CHINESE AUTOMOBILE INDUSTRY: HISTORY, IMPROVEMENTS AND EXPORTS

AUTOMOBILE INDUSTRY IN CHINA

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Geely IG concept car
in Auto Shanghai 2011
China is now the largest manufacturer of automobiles as well as the largest buyer of them. It manufactured 26 million vehicles (21.4 million cars and 4.6 million commercial vehicles) in 2021. The largest Chinese automakers, known as the “Big Four,” are SAIC Motor, Dongfeng, FAW, and Chang’an. The United States is the second-largest car producer in the world, producing less than half of what China does. It manufacturing 9.1 million vehicles (1.5 million cars and 7.6 million trucks, pick-up trucks, SUVs and commercial vehicles) in 2021. In 2021, Japan produced 7.85 million vehicles; India, 4.40 million; South Korea, 3.46 million. [Source: World Population Review]

In 2021, vehicle production increased 3.4 percent to 26.08 million , industry data showed, ending a three-year decline. Total output led the world for 13 consecutive years at that time. The future also looked bright:"Thanks to new-energy vehicles (NEVs) and the export market, the market share of Chinese auto brands reached 44 percent at home, nearing the best level in history," the China Association of Automobile Manufacturers (CAAM) said.[Source: Global Times, January 12, 2022]

In 2021, Chinese brands saw a 4.4 percent increase in sales in China, with their market share rising to 54.4 percent from 48.9 percent in 2020, according to China Passenger Car Association, with a a cumulative sales volume of 20.15 million in 2021. In contrast international brands saw a 6.9 percent decline in sales in China, with their market share falling to 45.6 percent from 51.1 percent. The market share of the Chinese Automobile makers was 41.4 percent in 2016 and 38.1 percent in 2015. [Source: Zhang Dandan, China Daily, January 24, 2022; Bart Demandt, carsalesbase.com, January 21, 2017]

China was the top car producer in 2009 with a production of 13.79 million units. It surpassed Japan at the top by a large margin. In Japan, domestic automobile production fell to a 33-year low in 2009 to 7,934,516 units, a 31.5 percent drop from the previous year. Production was at its peak there in 1990 when it reached 13.49 million units. Years of double-digit expansion increased Chinese auto production to almost 17 million cars, minivans, pickup trucks and sport utility vehicles in 2010, from fewer than two million in 2000, making it almost twice the size of the United States or Japanese industries and far larger than any European country’s auto manufacturing sector. China became the world’s third largest vehicle producer in 2007, surpassing Germany for third place. It produced 7.18 million vehicles Only Japan and the United States made more. Production has increased at a clip of more than1 million vehicles year since then

As of 2009 there were 52 foreign and domestic carmakers operating in China, compared to 15 in the United States. Top car makers in 2006: 1) Shanghai GM; 2) Shanghai Volkswagen; 3) FAW Volkswagen; 4) Chery; 5) Beijing Hyundai; 6) Tianjin FAW Toyota; 7) Tianjin FAW Xiali Automobile; 8) Geely Automobile; 9) Guangzhou Honda ; 10) Dongfeng Peugeot Citreon. These top 10 automakers account for 70 percent of total sales.

A lot of investment money has gone into the automobile industry. Even so Chinese automakers have lacked solid financial markets because the market is so fragmented as there are so many car makers and the market has been dominated by foreign brands. As of 2009, foreign car companies held 85 percent of the Chinese car market. Nearly all the cars produced in China are made for domestic consumption. But even if Chinese brand associations can seem remote and perhaps amusing to those outside the country, Zhang Yu, managing director of Automotive Foresight, a Shanghai industry consultancy, told the New York Times in the early 2010s says they will prove decisive to sales in coming decades. “China is already the largest automobile market in the world. No car company can afford to overlook its Chinese brand,” he said.



History of the Chinese Automobile Industry

Before the Communist Revolution Model Ts were sold in China and Buicks were a prestige car. In the Mao era no one really owned a car. Only the elite had access to them. Engineers were assigned to truck factories because there simply wasn’t a market for passenger cars. Things began to open a little in the early Deng era. The First private vehicles appeared in Beijing in 1984. In 1985, the Chinese media gave front page coverage of the first farmer who bought his own truck

China's first motor vehicles — Liberation trucks, with 95-horsepower engines, and Red Flag limousines — were produced in the 1950s at a factory in the Jilin province, built with Soviet help. The Red Flag was modeled after the 1948 Packard car and looks like the cars seen in old gangster movies. See Red Flag Limo Under AUTOMOBILES IN CHINA factsanddetails.com

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early Chinese built automobile
In the 1980s, foreign automakers were allowed to form joint ventures with state-owned Chinese partners with foreign ownership limited to 50 percent. The goal of the government was to develop a car industry quickly, learning from the foreign companies how to make cars while maintaining control of the car industry. Volkswagen and American Motors were the first. VW came and built the Santana model to serve the envisioned need for taxis. American Motors came and built Jeeps. Originally, they thought that this would be a good model given China's rural infrastructure. The American Motors/Beijing Auto Works #3 was the joint venture that formed the basis of China's Joint Venture Law. Every one made out well in part because competition was strictly controlled.

Passenger vehicle sales rose from 550,000 units in 1998 to 600,000 in 1999 to 630,000 in 2000 to 700,000 in 2001 to 1.06 million in 2002 to over 2 million in 2003 to 5 million in 2004. The sale of cars and light trucks rose from 420,670 in 1990 to 1.4 million in 1995 to 1.8 million in 2000 to 3.8 million in 2003. Growth was 20 percent in 2004, down from 80 percent in 2003. Sales were slower in 2004, partly because efforts to slow down the overheated economy. Sales slowed a bit in 2005 as unsold vehicles piled and profits shrunk. In 2006 things began to pick up. Car sales were up 50 percent in the first half of 2006, with 1.8 million vehicles sold, up 46.9 percent from the previous year, with General Motors selling the most cars and Volkswagen in second.

Increased competition cut the profit margin of cars sold in China from 9 percent in 2003 to 3.1 percent in 2006. The Chinese government helped boost cars sales with is economic stimulus [package to address the global slump that provided tax cuts and subsidies for drivers who stitched to clean , more fuel-efficient cars.

Automobile Production in China

China’s automobile industry consists mainly of local companies that have joint ventures with well-established multinational companies. In the early years of many of the factories are outdated and inefficient Auto parts were either imported or made locally by hand with molds hundreds of miles away from the assembly plants. There were quality and transportation problems. These days things have improved a lot. Auto parts are made closer to the car plants and are exported.

Initially the market in China was still too small for economical high-volume production and many components had to be brought in because components made by local manufacturers are not very good quality. Autoworkers were paid around $240 a month in the 2000s. This worked out to about $1.50 an hour, compared to $30 an hour in Germany and $5 an hour in Poland. In the United States at that time some workers got $65 an hour when their pensions, health insurance and other benefits are factored in. There are no independent unions in China. There are strong government pressures for workers to stay in line.

China has had success in the auto industry because of its access to cheap labor and technology of foreign automakers. Its research and development costs are minimal because designs are borrowed or copied for foreign firms. The safety and emission requirements of cars made in China are much lower than those of American made cars. China introduced its first fuel economy regulations in 2004. By the mid the mid 2000s quality and efficiency was improving. With labor cost remaining low, China began to produce reasonable quality cars for a fraction of the cost of cars built anywhere else. Many foreign automakers were cutting cost by buying more parts from suppliers in China.

China's auto manufacturing policies have provoked disputes with Washington and other trading partners. The United States, Europe and Canada launched a World Trade Organization case in 2006 challenging Beijing's effort to compel automakers to use Chinese-made components by imposing higher taxes on cars made with more than 40 percent foreign parts. The WTO ruled against Beijing in 2008, but by then automakers had developed local suppliers.

Why Chinese Cars Are So Cheap

"What makes Chinese cars so much cheaper? Start with labor," Guido Vildozo, an auto industry expert with consultants IHS Automotive in Lexington, Mass. told the Los Angeles Times, noting that a typical Chinese autoworker makes $300 to $400 a month, a fraction of the $2,000 to $3,000 in wages that Mexican workers make or the $5,000 to $7,000 a month that U.S. auto workers average. [Source: Adriana Leon and Chris Kraul, Los Angeles Times, February 9, 2012]

Another price advantage, said Jian Sun, a partner with AT Kearney business consultants in Shanghai, stems from the "reverse engineering," or design and mechanical imitation, that many Chinese carmakers use in competing models to save them the expense of designing new models from scratch.

Then there is Chinese government help. When Chinese automakers asked for help during the economic crisis in 2008 and 2009, the Chinese government responded with subsidies and slashed the sales tax on small, fuel-efficient cars, spurring demand. China’s auto exports jumped nearly 70 percent in April 2008 from the previous years, surpassing 70,000 units.

Growth of Chinese Car Manufacturing

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Great Wall SUV
In 2000, China had 120 auto assembly companies. Thirteen accounted for 98 percent of the country's car sales. In June of 2004 the Chinese government offered incentives for these companies to combine. The government’s aim was to have three of four Chinese automakers become major players in the global market. First Auto Works (FAW) and Shanghai Automotive Industrial Corporation were the only two that produced more than 500,000 cars a year. Eight others produced more than 100,000 cars but 95 failed to produce more than 10,000 cars. As of 2005, there were still 100 car makers in China, with a manufacturing capacity of 6 million vehicles. Competition was very fierce. There was a lot of price cutting and cost cutting. Few made any profit. The industry went through a $25 billion expansion, which was expected to double capacity by 2007. Stepping up production and expanding was made possible by tax breaks, generous loans and cheap land from the government.

Explaining how his company came up with a design for a SUV, an executive with one company told the Washington Post basically they bought all the SUV models they could and took them apart and studied them and copied them. It is not surprising that there is a lot of copyright infringement going on. One company sells a BYD with an emblem that looks almost exactly like a BMW emblem except the colors are reversed. Another company sells an SUV that looks a lot like Honda’s CR-V

Norihiko Shirouzu of Reuters wrote: “Rapid growth in the economy led to the creation of more than 100 registered automakers across China by the early 2000s, but they lacked expertise. Their solution to developing affordable cars was simple: Copy foreign designs. “Around 2000, China began embracing an approach it described as ‘reverse engineering.’ It was essentially a fancy word for copying,” said Dai Ming, a senior engineer at CH-Auto Technology, an independent design and engineering company based in Beijing. “The problem with those copied cars was that the Chinese were able to emulate the shape of a foreign car but not its soul.” [Source: Norihiko Shirouzu, Reuters, September 18, 2012]

“Chinese carmakers tended to sift through a foreign vehicle to identify expensive but noncritical features and functions that they could skimp on or eliminate, like power windows or doors that close with a solid thump. The result was often dubious levels of quality and durability. After a few years of use, bumpers and door handles would start falling off.

“Chinese automakers are so new that many have not had time to groom their own engineers, and their best engineers are usually occupied more with manufacturing than design. Companies thus often outsource product design and development to engineering houses filled with Chinese engineers trained overseas. By using the same few design and engineering firms, Chinese carmakers have effectively created a shared pool of homegrown automotive technology.

“CH-Auto, for instance, has helped design an array of cars over the past decade, each time gaining fresh expertise that it deploys on its next project, in most cases for a different company. CH-Auto was established in 2003 by a small group of jobless Chinese engineers who had trained with Beijing Jeep, a now-defunct joint venture set up initially by Beijing Automotive Industry Holding and American Motors, which included the Jeep light-truck brand (the U.S. automaker was later absorbed by Chrysler).

“CH-Auto and its rivals say they have moved beyond copying foreign designs. Instead of imitating the shape of a component or an entire foreign car, they try to match its performance as well — often successfully — even as they improvise and simplify to cut costs. The aim is to make cars affordable to the Chinese middle class, people who earn 50,000 to 60,000 renminbi a year. “It’s not copying. It’s not that simple anymore,” said Wang Kejian, the president of CH-Auto and a former Beijing Jeep engineer who was trained for a time in Detroit by Chrysler. “Since Chinese carmakers have no accumulated vehicle design technology or know-how, we have to develop our own by studying foreign cars and use local parts suppliers to approximate the components and the cars.”

Chinese Get Better at Making and Designing Cars

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Geely car
Geely Group and Chery are large Chinese auto makers that market and sell cars in China and have done well without forming joint ventures with foreign automakers. They are known for adapting quickly to the Chinese market and producing affordable cars but they have also gotten into some legal trouble because of copying designs from foreign manufacturers such as Toyota and GM.

Norihiko Shirouzu of Reuters wrote: China keeps getting better at making cars. One reason: It is getting better at cutting corners. Zhejiang Geely Holding Group, one of the biggest Chinese carmakers, conducted 20 to 25 crash tests when it developed its popular Panda model, engineers involved in developing the car said. Global carmakers typically conduct 125 to 150 crash tests for each new model. By relying more on computer simulations, Geely saved at least 200 million renminbi, or $32 million, and two years in development time on the Panda, the engineers said. That paring back on crash tests — along with skimping on frills, simplifying designs, using less expensive materials and, in a departure for the industry, outsourcing most design and engineering work — is having a profound effect on the cost bases of China’s dozens of carmakers. Some are now able to sell inexpensive small cars for 40,000 renminbi — less than half the price of a basic Toyota. [Source: Norihiko Shirouzu, Reuters, September 18, 2012]

“Ten years ago, no discerning Chinese consumer would have bought a Chinese-designed car. Not only were such vehicles viewed as illegal counterfeits of foreign models, their quality and safety were mistrusted. Now, some indigenous models are striking a balance between no-frills affordability and acceptable quality. In China, it is the age of the good-enough car, and that has potentially significant implications for the world auto industry. Models like the Panda and the Great Wall Haval H3 are becoming popular, not only in China but also in emerging markets like Egypt, Indonesia and Ukraine. They are driving Chinese car exports to record levels, even as growth in the domestic market slows.

“It normally takes four to five years for companies like General Motors or Toyota Motor to develop new cars. Chinese manufacturers can do so in two and half years. “Perhaps the Chinese achieve their low cost by sacrificing quality standards,” said Shiro Nakamura, the chief designer at the Japanese automaker Nissan Motor. “But in many ways, their way also points to ‘over-quality’ or ‘waste’ we have built into our conventional design process over the years.”

“The Chinese approach is a product of the extraordinarily fast rise of its automotive industry. As the country opened up to the West, carmakers were faced with relatively poor customers at home and competition from sophisticated products made abroad. Global automakers could sell their expensive cars to rich Chinese, but domestic automakers had to come up with inexpensive cars for the masses.

Growth of Chinese Automobile Manufacturing

Norihiko Shirouzu of Reuters wrote: “Rapid growth in the economy led to the creation of more than 100 registered automakers across China by the early 2000s, but they lacked expertise. Their solution to developing affordable cars was simple: Copy foreign designs. “Around 2000, China began embracing an approach it described as ‘reverse engineering.’ It was essentially a fancy word for copying,” said Dai Ming, a senior engineer at CH-Auto Technology, an independent design and engineering company based in Beijing. “The problem with those copied cars was that the Chinese were able to emulate the shape of a foreign car but not its soul.” [Source: Norihiko Shirouzu, Reuters, September 18, 2012]

“Chinese carmakers tended to sift through a foreign vehicle to identify expensive but noncritical features and functions that they could skimp on or eliminate, like power windows or doors that close with a solid thump. The result was often dubious levels of quality and durability. After a few years of use, bumpers and door handles would start falling off.

“Chinese automakers are so new that many have not had time to groom their own engineers, and their best engineers are usually occupied more with manufacturing than design. Companies thus often outsource product design and development to engineering houses filled with Chinese engineers trained overseas. By using the same few design and engineering firms, Chinese carmakers have effectively created a shared pool of homegrown automotive technology.

“CH-Auto, for instance, has helped design an array of cars over the past decade, each time gaining fresh expertise that it deploys on its next project, in most cases for a different company. CH-Auto was established in 2003 by a small group of jobless Chinese engineers who had trained with Beijing Jeep, a now-defunct joint venture set up initially by Beijing Automotive Industry Holding and American Motors, which included the Jeep light-truck brand (the U.S. automaker was later absorbed by Chrysler).

“CH-Auto and its rivals say they have moved beyond copying foreign designs. Instead of imitating the shape of a component or an entire foreign car, they try to match its performance as well — often successfully — even as they improvise and simplify to cut costs. The aim is to make cars affordable to the Chinese middle class, people who earn 50,000 to 60,000 renminbi a year. “It’s not copying. It’s not that simple anymore,” said Wang Kejian, the president of CH-Auto and a former Beijing Jeep engineer who was trained for a time in Detroit by Chrysler. “Since Chinese carmakers have no accumulated vehicle design technology or know-how, we have to develop our own by studying foreign cars and use local parts suppliers to approximate the components and the cars.”

Auto Shows and Car Babes in China

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Chery Fulwin at the
2011 Shanghai show
The auto shows in Beijing, Shanghai and Guangzhou are all drawing a lot of attention. The ones in Beijing and Shanghai are held in alternating years and tend be glitzier than the one in Guangzhou which is held every year and is geared more for the local market. The Beijing Auto show is a major industry event. More than 2,100 automakers and auto parts companies from 16 countries showed up at the Beijing Motor Show in April 2010. At total of 990 vehicles were displayed, including 89 debut cars. The show attracted slightly more than 100 Chinese and foreign automakers in 2008. The annual auto show in Shenzhen also draws a lot of interest.

The Shanghai Auto Show is China’s biggest car show. Lasting for nine days, it is regarded as the auto industry’s biggest marketing event, not just in China but worldwide. Almost every global and Chinese brand has displays, often with at least one electric concept car, if not a model ready for sale, alongside its latest SUVs and sedans."It's a major industry event for us," Andrew Boyle, global product communications manager at Rolls Royce, told CNN. The company sells several hundred of its super-luxury vehicles in China. In 2015 it launched its latest model, the Phantom Limelight, at the show.

In 2015 the Shanghai Auto Show banned “car babes” presumably so show attendees would focus their eyes on the cars rather than the girls. CNN reported: The only models on display will be the ones with four wheels. Gone, show organizers hope, will be the scantily-clad "car babes" that in previous years have posed provocatively on car hoods and sashayed through the aisles to draw crowds. The focus, instead, will be the latest offerings from an array of global car manufacturers, which — models or not — are pulling out all the stops to compete for Chinese customers in what since 2009 has been the world's largest car market. [Source: Katie Hunt, CNN, April 19, 2015]

Advancing Automobile Industry in China

In an effort to make the Chinese automobile industry more competitive internationally, the Chinese government encouraged car companies to consolidate, combining the 14 largest car makers into 10 and weaning them off their dependence on government subsidies and joint ventures with foreign companies. Shanghai Automotive Industry Group (SAIG), China FAW Group, Dongfend Motors and Changsan Automotive have been encouraged to buy smaller rivals. The government took a similar action in the steel industry.

For some the recent purchase of Hummer by a Chinese auto company has become symbolic of China’s embrace of car culture and drift towards a culture that was once seen as the private domain of the United States. Peter S. Goodman wrote in the New York Times, “China has come to embrace many of the modes of consumption that Americans may reflectively consider their own, complete with the sprawl and tangle of highways familiar to any resident of Los Angeles or Atlanta...China has put the automobile at the center of contemporary life. China has torn down older buildings in every major city to make way for more vehicles. It has erected an impressive network of highways crisscrossing the vast country. Air quality and energy efficiency have been outweighed by reverence for the car.”

“This has not happened randomly. In recent times China’s leaders have unleashed enormous quantities of state finance to seed auto ventures in every province, spurning industries that have grown along with the ubiquity of the car. Petrochemicals, steel, glass-making and rubber have all expanded to feed auto-making. Tourism and retail shopping have increased as more Chinese take possession of steering wheels.”

“Along the way, many Chinese aspirations have come to focus on car ownership. In a country where so many people look back with bitterness on the regimented days of Maoism. And where public transportation still involves packing into belching buses and gruesomely crowded trains, the car has become a vessel for Chinese dreams.”

China's auto parts industry has grown hand and hand with its automakers and as suppliers for foreign car companies. In 2007,China exported $12 billion in auto parts, up from $2 billion in 2002. Shanghai General Motors — a China-based joint venture of G.M. and Shanghai Automotive Industry — produces engines for the Chevy Equinox and the Pontiac Torrent. The engine has a reputation for being “lackluster” but experts say that has more to do with the G.M. design than Chinese manufacturing.

Exported Chinese Cars

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Geely car
China's auto vehicle exports doubled to a record 2.02 million in 2021, exceeding the two million mark for the first time, according to data from the Ministry of Industry and Information Technology (MIIT). The annual export volume in 2021 was a breakthrough for exports, which hovered at over 1 million units for many years, the China Association of Automobile Manufacturers (CAAM) said. The increase made China the third-largest vehicle exporting nation behind only Japan with 3.82 million units and Germany with 2.3 million units. It overtook South Korea, which exported just 1.52 million vehicles last year.[Source: Global Times, January 12, 2022]

In May 2022, China's exports of cars recovered thanks in part to electric vehicles According to Bloomberg: Passenger cars worth $2.8 billion were exported, the fourth-highest monthly total in the past few years. With domestic sales falling for 11 of the past 12 months, car companies in China have boosted their sales overseas, with exports in just the first five months of this year exceeding the whole of 2020. The biggest market is Europe, which took nearly half of shipments in May and about three-quarters of electric car exports, with much of the rest going to Asia. [Source: Bloomberg News, June 21, 2022]

China exported 891,000 vehicles in 2017, up 26 percent year-on-year, according to the Beijing-based China Association of Automobile Manufacturers. The exports included 639,000 passenger cars and 252,000 commercial vehicles. According to just-auto.com: China’s main export thrust so far has been in emerging markets, particularly neighbouring Asia-Pacific countries, Middle-East and Africa and Latin America. Leading automakers such as SAIC Motor, Chery, Great Wall Motors and Geely have been busy establishing production networks to help underpin their expansion into these markets. They and and their suppliers have also invested heavily in product quality and in-house technologies, allowing them to move up the automotive “food-chain” significantly. More recently they have increased their focus on electric and hybrid technologies, whose markets are beginning to open up globally. In 2021, exports of new energy vehicles, mainly electric and hybrid vehicles, from China surged fourfold to 310,000 units. [Source: just-auto.com April 26, 2022]

In the mid 2000s. Chery exported cars to 70 developing countries in Asia, the Middle East and Latin America It hoped to double foreign sales in 2010 to 100,000 vehicles. At the Beijing Motor Show in April 2010, Chinese automakers announced ambitious plans to expand abroad and unveiled new models with foreign markets in mind. Chery released the Riich G5 car with an advertisement featuring Lionel Messi, a star soccer player for Argentina and Barcelona. Geely unveiled six alternative fuel vehicles.

The Chinese have been interested in selling cars abroad for some time. One Chinese economist told Theroux in the 1980s, "What we want to do is make cars and sell them to other countries. The export market — that's what interests us." In the past Chinese automakers have announced ambitious plans to expand into North America and Europe but fell short in meeting safety and environmental standard there.

In July 2002, the Tianjin Auto Group began exporting Xiali sedans for re-export to Mexico. In 2004, China exported around 100,000 vehicles, mostly to Southeast Asia, Africa and the Middle East. In 2005, Honda began exporting Chinese-made cars to Europe. The first Chinese-made cars exported to Europe were 200 Landwind SUVs exported in July 2005. Chery has plans to sell cars in the United States in 2007. Geely and Great Wall have plans to sell cars abroad (See Above). Chinese vehicles are being marketing pretty heavily in Brazil, where a basic JAC model sells for $24,000 and comes with a six-year warranty.

Chinese Auto Plant Abroad: Bulgaria, Mexico and South Africa

Beijing Automotive Group Co Ltd, or BAIC Group has more than 20 plants, and research and development centers in Mexico, India, Japan, the Netherlands, South Africa Spain, Germany, Italy and the United States. These including a car assembly plant in Mexico, 2) a truck manufacturing center in India, and 3) a manufacturing base in Ruili, Yunnan province that makes SUVs and light trucks for the Southeast Asian market The company subsidiary joint-venture arrangements with Hyundai Motor Co and Mercedes Benz. It officially opened a manufacturing facility in South Africa in August 2018, with an annual production capacity of 50,000 vehicles.[Source: Zhong Nan, China Daily, September 6, 2018]

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Chinese-made Changsan minivan
In February 2012, Great Wall Motor became the first Chinese automaker to open an assembly plant in Europe, aiming to produce 50,000 vehicles per year for the whole continent in northern Bulgaria. "Great Wall's plans to build a plant in Bulgaria and produce automobiles here are aimed at boosting our production capacity and exporting these automobiles for the European market," company president and chief executive Feng Ying Wang said. [Source: Diana Simeonova, AFP, February 21, 2012]

AFP reported: “ The facility in Bahovitsa, built together with Great Wall's Bulgarian partner Litex Motors, will initially employ 150 workers making 4,000 automobiles per year from Chinese-imported kits. But plans are to expand capacity to an annual 50,000 cars and 2,000 workers. The company started sales of three Chinese-imported models in Bulgaria in October 2011 and supplying the Bulgarian market with locally-assembled cars will remain an immediate priority, Wang said. Sales would then start in neighbouring countries, with Macedonia, Albania and Montenegro expected to come first by end-2012, while talks will start this year for sales in Serbia, Litex Motors marketing director Ivo Dekov added.

In 2017, Mexico's Giant Motors and China's Anhui Jianghuai Automobile (JAC Motor) said they would invest more $212.46 million) in an existing plant to build SUVs in the central Mexican state of Hidalgo. Up to 10,000 vehicles could be produced at the plant, with JAC's SUV S2 and SUV S3 would be the first vehicles to be assembled.[Source: Reuters, Feb 2, 2017]

Expansion of China’s Automobile Industry into Europe and the U.S.

Keith Bradsher wrote in the New York Times in 2011: “The government has prohibited Chinese automakers from making big jumps into the American market and severely restricted their entry into the European market. They have also demanded that automakers increase vehicle quality considerably, and have suggested that high-volume exports may not be allowed to start until 2015 or so. [Source: Keith Bradsher, New York Times September 4, 2011]

The goal has been to make sure that when large-scale exports begin, Chinese cars do not initially acquire the same reputation for shoddy quality that bedeviled the South Korean industry when it entered the American market and that took many years and offers of long, costly warranties to overcome. One of the biggest problems that Chinese automakers have in selling their cars abroad is meeting foreign safety and emission standards. Chinese automakers also have to overcome to enter the American and European market include overcoming doubts about Chinese quality.

Five Chinese companies — Changfeng Motors, BYD Auto Co., Geely, China America Cooperative Automotive and Li Shi Guabng Ming Auto. Design Co.’showed up at the Detroit auto show in 2007 Geely and Hunan Changfeng were at the 2006 show. Hunan Changfeng makes low cost SUVs and pick-up trucks, using engines and parts imported from Italy and designs it devised partly as the result of a decade-long collaboration with Mitsubishi. Its autoworkers are paid $300 a month. Its new car, which some said looked like it was from the 1980s, was displayed in a basement exhibition space.

The first Chinese-made cars exported to Europe were 200 Landwind SUVs shipped by Jiangling Motors to Belgium in July 2005. They cost about half their main European competitors. Its distributor told the Washington Post, “You can not compare to a VW or a BMW. It doesn’t have a high-power engine or the most modern suspension. But for the money, you get a hell of a lot of car.” Only a few hundred Landwinds were sold in Europe after it received a zero safety rating by a German automobile club. Still many take the Chinese very seriously. They could make to same progress in five years that the Japanese made in 20 years and the Koreans made in 10.

In 2010, Hebei Zhongxing in Baoding was attempting to set up a deal to sell pick-up trucks and SUVs that list for under $10,000 in California. Brilliance China Automotive planned to sell cars in Germany. The cars these companies sold were about the half the price of comparable European- and American-made models. Brillance missed it goal of launching a vehicle in the United States in 2009. BYD had hoped to introduce its plug-in electric car in the United States in 2010 but pushed that date to 2011.

Chinese Cars Become Popular in Latin America

Adriana Leon and Chris Kraul wrote in the Los Angeles Times: At first, Lima taxi driver Mario Segura was disgusted by the thought of buying a Chinese-made car. He had doubts about the vehicles' durability, service and resale value. But favorable word of mouth, assurances that spare parts are plentiful and, of course, unbelievably low prices won him over. "Little by little, I heard favorable comments," said Segura, speaking in a Chery showroom in the Surquillo district. He had just plunked down $12,000 in cash for a new Fullwin XR sedan, half the cost, he said, of a comparable Fiat or Renault. "It took a long time to decide, but I'm risking it." [Source: Adriana Leon and Chris Kraul, Los Angeles Times, February 9, 2012]

So is Luis Luna, a doctor just back in Lima after working for several years in Argentina. He had planned on buying a secondhand Japanese car. Until, that is, he noticed billboards touting low-priced Chinese brands and listened as his relatives insisted that he kick tires at a JAC dealership, one of dozens of Chinese brands sold here. "We realized for the same money that we'd pay for a crummy secondhand car that inspired no confidence, we could have a brand-new Chinese car with a two-year warranty," Luna said as he finished paperwork on his new $16,000 JAC B-Cross family wagon. "I'm totally convinced this is the right decision."

Similar buyer testimonials can be heard across Latin America these days, where Chinese cars with unfamiliar brand names like Great Wall, JAC, Brilliance and Sinotruk are selling like hot cakes. Chinese cars were introduced in Peru in 2006 and now one in six new cars sold here is a Chinese make. The Chinese brands' main selling point is, of course, price: New Chinese cars typically sell for half to two-thirds the cost of a comparable European, U.S. or Japanese vehicle. Chinese manufacturers bean entering the market as Latin American incomes are rising to unprecedented levels, flush from the decade-long global commodities boom filtering down to an expanding consumer class. Augusto de la Torre, chief Latin America economist at the World Bank, said the region's middle class now encompasses 30 percent of its population of 570 million, up from 20 percent in 2002.

Many buyers, like Antonio Benevides, a 26-year-old theme park worker in Bogota, are first-time owners. In2011, he bought a new Chery QQ model for $9,000, two-thirds the cost of a comparable Renault he had considered. "That difference in price is what put a new car within my reach for the first time," Benevides said as he drove his car off the dealership lot near Bogota's international airport. "I've heard they hold together well, that they are cheap to operate and, as you can see, they are not bad looking."

Image Sources: Wiki Commons, Makers of the cars shown

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, National Geographic, The New Yorker, Time, Newsweek, Reuters, AP, Lonely Planet Guides, Compton’s Encyclopedia and various books and other publications.

Last updated July 2022


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