifying Luxembourg-based ArcelorMittal and Japan's Nippon Steel Corp. as the benchmarks. "This is the highest level of our work, and to keep ahead of others is the most difficult part."

Baoshan will supply steel to new car models Nissan Motor Co. plans to introduce in China in the next two years, Wang said. Traditionally, automakers use steel made by Japanese or European mills for models first introduced in China, he said.

Nissan, Japan's third-largest carmaker, plans to introduce a new passenger-car brand in China from early 2012, it said Sept. 8. It will become the second Japanese carmaker, after Honda Motor Co., to have a new China-only brand.

Baoshan Steel's total annual capacity for automotive steel will reach about 5 million metric tons this year, Wang said.

"To own half of the domestic market has been one of our key strategies," Wang said. "We must plan for the future to ensure this share is maintained, say, after 2015."