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November 25,
2008
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Shanghai Automotive Industry Corporation (Group):
Automaker Going Global with Own Brand
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Shanghai Automotive Industry Corporation (Group), one of China's Big Three automakers, has been manufacturing vehicles at its subsidiary, SsangYong Motor Company, in Korea and exporting passenger cars, made by its joint ventures with Volkswagen and General Motors, and automotive parts.
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Global Automakers' Production and Sales Share:
Growing Dependence on China
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Since 2007, when sales contraction became an obvious trend in developed countries, production and sales ratio of major automakers' home country have been declining while their business dependence on China, which became the second largest market in 2006 excluding Japan, has been increasing.
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November 17,
2008
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China's Pickup Truck Market:
Automakers Energetically Launch New Models
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In 2007, the factory shipment of pickup trucks by China's top ten pickup truck makers increased 24% year-on-year to 185,911 units. In the first half of 2008, it increased 21.8% to 103,387 units compared to the same period of a year earlier. Booming sales are attributed to the vigorous launch of new models, active sales promotion in regional cities and rural areas, and steady expansion of exports to emerging countries.
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Dongfeng Motor Corporation:
Sino-Foreign Ventures to Expand Sales Abroad
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Dongfeng Motor Corporation (DFM), one of China's top three state-owned automakers whose annual export had been around 2 thousand vehicles until 2005, increased exports to 4,715 vehicles in 2006 and to nearly 25 thousand units in 2007. In the first half of 2008, DFM exported 23.8 thousand complete vehicles and year-round exports are expected to double, according to a local newspaper.
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November 10,
2008
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China's Passenger Car Registrations:
Foreign Brands Dominate the Market
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In China, the number of passenger cars registered by end-users increased from 29.4 million units in 2005 to 4.42 million in 2007, according to FOURIN's research. Since, an additional 2.82 million units were registered in the first half of 2008, it is probable that year-round registrations will reach 6 million units despite the slowing economy.
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China FAW Group Corporation:
Automaker Aiming to Expand Business Globalization
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China FAW Group Corporation, one of China's largest state-owned automakers, announced it in its 2007 business plan that the company aims to internationalize its operations and speed up the expansion of its overseas business activities. In 2007, FAW exported 28,823 complete vehicles, up 44% from a year earlier, generating 287.25 million USD in sales revenue.
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November 4,
2008
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Complete Vehicle Sales Forecast:
Factory Shipment to Reach 10 Million Units in 2009
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Due to the sudden drop of the A-share market and continued decline of real estate prices in some cities, more and more people think that the economy is retreating. The fact that vehicle factory shipment volume fell for the second consecutive month in September has also become a key factor for speculations in the media.
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Lexus Brand in China:
Toyota Expanding Sales Network in Coastal Cities
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Toyota Motor Corporation considers China as a strategic market for the Lexus marque, the automaker's global premium brand. Toyota is currently engaged in the opening of exclusive dealerships in large cities, improvement of brand power, and expansion of sales. In China, sales went up 127% to 25,234 units year-on-year, becoming the growth engine of global Lexus sales in 2007.
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October 27,
2008
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Dongfeng Liuzhou Motor Co., Ltd.:
Automaker Focusing on Heavy-Duty Truck and Passenger Car Sales
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Dongfeng Liuzhou Motor Co., Ltd., headquartered in Liuzhou, Guangxi Zhuang Autonomous Territory, is a subsidiary of Dongfeng Motor Corporation, manufacturing trucks and passenger cars. In 2007, Dongfeng Liuzhou increased commercial vehicle sales 60% year-on-year to over 28 thousand units. Total sales, including the automaker's self-brand MPV, exceeded 47 thousand units in the same year.
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China's Military Industry in the Automotive Sector:
Government Diluting State-Owned Share
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China has been speeding up the process of transforming the state-owned structure of its military industry to an equity-based system. Through attracting private and foreign investors and introducing new technologies, China is stimulating the growth of the military industry's civilian sector, changing the tendency of technology flow from the military to the civilian sector, and beginning the process of converting the national strategy.
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October 20,
2008
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FAW-Toyota Manufacturing Ventures in China:
Corolla Derivatives to Be Launched at Changchun Plant
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China FAW Group Corporation and Japan's Toyota Motor Corporation have two joint venture manufacturing operations in China. As of August 2008, the two ventures had a combined annual production capacity of 440 thousand units. and sold a little less than 283 thousand passenger cars in 2007, exceeding the company's annual sales target which was upwardly revised in mid-year.
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China's Semi-Tractor Market:
Growth of Factory Shipment Losing Steam
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China's factory shipment of semi-tractors increased 91.9% to 177,776 units compared to 2006. However, in the first half of 2008, due to concerns over the slowdown of the domestic economy, output went up only 47.6% to 138.388 units compared to the same period of a year earlier. Although demand grew in the first half of 2008 before the launch of State III emission regulations in July 2008, the growth rate was clearly milder than in 2007.
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October 14,
2008
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Chinese Automakers in Russia:
Imported Vehicle Sales versus Local Assembly
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Chinese automakers have been increasing sales in Russia which imposes a 25% customs duty on imports and a relatively low entry requirement on automakers who intend to commence local assembly. In 2007, Chinese vehicle sales reached 51 thousand units in Russia. The Russian market which is expanding at a 30% rate annually is a very attractive market for Chinese automakers who are plagued with overcapacity.
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China's Electronic Components Sector:
Top 100 Suppliers in 2007
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Thanks to the continued growth of the automotive industry and the ongoing conversion to electronics, existing electronic parts makers, who used to focus on industrial machinery, home appliance, and consumer equipment, are expanding their supply chain to automobile-related sectors. It is likely that Chinese electronic parts makers will expand supply for automobiles as Tier 2 and 3 suppliers in the future.
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October 6,
2008
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Daihatsu Motor Co., Ltd.:
Automaker Aiming to Increase Presence in China
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In June 2007, Daihatsu launched the Xenia, its low-cost strategic vehicle jointly developed with Toyota for emerging markets, in China. Until June 2008, the Xenia sold about 400 units per month on average, performing significantly below the initially expected monthly sales of 1 thousand units. In order to boost sales, Daihatsu aims to expand its sales network and bolster its price competitiveness by improving its local content ratio.
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China's Cash-Transport Vehicle Sector:
New Regulations Pushing Up Demand
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The production volume of cash-transport vehicles doubled in the past ten years in China from 2,153 units in 1997 to 4,243 units in 2006, according to China Association of Automobile Manufacturers. Bus chassis-based light cash-transport vehicles account for 90% of production. Banks are the largest client base of these products.
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September 29,
2008
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Guangqi Hino Motors Co., Ltd.:
New Sino-Japanese Venture to Enter Heavy-Duty Truck Market
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Guangqi Hino Motors Co., Ltd., a 50/50 joint venture between Japan's Hino Motors Ltd. and China's Guangzhou Automobile Group Co., Ltd. (GAG), was established in November 2007. Through the venture, GAG aims to strengthen its commercial vehicle business while Hino Motors intends to boost its activities in China.
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Volvo Car Corporation in China:
Automaker to Launch Its Flagship Luxury Model
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At the end of 2009, the Swedish automaker plans to commence production of its flagship luxury model, the S80, in China at the Chongqing production base of Chang'an Ford Mazda Automobile Co., Ltd. Currently Volvo only manufactures the S40 in China and out of safety and quality concerns, the localization of the model had been conservative up until Alexander Klose was named CEO of Volvo Cars China in March 2007.
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September 22,
2008
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China's Low-Price Passenger Car Market:
High Fuel Prices and New Regulations Escalate Competition
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China's factory shipment volume of passenger cars with a base price of 80 thousand CNY or less increased 8.2% year-on-year to over 1.17 million units in the first half of 2008. The total factory shipment of passenger cars went up 17.1% year-on-year to 3.61 million units during the same period. These figures reveal that annual production growth of low-price passenger cars was 9.0 points below segment average and market growth tends to gravitate toward high-end passenger cars.
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Dongfeng Motor Corporation's SUV Strategy:
Automaker Differentiates Potentially Rival Models
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The Honda CR-V and Nissan Qashqai, two urban SUV models which Dongfeng Motor Corporation (DFM) manufactures and sells through its joint ventures with Honda Motor Co., Ltd. and Nissan Motor Co., Ltd., sold a total of 50 thousand units in the first half of 2008. The two models accounted for 23% of total SUV sales in China during the same period.
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September 16,
2008
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China's New Technical Measures in the Automotive Industry:
Evolving from the Largest to the Strongest Automaker
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The rapid growth of China's automotive industry and the country's entry into the motorization era have brought about worsening environmental pollution and a mounting need to regulate China's insufficient traffic safety and energy standards. These issues have prompted the central government to introduce stricter regulations in the areas of air and noise pollution, occupant protection, safety technology, and fuel economy.
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Minth Group Limited:
Sales Revenues Exceed 1 Billion Yuan in 2007
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The Minth Group Limited, headquartered in Ningbo, Zhejiang Province, is a Taiwan-invested parts supplier incorporated in the Cayman Islands in 1997. Its principal products are automotive trims, decorative parts, and body structural parts. Thanks to the expansion of China's passenger car market, Minth Group has been posting an over 40% annual growth rate since 2004.
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September 8,
2008
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China's Automotive Glass Sector:
Booming Market Prompts Additional Investment
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China's expanding automobile production and vehicle fleet are boosting demand for automotive glass. According to China Building and Industrial Glass Association, the glass industry supplied an estimated 43 million sqm of glass to the OEM market and another 13.2 million sqm to the aftermarket. Since automakers are distributed across China, automotive glass makers are building new plants and improve capacity.
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Shanghai GM Dongyue Automotive Co., Ltd.:
Yantai Base to Become China's Largest Compact Car Manufacturer
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Shanghai GM Dongyue Automotive Co., Ltd., located in Yantai, Shandong Province, is a major Sino-American compact car maker, producing Chevrolet-brand vehicles. Shanghai GM aims to boost the annual production capacity of SGM Dongyue to 300 thousand units by 2010 and make the Yantai-based automaker China's largest compact car manufacturer in the medium term.
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September 1,
2008
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China's Foreign Trade of Automotive Products in the First Half of 2008:
Strong Yuan Hurting Exports to the United States
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In the first half of 2008, the export and import of automotive products equally increased 40% to 17.78 billion USD and 26.41 billion USD, respectively compared to the same period of 2007. In the first half of the year, the combined total of exports and imports was 44.2 billion USD, making it likely that year-round total would reach 90 billion USD.
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Sales Achievement Rate of Domestic-Made Passenger Cars in the First Half of 2008:
Sluggish Performance May Hamper Year-Round Goal
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In the first half of 2008, sales of domestic-made passenger cars increased 17.1% compared to the same period of 2007. However, the combined 2008 sales target of major automakers is 7.81 million units, indicating that the achievement rate for the first half of the year is only 46%. It is 2.0 points less compared to the same period of last year when it was 48%, signaling that it will be a difficult task to achieve automakers' year-round target.
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August 25,
2008
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China's Automotive Engineering Plastics Sector:
Automobile Lightweighting Improves Demand for New Materials
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As China's automobile production expands, demand for automotive engineering plastics increases as well. Demand is calculated to go up from over 600 thousand tons in 2007 to over 700 thousand tons in 2008. The increase in engineering plastics demand is attributed to the shift by automakers to plastic parts from cast iron parts. Plastic parts make vehicles lighter which improve fuel efficiency.
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China's Luxury Car Market:
German Automakers Dominate the Segment
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In 2007, China's luxury car market expanded 36.7% year-on-year to 301.6 thousand units thanks to the continued growth of the economy and the expansion of the wealthy class. Domestic-made luxury car sales increased 34.9% year-on-year to 208,890 units and imported luxury car sales went up 41.5% year-on-year to 93,075 units.
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August 18,
2008
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Domestic-Made Passenger Car Sales in the First Half of 2008:
High Fuel Prices Prompt Growing Compact Car Demand
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In the first half of 2008, sales of domestic-made passenger cars increased by 17.1% to over 3.6 million units compared to the same period of 2007. Although China was hit by several major natural disasters in the first half of the year, domestic demand and exports steadily expanded.
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China's Concrete Mixer and Bulk Cement Truck Sector:
Projects at Home and Abroad Boosting Demand
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China's concrete mixer and bulk cement truck production increased eightfold in the past six years from 2,140 units in 2000 to 17,008 units in 2006. Propelled by China's around 10% annual economic growth, major infrastructure projects in the transportation and energy sectors and urbanization are rapidly progressing. The increase in cement output has been pushing up demand for concrete mixer and bulk cement trucks.
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August 4,
2008
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Japanese Tier 2 Suppliers in China:
Companies Increase Sales to Chinese Clients
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The number of Japanese Tier 2 suppliers has been on the rise in China. According to FOURIN's survey, a total of 65 companies set up operations in China between January 2006 and June 2008. High tariffs on imported parts, over 10% on average, and fierce price competition among automakers, bring forth the important issue for Tier 1 suppliers and automakers to construct a local parts procurement system which includes Tier 2 suppliers as well.
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Zhengzhou Nissan Automobile Co., Ltd.:
Automaker Strengthens LCV Production
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The automaker was originally established as a light commercial vehicle maker in 1993 by five companies. In 2005, Dongfeng Motor Co., Ltd. acquired a 51% stake in the automaker becoming its largest shareholder. According to a company announcement on January 11, 2008, 2007 sales went up 33.2% year-on-year to 40,228 units. In 2008, the automaker aims to sells 47 thousand units at home and 13 thousand units abroad.
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July 28,
2008
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China New Car Assessment Program:
Automakers Compelled to Improve Safety
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As China's vehicle fleet expands, traffic accidents are becoming a severe problem in the country. The central government commenced full frontal collision regulations in 2001, and side as well as rear-end collision regulations in July 2006. According to the Chinese automotive industry's 11th Five Year Plan, the country intends to actively pursue the research of collision safety technology, in order to lower the number of traffic accident injuries and improve product safety.
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Shandong Gold Phoenix Group Corporation:
Supplier Strengthens Presence in Home Market
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Shandong Gold Phoenix Group Corporation, headquartered in Leling, Shandong Province, is China's largest privately-owned brake friction materials supplier. In 2006, the company manufactured nearly 80 thousand tons of brake friction materials, accounting for 52.7% of total output of the sector in China. Despite being China's largest friction materials maker, only 10% of its output goes to the domestic market and the rest is sold overseas.
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July 22,
2008
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Shaanxi Automobile Group Co., Ltd.:
Automaker Strengthens Custom-Built Vehicle Business
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Shaanxi Automobile Group Co., Ltd., headquartered in Xi'an, Shaanxi Province, is a major Chinese commercial vehicle maker. The group's output has been rapidly increasing in the past nine years, except for a drop in 2005 which was generated by the implementation of tight-money policy by the central government. The group's total production increased 57.4% year-on-year to 68,160 units in 2007 and went up 47.9% compared to the same period of a year earlier in the first third of 2008.
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China's Vehicle Loan Sector:
Rapid Increase of Foreign Presence
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China's vehicle loan market is the second largest consumer loan market after real estate in the country. Vehicle loans are expected to increase from ten-some percent in 2007 to 30% by 2010. By 2020, vehicle loan service is expected to become a 500 billion yuan market in China. In 2006 and 2007, loan rates increased eight times, negatively impacting vehicle loans in China where consumers tend to give priority to the repayment of real estate loans.
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July 14,
2008
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Hyundai-Kia Automotive Group in China:
Automaker Strengthens Local Development and Purchasing Activities
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One of the foremost priorities of the company is to establish a 1 million-unit sales system in China. This goal is indispensable for achieving the group's global sales target of 6 million units by 2010. After starting full-scale production in China in 2002, Hyundai-Kia had maintained two-digit annual growth until 2006, temporarily becoming the third largest passenger car maker in China following Volkswagen and General Motors.
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Renault S.A. in China:
French Automaker Entering China for Second Time
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Renault's business activities in China were hampered by the cancellation of production at its local joint venture, Sanjiang Renault Automotive Co., Ltd. in 2002. Since 2003, the company's moderate annual sales volume of several thousand units has been completely supplied from abroad. However, in 2008, there are some signs that the French automaker will relaunch local production.
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July 7,
2008
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China's Sport Utility Vehicle Market:
Market Keeps Expanding Despite Rising Fuel Prices
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China's SUV sales are estimated to have increased 51% to over 541 thousand units in 2007 compared to 2006. In the past five years the market expanded approximately tenfold. In the first four months of 2008, SUV factory shipment, which stands for sales volume in Chinese statistics, increased 42% to over 140 thousand units and domestic-made SUV sales are estimated to have increased 63% to over 205 thousand units.
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WABCO Vehicle Control Systems in China:
Supplier Increasing Sales to Local Commercial Vehicle Makers
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WABCO commenced exports to China in 1986 and set up its first production plant in the country in 1996. The company's business activities in the Asia-Pacific region, which includes China but excludes India, accounted for 9.4% of WABCO's global consolidated sales revenue in FY 2007. The sales revenue in China doubled in FY 2007 compared to the same period of a year earlier.
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June 30,
2008
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Fuji Heavy Industries Ltd.:
Automaker Achieves Steady Increase in Sales
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Since FHI suspended automobile production in China in 2004, it is the only Japanese automaker that does not have a production base in the country and so its sales completely depend on imports. As a result, FHI's annual sales volume has been below 10 thousand units in China and the country accounts for less than 1% of the automaker's global sales. However, as sales in Japan and the US decrease, even for FHI China is likely to gain importance.
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Foreign Companies' M&A in China:
China Rejects Excessive Foreign Industry Control
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FOURIN has surveyed recent M&As, including stock acquisitions below 50%, by foreign companies in China's automotive industry. According to the survey, since December 2005, 19 transactions were reported, of which 15 were successful, three failed, and one is still under consideration. Three transactions were not approved by the central government because it felt that these deals would give too much control to foreign companies over a certain sector.
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June 23,
2008
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China's Special Purpose Vehicle Sector:
Twenty-Two New Production Bases in Two Years
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In the past seven years, China's special purpose vehicle production nearly doubled from 291 thousand units in 1999 to 550 thousand units in 2006. China's 10% annual economic growth is boosting infrastructure building and urbanization as well as aiding the development of the logistics and service industries of the country, all of which in turn is increasing demand for special purpose vehicles.
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Harbin Hafei Automobile Industry Group Co., Ltd.:
Automaker's Survival Depends on Cooperation with Dongfeng
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Despite an overall of growth of the Chinese automotive market, Hafei Automobile has been experiencing some difficulties. In 2007, group sales fell 9.8% year-on-year to 209,078 units. Although the group has set its 2010 sales target at 700 thousand units, in March 2008 the automaker already downwardly revised its goal for 2008 from 270 thousand units to 216 thousand units.
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June 16,
2008
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China's Machine Tool Sector:
Diversifying Market Pushes Up Demand
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As the production of vehicles and parts expands in China, it is estimated that annual demand for press dies, molding machines, resin injection moldings, and related jigs increases by tens of billions of yuan. Growing competition in new-car engineering requires the development cycle of machine tools to be reduced. In addition, China intends to improve the sealing performance of its vehicles and increase the use of lightweight and new composite materials.
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Sino-Japanese Automotive Parts Trade:
Japan's Export Surplus Remains above 200 Billion Yen
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Sino-Japanese trade keeps on growing thanks to China's galloping economy. According to the Japan Trade Association, automotive parts trade between Japan and China increased from 483.82 billion yen in 2003 to a record high of 1.18 trillion yen in 2007. Increase in exports to China is attributed to higher output by Japanese automakers in the country, whereas growing imports to Japan is believed to be the result of increasing parts purchasing in China by Japanese OEMs.
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June 9,
2008
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China's Wire Harness Sector:
Global Suppliers Dominate Local Market
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China's automotive wire harness production volume increased nearly 50% year-on-year to 19.06 million units and production value reached 16 billion yuan in 2006. The data are based on the performance of 23 major wire harness manufacturers surveyed by the China Automotive Technology and Research Center. The 12 foreign-affiliated parts makers which were included in the survey accounted for nearly 71% of total production in 2006.
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Supplier Trends since 2007 in China:
Increasing Sino-Western Supplier Deals
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FOURIN has surveyed the recent parts purchasing trends in China broken down by the origin of suppliers and their clients. The study reveals that foreign suppliers have increased sales to Chinese automakers, while Chinese suppliers also boosted sales to foreign automakers, excluding that of Japan. The increase in purchasing by Chinese automakers from foreign suppliers is attributed to the efforts of Chery, Geely, and other local automakers to bolster exports and strengthen independent development capability.
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June 2,
2008
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China's Used Vehicle Market:
Passenger Cars Account for Over Half the Transactions
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In 2007, China's used car sales volume, which is measured by the number of deals handled by the Trade Center, a government entity that approves business transactions, increased 43% year-on-year to 2.526 million units, according to the China Federation of Logistics & Purchasing. However, apart from deals authorized by the Trade Center, the industry estimates that as a result of sales by unauthorized dealerships and private transactions, the actual used car sales volume reached 3.5 million units in 2007.
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Brose Fahrzeugteile GmbH & Co. KG, Coburg:
Supplier Expands Presence through Business Purchase
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The company expanded into China in 1996, when it established Zhangjiagang Brose Automotive Parts Co., Ltd., a joint venture with a local entity, Xingang Electronics Co., Ltd. As part of its plan to expand clientele while bolster ties with its existing customers, Brose is aiming to increase sales revenue in Asia, including China, from 100 million euros in 2004 to 400 million euros in 2010.
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May 26,
2008
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Great Sichuan Earthquake:
Automotive Industry Shows Quick Recovery
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On May 12, 2008, at 2.28 pm, a major earthquake measuring 7.8 on the Richter scale struck Wenchuan County in Sichuan Province. The vice-president of the Ministry of Information Industry, Xi Guohua, has said that the direct economic damage is estimated at 67 billion yuan and the earthquake is forecast to push down China's year-round GDP growth by 0.27 points.
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Shanghai Volkswagen Automotive Co., Ltd.:
Automaker Boosting Sales through Double-Brand Strategy
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After sluggish sales in 2004 and 2005, Shanghai Volkswagen's sales performance recovered in 2006. Thanks to the launch of the Volkswagen Polo's Jingqing and Jingqu variants in June 2006, which became hit models in 2007, and the Skoda Octavia in June 2007, factory shipment in 2007 went up 30.7% year-on-year to 456 thousand units. However, the automaker's sales fell short of the 2007 sales of FAW-Volkswagen Automotive Co., Ltd., which were 461 thousand units.
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May 19,
2008
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China's National Energy Strategy:
Economic Growth Enhances Dependence on Imported Oil
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China's intense economic growth is expected to boost energy consumption as much as 2.7 times from 1.74 billion tons of oil equivalent in 2005 to 4.7 billion tons in 2030. On the other hand, while China has rich coal deposits, the country's dependence on oil is forecast to increase from the current 50-some percent to over 70% by 2030. Growing consumption is especially remarkable by road transport, in particular by China's booming motor vehicle fleet.
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China's Engine Cylinder Block Sector:
Industry Aiming to Lightweight Product Materials
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China's automotive engine cylinder block production reached 2.59 million units in 2006, according to the China Automotive Technology & Research Center's total based on the output of mainly independent suppliers. If the in-house production of automakers is included as well, total production is estimated to be over 30 million units, indicating that China has become a prominent manufacturing base of cylinder blocks.
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May 12,
2008
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Global Platform Strategy in China:
Booming Production Brings Gradual Change
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As China's automotive market expands, the Chinese production share of major foreign models tend to improve. In 2007, Chinese production share of the following foreign models exceeded 30%: Volkswagen Jetta/Bora, Audi A6, Buick LaCrosse, Toyota Reiz and Crown, and Hyundai Elantra. Among these models, the local production share of the Volkswagen Jetta/Bora, Buick LaCrosse, and Toyota Reiz surpassed the production share of their respective home countries.
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PSA Peugeot Citroen S.A. in China:
Joint Venture Talks with Dongfeng and Hafei
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Although PSA attempted to position China, followed by South America and Russia, as its growth engine in the company's CAP 2010 program, the automaker's sales volume in China increased only 2.9% year-on-year to 207 thousand units in 2007, performing significantly below the 24.4% growth rate of China's automotive market. PSA's sales in China were impacted by the fact that the only new model launched in the country was the Picasso MPV.
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April 28,
2008
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Overseas Acquisitions by Chinese Suppliers:
Parts Makers Focus on the US Market
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Since the beginning of this decade, Chinese automotive parts suppliers have been actively acquiring overseas suppliers. Wanxiang Group Corporation started the trend in April 2000 by buying out Zeller Corporation, the largest supplier of universal joints in the United States. Although Chinese suppliers have already gained capital power thanks to the expansion of the late-blooming domestic automotive industry, cutthroat global competition does not allow time for them to formulate a powerful market strategy.
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Bus World Asia 2008:
Medium and Large Buses Undergoing Rapid Diversification
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China's medium and large bus production has quadrupled in the past ten years reaching 119,735 units in 2007. The growth is attributed to both increasing domestic as well as overseas demand. In the coming years, continuously expanding demand is expected for long-distance transport buses to link hundreds of small towns and for commuter buses to connect cities with their suburbs. Annual demand is forecast to increase from 150 thousand units to 200 thousand units.
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April 21,
2008
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China's Motorcycle Industry in 2007:
Domestic Demand to Become Driving Motor of Sales
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In 2007, China's motorcycle production went up 16% year-on-year to 25.45 million units. The growth is attributed to the increasing penetration into the rural domestic market and overseas markets of developing countries. China's domestic motorcycle demand rose 21.6% to 16.02 million units in 2007 compared to the year before. Exports increased 10.1% year-on-year to 9.45 million units.
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China's Radiator Sector:
Industry Shifts from Copper to Aluminum Products
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In the past eight years, sales in China's radiator industry went up approximately 4 times from 2.33 million units in 1998 to 9.07 million units in 2006. The increase is attributed to growing demand from the domestic automotive industry and from foreign aftermarket. Although Chinese radiator suppliers have narrowed the technological gap between themselves and their global competitors, currently the number of Chinese suppliers is too high while their production capacity is low.
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April 14,
2008
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Automotive Industry-Related Regulations in 2007:
China Puts Greater Emphasis on the Environment
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In China, the automotive industry-related regulations which were implemented in 2007 mostly focused on environment protection. The most discussed regulation was the Rules on the Management of Production Permits for New-Energy Vehicles. It aims to introduce new foreign technology in China by establishing R&D centers and launching core technology in the country.
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AB Volvo in China:
Commercial Vehicle Maker Putting Greater Emphasis on China
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By converting Nissan Diesel Motor Co., Ltd. into its subsidiary, AB Volvo was able to indirectly strengthen ties with Dongfeng Motor Corporation (DFM), which claimed China's second largest truck market share in 2007. As of February 2008, Volvo and DFM entered the final stage of negotiations to set up a 50/50 joint venture to manufacture medium and heavy trucks.
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April 7,
2008
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Suppliers of Locally-Assembled Foreign Luxury Cars:
Automakers Boosting Local Content Above 40%
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The local content ratio of locally-assembled foreign luxury cars in China is lower than that of their mass-produced counterparts. Due to low production volume, the share of locally-purchased parts for any foreign luxury car has been less than 40%. However, the Measures for the Administration of Import of Automobile Components and Parts Featuring Complete Vehicles, scheduled to be implemented in July 2008, forces foreign luxury car makers to boost local content ratio above 40% of their models produced in China.
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Xiamen King Long Motor Group Co., Ltd.:
Bus Maker Entering RV and Limousine Sectors
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Xiamen King Long Motor Group Co., Ltd., headquartered in Xiamen, Fujian Province, is a major Chinese bus manufacturer. As of March 2008, the group had six production bases of complete and customized vehicles in southeast China. According to King Long Motor Group, the group's 2007 sales volume increased 31.4% year-on-year to 53,750 units. The group's export volume went up 361.4% year-on-year to 15,757 units in 2007.
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March 31,
2008
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Magna International Inc.:
Parts Maker Offers Support to Chinese Automakers
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The company entered China in February 1996 by setting up a 50/50 joint venture with Shanghai J.Y. (Group) Company in order to manufacture automotive seat frames. By the end of 2007, Magna had established 15 production plants and four R&D centers in China, employing about 4 thousand people. In addition to parts manufacturing, Magna is also involved in vehicle development in the country. The company will add electronics production to its local activities starting in 2008.
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China's Automotive Environmental Policy:
An Interview with Mr. Chen Guangzu
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In December 2007, FOURIN interviewed Chen Guangzu, a member of the China Automotive Industry Consultative Committee. The focus of the interview was the environmental policy of the Chinese automotive industry. Mr. Chen said that in December 2007, at the Conference of the Parties under the United Nations Framework Convention on Climate Change, China argued that excessive burden is put on developing countries, which include China.
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March 24,
2008
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China's Automotive Electronics Sector:
China Lacks Competitive Chassis and Engine Control Technologies
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In the past six years, between 2001 and 2007, sales of China's automotive electronics increased 6.4 times. In 2007, sales grew 33.4% year-on-year to 115.7 billion yuan, according to CCID Consulting Co., Ltd., the think tank of China Center for Information Industry Development. This was the first time that sales exceeded 100 billion yuan in the automotive electronics sector. CCID Consulting forecasts that market volume will double by 2011 reaching 240 billion yuan.
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China's Foreign Trade of Automotive Products in 2007:
Trade Surplus Reaches 15.15 Billion US Dollars
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China's foreign trade of automotive products grew 37.1% from a year earlier to 71.43 billion US dollars in 2007. Despite the strong yuan and anti-dumping investigations on several automotive products in a number of countries, the export of automotive products was rapidly growing in 2007. Export surplus nearly doubled from a year earlier, reaching 15.15 billion yuan.
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March 17,
2008
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Anhui Zhongding (Group) Co., Ltd.:
Business Integration Revitalizes Ailing Company
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Anhui Zhongding (Group) Co., Ltd., headquartered in Ningguo, Anhui Province, is a privately-owned Chinese enterprise. The company manufactures oil seals for hydraulic systems, automotive rubber parts, and mixed rubber. According to China Automotive Technology & Research Center, in 2006, Zhongding's sales revenue of automotive seals was 1.42 billion yuan.
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SAIC-GM-Wuling Automobile Co., Ltd.:
GM's Response to Tata's Nano
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The joint venture is a strategic production base of SAIC Motor, manufacturing mini vehicles (utility vehicles, mini trucks, and the Cherolet Spark basic car) which account for one-third of the total production volume of the Chinese automaker. Since its establishment in 2002, SAIC-GM-Wuling has achieved a 30% annual growth on average. In 2007, production volume grew 15.8% year-on-year to 556,068 units.
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March 10,
2008
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Denway Motors Ltd.:
Listed Subsidiary Prepares for Parent's IPO
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Denway Motors Ltd., located in Hong Kong SAR, China, is a Hong Kong-listed automaker 37.91%-owned by Guangzhou Automobile Group Co., Ltd. The company has a 50% stake in Guangzhou Honda Automobile Co., Ltd. and mainly focuses on the manufacture and sales of vehicles, related parts, and car audio equipment. Denway conducts operations in China, Hong Kong, and Australia.
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2008 Sales Target of Domestic-Made Passenger Cars:
Chinese Automakers Are Taking the Lead
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In 2006, the sales of domestic-made passenger cars in China increased 22% year-on-year to 6.3 million units, according to China Association of Automobile Manufacturers. In 2008, China's 60 automakers are planning to boost sales to a total of 7.81 million units which translates into an annual growth of 24%. Chinese and Japanese automakers expect sales to increase by 26% to 2.59 million units and 30% to 1.99 million units, respectively.
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March 3,
2008
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Chery Automobile Co., Ltd.:
Automaker Diversifies Lineup and Partners
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Chery Automobile Co., Ltd. commenced operations in 1999. In the following eight years, Chery underwent a tremendous growth and its annual output in 2007 was nearly 390 thousand units. The automaker¡Çs annual production volume is still small on a global scale, but in China it makes Chery the fourth largest passenger car maker after FAW-Volkswagen Automotive Co., Ltd., Shanghai Volkswagen Automotive Co., Ltd., and Shanghai General Motors Co., Ltd.
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General Motors Corporation:
Automaker Putting Greater Emphasis on Eco-Cars
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According to General Motors, in 2007, sales in China increased 18.5% to 1.032 million units, becoming the first foreign automaker to sell more than 1 million automobiles in the country. In order to strengthen its presence and maintain its No.1 market share in China, the US automaker has been pursuing a multi-brand strategy, boosting local content, and bolstering its local supply system and development capabilities.
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February 25,
2008
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China's Small Bus Market:
Cargo Transport and Taxi Bus Demand Improve Sales
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In 2007, the factory shipment of small buses increased 22% year-on-year to 235 thousand units. Demand is growing for small buses to be used for low-volume urban cargo transport in Chinese cities and as taxi buses in emerging countries. According to the General Administration of Customs, small bus exports have increased 35% from 14,168 units in 2006 to 19,146 units in 2007.
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BMW AG in China:
Automaker Aiming to Capture Top High-End Market Share
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According to BMW, in 2007, sales in China increased 41.9% year-on-year to 52 thousand units, exceeding the 50 thousand-unit level for the first time. The automaker expects sales volume in China to exceed that in Japan and become BMW's largest market in Asia. In the long term, the automaker expects to sell 100 thousand units annually in China and hopes to become the country's top player in the locally-built high-end automobile market.
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February 18,
2008
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Geely Automobile Holdings, Ltd.:
Automaker Shifting Strategy to Revive Sales
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Geely Automobile Holdings, Ltd., headquartered in Hangzhou, Zhejiang Province, is China's first privately-owned automaker. Currently, the company is trying to shed its image as a low value-added automaker by reforming its business strategy. Geely aims to shift from basic cars, retailed for 50 thousand yuan or less, to compact cars in the 50 thousand to 100 thousand-yuan price range.
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Shijiazhuang Kincon Internal Combustion Engine Parts Group Co., Ltd.:
Stricter Emission Measures Call for New Products
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Shijiazhuang Kincon Internal Combustion Engine Parts Group Co., Ltd., located in Shijiazhuang, Hebei Province, is the largest producer of internal combustion engine parts in China. As China issues new emission and fuel consumption regulations, the engine industry actively churns out new engines for commercial vehicles that meet stricter measures. Since Kincon has responded late to the new trend its market share has halved between 1999 and 2006.
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February 12,
2008
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China's Low-Cost Passenger Car Segment:
Segment Share Dropped 50% in the Past Decade
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The factory shipment of low-price passenger cars with a base retail price of below 80 thousand yuan has increased from 330 thousand units in 1998 to 1 million units in 2004 and to 1.74 million units in 2007. Also, the factory shipment of utility vehicles, which have passenger car functions, but are mostly used for commercial purposes, has gone up from 230 thousand units in 1998 to 990 thousand units in 2007.
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Visteon Corporation in China:
Making China an Export Base of Electronics
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The company has been boosting business in the Asia Pacific region which accounted for 33% of global sales in 2006. The sales share of the region is expected to reach 38% and 44% in 2008 and 2009, respectively, complementing the company's dropping revenues in the United States. Apart from India, China has an important position in Visteon's Asian strategy.
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February 4,
2008
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China's Expressway Network:
National Events May Slow Down Regional Development
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Since the second half of the 1990s, China has been promoting road infrastructure projects, especially expressway constructions, which have been giving an additional boost to the country's growing automotive industry. The Eleventh 5-Year Plan of Roadway and Waterway Traffic, announced in September 2006, outlines the construction of 14 national expressways, which is expected to provide further support to China's automotive market.
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China's Large Commercial Vehicle Diesel Engine Sector:
Engine Makers Preparing for State IV Emission Regulations
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Since 2004, due to loading regulations and improving roadway infrastructure, the market of large commercial vehicles has been undergoing a rapid change in China. In order to boost transport capacity, demand for high-speed and high-loading-capacity vehicles has been growing, which in turn boosts demand for next-generation engines. Furthermore, in January 2007, State III emission regulations were introduced, forcing engine makers to develop energy-efficient and low-pollution technologies.
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January 28,
2008
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Zhejiang Ruili Group Co., Ltd.:
Bolstering Production to Meet OEM Demand at Home and Abroad
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The Zhejiang Ruili Group Co., Ltd. is the largest air brake valve manufacturer in China. In anticipation of greater demand for air brakes than for hydraulic brakes, the company invested 5 million yuan in air brake valve production in 2000. The company has been involved in OEM and aftermarket supply and exploring overseas markets through its trading offices in Dubai, Australia, and the US. In 2006, the company's sales value increased 40% year-on-year to 1 billion yuan.
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North American International Auto Show 2008:
Growing Presence of Chinese Automakers
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The 2008 North America International Auto Show opened on January 13 at the Cobo Center in Detroit, USA. Four automakers and a design house from China exhibited at the event showcasing a total of 20 vehicles. The Chinese exhibitors' main aim was to do away with the low-price/low-quality image of Chinese automobiles. Geely Holdings Group, Ltd. and BYD Auto Co., Ltd. unveiled their new technology for the first time at the event, in an effort to attract the North American market.
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January 21,
2008
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SAIC-NAC Merger:
A Win-Win Deal to Expand Own-Brand Projects
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Shanghai Automotive Industry Corporation (Group) announced in December 2007 that its listed subsidiary, SAIC Motor Corporation, Limited, purchased Nanjing Automobile (Group) Corporation and the deal would be completed by June 2008. Thanks to the acquisition, SAIC will become a full-line automaker, similarly to China's largest vehicle manufacturer, China FAW Group Corporation.
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DENSO Corporation in China:
Boosting Investment to Double Sales by 2010
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DENSO established its first production base in China in 1994 to support Toyota Motor Corporation's expansion plan in the country. The Japanese parts maker set up additional plants in China in the second half of the 1990s, followed by an expansion rush since 2002. DENSO aims to double its 2006 sales value, increasing it to 11.8 billion yuan by 2010.
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January 15,
2008
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Chongqing Lifan Industry (Group) Co., Ltd.:
Simultaneous Expansion at Home and Abroad
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Chongqing Lifan Industry (Group) Co., Ltd. is one of the biggest privately-owned enterprises in China.The Group entered the automotive industry in August 2003 by purchasing Chongqing Special Purpose Use Vehicle Manufacturing Co., Ltd. Based on the new acquisition, the Group established Chongqing Lifan Automobile Co., Ltd. In January 2006, the Group simultaneously launched the Lifan 520, medium/large passenger car at home and in six other countries.
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Industrial and Market Forecast for 2008:
Significant Drop in Positive Growth
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In December 2007, FOURIN conducted a series of interviews about the business environment of China in 2008. According to four of our interviewees, an official from a government think tank and three other officials from the planning departments of China FAW Group Corp., SAIC Motor Corp., Ltd., and Beiqi Foton Motor Co., Ltd., the automotive market will expand in 2008 thanks to continued economic growth, but the growth rate will drop due to the stricter tight-money policy of the central government.
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January 7,
2008
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China's Rare Metal Sector:
Domestic Application Hampered by Lack of Technology
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China's economic growth is boosting demand for rare metals. Although, the country is known to have the largest rare metal deposits in the world, China is bolstering strategic stockpiling of scarce resources and controlling their export. Since 2004, the country has reduced or eliminated export tax refund on rare metals. Moreover, it introduced export tariffs on rare metals in two stages, in November 2006 and June 2007.
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Volkswagen Group in China:
Automaker Bolsters Localization of Key Components
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The Volkswagen Group's restructuring strategy of its China business, called the Olympic Program, was launched in November 2005. The program calls for the cancellation of additional capacity increase. In addition, it outlines the reinforcement of brand strategy, the upgrade of locally-built models, cost reduction, maintaining operating ratio, and revamping sales network.
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December 25,
2007
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China's Vehicle Production Capacity:
China to Become No.1 in 2010
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China's vehicle production capacity has tripled in the past ten years, reaching 12.69 million units in 2007. As both foreign and domestic automakers are aiming to boost their presence in China, vehicle production capacity is expected to surpass that of the United States in 2010. It is forecast to reach 17.16 million units in 2010 and 18.49 million units in 2013.
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Wuhan Plastics Industrial Group Co., Ltd.:
Diversification of Client Base Pressures Parts Maker
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Wuhan Plastics Industrial Group Co., Ltd., headquartered in Wuhan, Hubei Province, is a major automotive plastic parts maker. The company mainly supplies bumpers, fuel tanks, and other automotive plastic parts to Dongfeng Peugeot Citroen Automobile Co., Ltd. Wuhan Plastics was able to reduce management expenses by calling in non-performing loans from its parent company's subsidiaries. As a result, Wuhan Plastics turned operating profit loss into profit in 2006.
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December 17,
2007
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BASF AG in China:
Boosting Presence in the Automotive Industry
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In 2006, the company's sales in Greater China increased 23.1% year-on-year to 3.6 billion euros, accounting for 48.3% (up 2.0 points) and 6.8% (up 0.2 points) of its Asian and global sales, respectively. According to the company's so-called BASF 2015 strategy, announced in April 2004, BASF intends to focus on the Asia-Pacific region, making China its third largest market after Germany and the United States.
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China's Commuter Bus Market:
New Ways to Ease Pollution and Traffic Congestion
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Chinese cities have been facing mounting traffic congestion and worsening air pollution due to the increase in China's vehicle fleet. In September 2005, the Administrative Office of the State Council, together with the Ministry of Construction and the National Reform and Development Commission, released the Advisory on the Priority Development of Urban Public Transportation. The advisory stresses the importance of subway and local train systems over private vehicles in cities and promotes commuter bus service.
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December 10,
2007
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China's Bearing Sector:
Shifting from Joint Ventures to Wholly-Owned Subsidiaries
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China's automotive bearing business has been seeing a steady growth thanks to the expansion of vehicle, especially passenger vehicle, production. As automakers are switching to next-generation key components, like Euro III and IV-level engines, and automatic transmissions, bearings must be low-noise and require high-speed and high-precision processing.
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China's Vehicle Fleet in 2006:
Private Vehicle Share Reaches 63%
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In 2006, China's vehicle fleet increased 17% year-on-year to 36.97 million units, according to the China Association of Automobile Manufacturers. The number of privately-owned vehicles went up 26% year-on-year to 23.33 million units, accounting for 63% of China's vehicle fleet. Private vehicle ownership has been expanding in China due to an increase in vehicle purchase by the urban wealthy class and by a portion of the emerging middle class
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December 3,
2007
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China National Heavy Duty Truck Group Corp.:
Going Public to Raise Funds for Future Growth
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The commercial vehicle maker has boosted production eightfold in the past five years to 60 thousand units. The company's initial 2007 production target was 80 thousand units, but it was revised to 100 thousand units in September when production reached 78 thousand units. CNHTC aims to manufacture 125 thousand units annually by 2010 and become one of the global top 500 companies in the same year.
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Daimler AG in China:
Without Government OK Foton Deal Is to Be Canceled
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In line with its China strategy, the company is boosting production and product lineup in the country. In addition to the Mercedes-Benz E class, the German automaker will commence local assembly of the C class at Beijing-Benz DaimlerChrysler Automotive Co., Ltd. (BBDC) in December 2007. In November 2006, DaimlerChrysler AG announced to establish a joint venture with Beiqi Foton Motor Co., Ltd. to locally assemble medium and large trucks.
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November 26,
2007
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Magneti Marelli Holding S.p.A. in China:
Strengthening Sales Base through Cooperation
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Magneti Marelli Holding S.p.A. established its first plant in China in 1996. As of September 2007, it operated four wholly-owned production plants and a technical center in China. Magneti Marelli has been locally developing and manufacturing powertrains, automotive lamps, electronic systems, exhaust systems and other products. Its success in China is attributed to swift establishment of local production facilities, the localization of advanced technology, and cooperation with local and Sino-foreign automakers.
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China's Automotive Steel Sector:
New Challenges, Fuel Efficiency and Collision Safety
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China's automotive steel material consumption increased 28% year-on-year and reached 11.83 million tons in 2006, according to the China Automotive Technology and Research Center. Increased demand is attributed to anticipated growth in automotive steel consumption in the mid and long term. On the other hand, due to increased emphasis on fuel efficiency and collision safety, demand for lighter and high-strength automotive steel sheets is on the rise.
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November 19,
2007
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BYD Auto Co., Ltd.:
Aiming to Become Global No.1 by 2025
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BYD Auto Co., Ltd. is a privately-owned Chinese automaker established in 2003 by China's largest lithium-ion battery manufacturer, BYD Co., Ltd. The battery maker purchased a 77% stake in Xi'an Qingchuan Automobile Co., Ltd. for 254 million HK dollars. Subsequently, the automaker's name was changed to BYD Auto Co., Ltd. Later, BYD Co., Ltd. has raised its share to 99% in the automaker. Initially, BYD Auto manufactured the Alto-based Flyer, a model which was originally developed under the automaker's previous ownership.
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2010 Automotive Industry Policy by Administrative Unit:
Local Governments Focus on Local Demand
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Out of China's 31 administrative units, nine have declared the automotive industry an important growth sector and have laid out a detailed program in its Eleventh 5-Year Plan. Some of these administrative units are as big, in terms of population and GDP, as many countries around the world. Consequently, regional industry strategies not only create new jobs and growth in tax revenue, but also boost vehicle demand and strengthen the local industry.
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November 12,
2007
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Nissan Motor Company, Ltd.:
Common Platform May Slow Sales Growth
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The company's China operations are based on its local joint venture, Dongfeng Motor Co., Ltd. (DFL), with Dongfeng Motor Corporation. Dongfeng Nissan Passenger Vehicle Company, a branch of DFL, manufactures passenger vehicles, whereas, Zhengzhou Nissan Automobile Co., Ltd., a subsidiary of DFL, produces SUVs, pickups, and other light commercial vehicles. Although, the year-round passenger vehicle sales target of DFL has been set at 300 thousand units, until August 2007 the company sold only 178,650 units, making it unlikely that the initial goal can be achieved.
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China's Special Purpose Vehicle Sector:
Entry of High Value-Added Products
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After a drop in special purpose vehicle production in 2005 due to strengthened loading regulations and the government's strict macroeconomic policies, production volume in 2006 increased 25.8% year-on-year to nearly 551 thousand units. The renewed increase in production is attributed to the robust growth of China's economy (10.7% in 2006), which generated demand in the logistics industry, and the launch of various types of vehicles by new entrants in the sector.
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November 5,
2007
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China's Utility Vehicle Market:
Focus Shifting to Cargo Transportation
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China's utility vehicle production volume reached 930,815 units in 2006, amounting to 17.8% of the passenger vehicle market. In the first eight months of 2007, production volume increased 6.4% to 629,742 units compared to the same period of a year earlier. While utility vehicle sales have been growing due to the development of rural China and the rapid launch of new models, demand for better safety and new environmental protection measures call for the improvement of existing utility vehicle technology.
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Overseas Expansion of the Chinese Automotive Industry:
Foreign Sales Hampered by Poor Infrastructure
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Chinese vehicle exports and overseas assembly operations have been undergoing a dramatic change in the last few years. Thanks to domestic tax refund and other preferential measures, complete vehicle exports from China have expanded from 16,537 units in 2002 to 347 thousand units in 2006. The trend continues in 2007 as well. In the first half of the year, exports increased 79% to 254 thousand units compared to the same period of a year earlier. Year-round exports are expected to reach 600 thousand units.
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October 29,
2007
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Chang'an Ford Mazda Automobile Co., Ltd.:
Sales to Exceed 150 Thousand Units in 2007
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Chang'an Ford Automobile Co., Ltd. was established as a 50/50 joint venture between Chongqing Chang'an Automobile Co., Ltd. and Ford Motor Co. in April 2001. Since its first model, the Fiesta, was launched in January 2003, the company has been steadily expanding production and sales. Mazda Motor Corp. acquired a 15% stake in Chang'an Ford Automobile Co., Ltd. in March 2006. Before the deal, the Japanese automaker had been only present in China through licensed production contracts.
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GSK Group:
Rapid Expansion in China's Interior Parts Sector
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The Group entered mainland China in the 1990s, becoming a leading interior parts supplier in the country. As of August 2007, the Group operated 29 plants, an R&D center, and a commercial center in China. The company aims to position China as the business core of its global operations. The Group has been expanding the production capacity of its current plants and building new production bases in China in order to increase its market presence in the country.
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October 22,
2007
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China's Tire Sector:
Radial Tire Share Rises to 41% in 2006
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China's tire production surpassed 430 million units in 2006, becoming the second largest tire maker after the US. The country's growing vehicle production, expanding vehicle fleet, and increasing exports are attributed to the growth of the tire sector. As driveability and safety receive more attention in China, tire makers are shifting to radial tires from bias ones.
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China's Motorcycle Engine Sector:
Average Engine Displacement Reaches 120cc in 2006
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According to the China Association of Automobile Manufacturers, motorcycle engine production in China increased 2.65 times in the past six years from 8.31 million units in 2000 to 22.04 million units in 2006. Four-stroke engine production volume went up 3.26 times from 6.36 million units in 2000 to 20.68 million units in 2006, increasing its share from 76% to 94%. On the other hand, 2-stroke engine production fell during the same period from 1.96 million units to 1.36 million units and its market share dropped from 24% to 6%.
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October 15,
2007
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Fuyao Glass Industry Group Co., Ltd.:
Global Market Share Aimed to Reach 8% by 2010
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Fuyao Glass Industry Group Co. Ltd. is a leading Chinese automobile and industrial glass maker. In the first half of 2007, the Group increased automobile glass sales value 22.6% to 1,654,641,913 yuan compared to the same period of 2006. In order to keep pace with its expanding domestic and overseas sales, the Group will boost annual production capacity of its existing plants by 2 million sets of automobile glass.
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Anhui Jianghuai Automobile Group Co., Ltd.:
Seven Passenger Car Models to Enter the Market by 2010
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Anhui Jianghuai Automobile Group Co., Ltd., located in Hefei, Anhui Province, is a major Chinese commercial vehicle and MPV maker. In January 2007, the Group acquired passenger car production permit from the National Development and Reform Commission which enabled the Group to formally start its passenger car business. In April 2007, the automaker exhibited its self-developed passenger car, the Binyue. The model reached the market in September 2007.
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October 9,
2007
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China's Emission Regulation Policy:
Inadequate Infrastructure Hampers Government Efforts
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On June 29th 2007, the State Environmental Protection Administration formally announced the implementation of State III emission standards on light vehicles, starting from July 1st 2007. According to the new measure, sale and registration of State II-level vehicles are no longer allowed. On the other hand, the National Development and Reform Commission has said that the acquisition of new refinery technology and facility reform would take years and the nationwide supply of State III-level fuel could only be achieved after December 31st 2009.
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China's Luxury Vehicle Market
Expanding Wealthy Class Induces Market Segmentation
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China's booming economy has created demand not only for mass-produced automobiles, but for luxury vehicles as well. In 2006, combined sales volume of locally-assembled and import luxury vehicles reached 260 thousand units. While until recently German automobiles had dominated China's luxury vehicle market, China's expanding wealthy class with its diversifying sense of values and lifestyles lured Japanese and other luxury vehicles to the country as well.
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October 1,
2007
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China's Pickup Truck Market:
Economic Diesel Engines Increase Vehicle Sales
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It is estimated that China's pickup truck market grew 30.1% year-on-year to 164 thousand units in 2006, outperforming the country's 25.1% total vehicle sales growth. Favorable sales in 2006 are attributed to exterior design changes by a number of pickup makers, the introduction of economic diesel engines, and the entry into foreign markets. However, since there are only a few locally-made diesel engine vehicles in China which meet Euro III-level emission standards, it is unlikely that China's urban pickup market will suddenly expand.
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Sino-Japanese Automotive Parts Trade:
Production Localization Hurts Japanese Exports
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China's booming economy has been boosting trade relations between the country and its island neighbor, Japan. According to the Japan Trade Association, automotive parts trade between Japan and China increased 130.5 billion yen in 1998 to 997 billion yen in 2006. In the first half of 2007, Sino-Japanese automotive parts trade went up 18.9% to 556. 6 billion yen compared to the same period of 2006 and year-round trade value is expected to exceed 1 trillion yen.
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September 25,
2007
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Continental AG:
Supplier Strengthens Local R&D to Expand Business Presence
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The company commenced production in China in the 1990s, and by 2006 its sales revenues reached 230 million euros. Continental AG's three business divisions, ContiTech, Continental Automotive Systems (CAS), and Continental Tires, are all present in China. The country occupies a key position in Continental AG's Asian business and as a result, the company is actively restructuring its existing plants as well as setting up new ones.
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China's Piston Industry:
Rising Metal Prices Prompt Development of New Materials
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Along with the expansion of vehicle production, vehicle piston production is expected to increase from about 25 million units in 2006 to 40 million units in 2010. Especially, as the production volume of Euro III and higher grade economic, low-noise and low-pollution engines increases, demand for high-endurance (heat and friction) pistons is likely to go up. As a result, raw materials of pistons is expected to shift from steel and alloy to composite materials.
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September 18,
2007
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Zhejiang Asia-Pacific Machine & Electric Co., Ltd.:
Business Expansion through Foreign Partners
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Zhejiang Asia-Pacific Machine & Electric Co., Ltd., based in Hangzhou, Zhejiang Province, is China's largest brake system manufacturer. In 2005, the company increased disk brake and drum brake production by 76.6% and 34.7% year-on-year to 1.884 million units and 2.387 million units, respectively, maintaining its top position in the disk brake sector and No.2 place in the drum brake segment. Apart from increasing the supply of existing anti-lock braking systems (ABS), Zhejiang Asia-Pacific has been constructing a production system of independently developed ABSs which meet stricter safety regulations.
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Foreign Trade of China's Auto Industry in the First Half of 2007:
Expanding Wealthy Class Boosts Demand for Luxury Imports
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In the first six months of 2007, China's foreign trade (import and export) of vehicles and related products increased 29.8% to 31.43 billion US dollars from the same period of a year earlier. Trade surplus grew 95.5% to 6.15 billion US dollars. However, due to the strong yuan, growing trade frictions with trading partners, recently implemented voluntary restraint on vehicle and related parts export by the central government, and Russia's decision to strictly scrutinize Chinese vehicle assembly projects in Russia, Chinese automakers may have to revise their current export strategy.
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September 10,
2007
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Suzuki Motor Corporation:
Integrating Sales Networks to Increase Sales
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The company began the construction of its first automobile plant in China in May 1993. As of July 2007, Suzuki had two local production bases, one in Chongqing Municipality and another one in Jiangxi Province, and a headquarters in Beijing Municipality. In 2006, the company sold 150 thousand automobiles in China, amounting to 6.8% of its global sales. The Chongqing base boosted sales by 25% year-on-year to about 120 thousand units in 2006. Suzuki aims to increase the combined sales of its two production bases to 200 thousand units in 2007 and 500 thousand units in 2010.
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Activities of Listed Automotive Industry-Related Companies:
Stock Market Boom Drives IPO Rush
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As China's automotive industry expands more and more Chinese automakers go public in order to finance their business expansion. The market capitalization of listed Chinese companies increased from 5 trillion yuan in September 2006 to 16 trillion yuan in April 2007, indicating active shares trading. It has been reported that a number of Chinese automakers has initial public offering plans. Automotive industry-related companies prefer to go public on the booming domestic stock exchanges, because they can generate more money than abroad.
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September 3,
2007
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Sales Performance Analysis of the Passenger Car Sector:
Winning Design Boosts Sales besides Fuel Efficiency
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China's expanding automotive industry has been boosting product diversification in recent years. According to the China Association of Automotive Manufacturers, as of June 2007, there were 196 locally-built passenger car models on the market. Fifty-seven of these models have been launched since January 2006. Large-scale launch of new models, combined with frequent price cuts, has been reducing the market strength of new products, creating fierce competition among automakers. As a result, China's automotive market is considered one of the most severe ones of its kind in the world.
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China FAW Group Corporation's MPV Business:
Automaker's Full Lineup Lacks Hit Model
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China FAW Group Corporation, ranked 385th on the Fortune Global 500 in 2007, is one of China's leading passenger car and commercial vehicle makers. FAW produces multipurpose vehicles at five locations in China. Its 2006 sales reached 21,493 units, capturing 9.3% of the local MPV market.
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August 27,
2007
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ZF Friedrichshafen AG:
Cutting Cost through Local Sourcing
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ZF Friedrichshafen AG, based in Friedrichshafen, Germany, is a major global supplier of driveline and chassis technology. The company and its group subsidiaries entered China's market in the 1990s and have been showing a healthy business growth since then. In 2006, the Group's revenues reached 600 million euros in China. Apart from expanding sales through its superior technology in China, the Group intends to cut costs by using local suppliers.
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China's Transmission Industry:
Industrialization of Advanced Products Is Underway
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Automotive transmission demand is increasing in China as automobile production expands. In 2006, OEM demand increased 27% year-on-year to 7.3 million units. As China's automobile market grows, more attention is paid to drivability, comfort, and fuel economy. As a result, automobiles are increasingly equipped with automatic, automated manual, and continuously variable transmissions, replacing manual transmissions.
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August 20,
2007
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Beijing Automotive Industry Holding Co., Ltd.:
Public Listing to Raise Funds for Business Expansion
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The Beijing Automotive Industry Holding Co., Ltd. is headquartered in Beijing Municipality and controls four complete vehicle subsidiaries. The BAIC Group manufactured a total of 680 thousand automobiles in 2006, becoming the fifth largest automaker in China. The Group aims to produce 1.2 million units annually by 2010 and become one of the 500 largest enterprises of the world in the midterm.
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Domestic-Made Passenger Car Sales in the First Half of 2007
Automobile Segments Enjoy Stable Sales Growth
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The robust growth of China's automotive industry further expanded in the first half of 2007. Sales of locally-built automobiles grew 23% to 4,373,754 units compared to the same period of a year earlier. Passenger car sales increased 22.3% to 3,084,069 units while commercial vehicle sales went up 25.9% to 1,289,685 units.
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August 6,
2007
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China's Heavy Truck Industry:
Booming Truck Market Lures Foreign Players
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China has become the world's largest heavy truck production base. In the past eight years production increased ninefold, reaching over 303 thousand units in 2006. In 2007, production volume is expected to reach 450 thousand units of which 10% is estimated to be sold abroad.
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China's Disk Brake and Anti-Lock Braking System Industry:
Stricter Safety Regulations Boost Demand
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Since the late 1990s, large buses have been equipped with anti-lock braking systems and disk brakes in China. The same safety features are becoming more common in medium and light buses and heavy trucks as well. Demand is expected to grow in the medium/long term for these equipments calling for the establishment of high-volume production systems.
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July 30,
2007
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Schaeffler Group in China:
Antitrust Law Prevents Expansion
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The Schaeffler Group, based in Herzogenaurach, Germany, is a leading manufacturer of rolling bearings and linear products. The company entered China in 1995 to manufacture bearings for local and global clients. As of May 2007, it owned three wholly-owned production bases, as well as a regional headquarters, R&D center, and aftermarket parts sales company in China. Schaeffler aims to increase sales from about 150 million euros in 2005 to approximately 500 million euros by 2012.
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FAW-Mazda Cooperation:
Own Brands Change Technical Cooperation
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FAW has been carrying out consignment production for Mazda at FAW Haima Motor Co., Ltd. and FAW Car Co., Ltd. FAW, Mazda, and FAW Car have also established a sales joint venture, FAW Mazda Motor Sales Co., Ltd. In 2006, Mazda sold 126 thousand passenger cars in China, surpassing the 100 thousand-unit mark for the third consecutive year.
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July 23,
2007
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China's Brake Industry:
Mounting ABS Demand Is Quenched by Growing Imports
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OEM demand for passenger car brake systems has been increasing in line with China's passenger car growth. In 2006, passenger car brake system production reached 20.92 million units. As traffic safety receives more emphasis in China, an increasing number of new models are equipped with anti-lock braking systems (ABS). In 2006, OEM demand for ABS was around 3.8 million units.
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Ssangyong Motor Company:
Growing Exports and Financial Support Improve Ailing Automaker
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Ssangyong Motor Company, a subsidiary of SAIC Motor, is the fifth largest automaker in Korea. According to the company's mid-term business plan announced in March 2007, it aims to increase its sales volume to 330 thousand units and sales value to six trillion won by 2011. If the automaker realizes its ambitious goal, it will become the third largest automaker in Korea.
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July 17,
2007
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Dongfeng Yueda-Kia Automobile:
Capacity Expansion, Despite Sluggish Sales
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Dongfeng Yueda-Kia Automobile Co., Ltd. is a Sino-Korean automaker based in Yancheng, Jiangsu Province. The company's mid-term business target is to boost its annual production capacity to 430 thousand units by 2010. Its sales value is expected to reach 50 billion yuan by the end of the decade which would enable the automaker to capture 8% of China's passenger car market.
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Guangzhou Kingfa Science & Technology:
Questionable Local Supply May Hamper Capacity Increase
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Guangzhou Kingfa Science & Technology Co., Ltd. is the largest thermoplastic resin producer in China, mainly supplying the household electric appliance sector. As China's automotive market expands, demand for fuel economic and lighter automobiles grows. The increased market for thermoplastic resins in the automotive industry prompted Kingfa to boost production capacity.
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July 9,
2007
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China's Used Car Market:
Foreign Entrants Improve Image of Sector
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Since 2004, China's used car market is outperforming new car sales for the third consecutive year. According to the China Federation of Logistics and Purchasing, a government organization in charge of the distribution industry, China's 255 major used-car trade centers sold 17.63 million vehicles (excluding motorcycles) in 2006 which was 31.7% more than in 2005.
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Jiangsu Yaxing Motor Coach Group:
Business Improvement through Restructuring
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Jiangsu Yaxing Motor Coach Group Co., Ltd. is a state-owned bus maker based in Yangzhou, Jiangsu Province. Although, the company established a bus manufacturing joint venture, Yaxing-Benz Co., Ltd., with Germany's Daimler-Benz AG in 1997, sales were dull, dropping from 7,720 units in 1998 to 3,410 units in 2006. Apart from diminishing sales, the company was hit by the arrest of Gu Chujun for embezzling funds from the company's listed subsidiary, Yangzhou Yaxing Motor Coach Co., Ltd.
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July 2,
2007
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China's Dump Truck Industry:
Large-Scale Constructions Boost Dump Truck Demand
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China's dump truck sector has been undergoing a surge in production due to a steady rise in the number of large-scale construction projects. Production volume of dump trucks has tripled from 29,691 units in 1999 to 92,030 units in 2005.
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99 Listed Automotive Industry-Related Companies:
Financial Results in 2006
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As Chinese businesses need more funds to expand operations and develop new products, more and more of them go public at home and abroad. As of 2006, 99 automotive industry-related companies were listed on the Shanghai and Shenzhen stock exchanges. Due to increasing domestic demand and expanding exports, sales value of these domestically-listed companies increased 23.4% year-on-year to 561.4 billion yuan in the 2006 calendar year.
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June 25,
2007
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Robert Bosch GmbH in China:
Superior Technology vs. Low-Cost Production
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Robert Bosch GmbH, with its head office in Germany, is one of the world's top manufacturers of automotive components. In China, the company uses its advanced technology to expand business in the gasoline engine and diesel engine parts sectors. Bosch aims to double sales in China from 1.2 billion euros in 2006 to 2.5 billion euros in 2007.
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Federal-Mogul in China:
Increase in OEM and Aftermarket Supply Bolsters Sales
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Federal-Mogul Corporation, a major automotive parts supplier, is based in the USA. As of the end of 2006, the company produced engine and chassis parts in China at ten locations. By 2008, the company intends to increase its share of automotive friction material supply to OEMs and the aftermarket to 10% and 20%, respectively.
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June 18,
2007
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China's Car Navigation System Industry:
Market Expansion Attracts Newcomers, Boosts Product Variety
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China ComputerWorld Media Group, a Chinese think tank, estimated in March 2006 that China's car navigation market will increase from 2.15 billion yuan in 2006 to 9.5 billion yuan in 2009. Calculating with an average unit value of 6 to 8 thousand yuan, demand is forecast to skyrocket up to 1.2 to 1.6 million units by 2009. Such a rosy outlook in the car navigation sector attracts newcomers from other industries as well as boosts product variety.
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China's Automotive Engine Industry:
Emission Regulations Shake Up Engine Sector
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China's automotive engine industry has been rapidly growing due to the expansion of domestic automobile production. Until 2002, engine production had grown only by several hundred thousand units a year. However, since then, production has been leaping upward by a million units annually, reaching 6.27 million in 2006.
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June 11,
2007
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New Models at Auto Shanghai 2007:
Automakers Target Potential Consumers through Diversification
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In April 2007, Shanghai International Automobile & Manufacturing Technology Exhibition, one of China's largest automobile exhibition took place in Shanghai. The event outshined last year's Beijing International Automotive Exhibition in scale as Chinese automakers debuted 26 new models at Auto Shanghai 2007. In addition, BMW and Audi unveiled new global models at the exhibition, possibly setting a trend for multinationals to release new models and information at future Auto Shanghai events.
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Dongfeng Motor Corporation's Powertrain Business:
Emission Regulations Prompt Technology Upgrade
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Dongfeng Motor Corporation, headquartered in Wuhan, Hubei Province, is one of the Big 3 in China's automotive industry. DFM¡Çs engine production is based on mainly joint ventures with global automakers and local engine manufacturers. At the end of 2006, the company's annual engine manufacturing capacity reached 960 thousand passenger car engines and 590 thousand commercial vehicle engines, a combined total of 1.55 million units.
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June 4,
2007
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Automakers from Emerging Nations in China:
Booming Market Attracts Daring Newcomers
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China has been attracting global automakers for over two decades. As major Western and Asian companies with superior technology establish joint ventures with local partners, automakers from emerging countries are increasingly drawn to China to claim their share of the Chinese market. However, for the most part, these newcomers find themselves allying with mediocre local partners with limited resources.
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Guangzhou Automobile Group's Powertrain Supply:
Emphasizing In-House Supply in Future Business
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Guangzhou Automobile Group (GAG), a major Chinese automaker, headquartered in Guangzhou, the provincial capital of Guangdong Province. The company procures engines and transmissions for its passenger car operations from the local production bases of Honda and Toyota. As for its commercial vehicle projects, GAG acquires powertrain systems from domestic manufacturers.
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May 28,
2007
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Valeo in China:
Local Business Expansion through R&D Investment
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Valeo, a major French parts supplier, has been actively expanding its operations in China since it set foot in the country in 1994. As of March 2007, the company had ten joint ventures and four wholly-owned subsidiaries in China. In anticipation of further growth of the Asian market, the company is strengthening its R&D capability in China to increase its presence in the Chinese market.
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Average Sales Price of Passenger Cars:
Major Slowdown in Price Decline
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Passenger car prices in China have been gradually declining mostly due to intense product competition. FOURIN has conducted a price survey of 177 passenger car models which were in production between March 2006 and March 2007, based on China Association of Automobile Manufacturers' data. The data indicate that during the past one year the average unit price of passenger cars dropped 1.2% or 1,185 yuan.
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May 21,
2007
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China's Aluminum Wheel Industry:
Energy Conservation Increases Demand for Lighter Products
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China's wheel industry has been seeing an increase in aluminum wheel demand as automakers are trying to launch lighter vehicles in order to lower fuel consumption. Aluminum wheels are not only lighter, but also radiate heat better than steel wheels. As a result, automakers, especially passenger car manufacturers, are switching to aluminum wheels.
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Guangzhou Honda's Fit/City:
Favorable Market Environment Boosts Basic Car Sales
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Guangzhou Honda, a Sino-Japanese automaker in Guangdong Province, has been manufacturing the Fit basic car in China since September 2003. Combined sales of the sedan and hatchback versions of the Fit reached 80 thousand units in 2004, nearly 90 thousand units in 2005, and 100 thousand units in 2006. The company's 2007 sales target is 145 thousand units, a 40% year-on-year growth, however, as of February 2007 only 15 thousand units were sold, making it questionable whether Guangzhou Honda can realize its goal.
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May 14,
2007
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Changfeng Group:
Declining SUV Sales Spur Product Diversification
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The Changfeng Group has been manufacturing SUVs since the late 1990s based on Mitsubishi Motors' Pajero technology. The group's subsidiary, Changfeng Motor, has an annual capacity of 80 thousand units, operating two plants in Yongzhou and Changsha, Hunan Province. The company has been facing several challenges since mid-2000 due to intensifying competition in the SUV market as well as rising gasoline prices.
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China's 2006 Automobile Production by Administrative Units:
Beijing Is on Top with 680 Thousand Units
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China's Top 5 automobile manufacturing administrative units were Beijing, Shanghai, Hubei, Jilin, and Chongqing in 2006, according to China Association of Automobile Manufacturers. Beijing, the No. 1 administrative unit in terms of automobile production for the second consecutive year, is the home of Beijing Hyundai, a Sino-Korean passenger car maker, and Beiqi Foton, a local commercial vehicle maker, with an annual production of 300 thousand and 380 thousand units respectively.
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May 7,
2007
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China's Economic Growth:
Short-Term Economic Fluctuations May Affect the Automotive Industry
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China's inflation rate has been less than 5% since the second half of the 1990s, meanwhile the country's economic growth rate has been over 8%. The country's swift development has been driving forward the global economy. Economic growth has triggered an increase in national income and large-scale national projects, which in turn have driven up domestic demand for automobiles. In 2006, China became the second largest automobile market and the third largest automobile manufacturer in the world.
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Fiat Group in China:
Additional Investment Is Planned to Revive Sluggish Sales
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The Fiat Group in China is planning to adjust its business strategy and launch new models in order to put a stop to sluggish sales in the country. By 2010, the automaker aims to manufacture 300 thousand passenger cars in China and considers introducing new models to the local market. Fiat, through the company's commercial vehicle division, Iveco, is currently reorganizing its commercial vehicle business in China.
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April 23,
2007
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Geely Automobile Holdings:
The Automaker Gears Up for Future Expansion
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Geely Automobile Holdings is involved in automobile manufacturing through its subsidiaries, Shanghai Maple Guorun Automobile and Zhejiang Geely Automobile, Zhejiang Kingkong Automobile, and Zhejiang Ruhoo Automobile. The company aims to sell 296 thousand units in 2007, 800 thousand units in 2010, and 2 million units in 2015, of which 1.3 million units are planned to be sold in foreign markets.
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China's Safety Systems Industry:
Strict Safety Measures Boost Airbag Production
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In 2005, 8.73 million units of seatbelts and 360 thousand sets of airbags were manufactured for the domestic market by the top 3 and top 8 companies respectively in China, according to China Automotive Technology & Research Center. The rapid growth in automobile production has prompted China to strengthen automotive safety regulations, stimulating the automotive safety industry to increase production.
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April 16,
2007
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MAN Group in China:
Expanding Demand Calls for Newer Models
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The MAN Group and its later subsidiaries, Steyr Daimler Puch and Neoplan, have been active in China since the early 1980s providing technology as well as production licenses of heavy trucks, diesel engines, and buses to local commercial vehicle and engine makers. In 2006, MAN Group's subsidiary, MAN Nutzfahrzeuge, established a Trucknology Center in Beijing. The center is in charge of all MAN Group business activities in China, including sales, after-sales service, aftermarket service, and engine development.
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China's Automobile KD Assembly in 2006:
Regulations Induce a Drop in KD Assembly
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KD assembly of automobiles in China stood at 338 thousand units, accounting for 4.6% of China's total automobile production of 7.28 million units in 2006, according to China Association of Automobile Manufacturers. Until 2002, annual KD assembly had been around 100 thousand units, but after China's entry into the WTO, KD assembly dramatically rose to 250 thousand units in 2003, 300 thousand in 2004, and 420 thousand in 2005.
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April 9,
2007
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Harbin Dong'an Auto Engine:
Drop in Demand and Prices Cause Profits to Fall
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Harbin Dong'an Auto Engine Co., Ltd. is located in Harbin, Heilongjiang and produces 1.0L-1.2L gasoline engines. The company's income and profits have been falling since 2004, due to decreasing demand and drop in prices. In 2006, Dong'an Engine's net profit declined 50% from the year earlier.
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Global Automotive Suppliers in China:
Companies Accumulating Advanced Technology in China
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Foreign-affiliated suppliers of automotive parts, raw materials, and equipment operated 2,640 facilities in China as of February 2007, according to FOURIN¡Çs survey. The number of facilities and investments has dramatically increased in the past five years as a result of a threefold surge in automobile production. By 2010, annual automobile production is expected to reach 10 million units, a major market for global as well as local suppliers which are likely to engage in a fierce cost competition.
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April 2,
2007
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Johnson Controls in China:
US Supplier Expands Local OEM Supply
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Johnson Controls, Inc. is a US company, specializing in automotive and climate control systems. In China, JCI has ten production bases, manufacturing mostly batteries and parts for interior systems. The company plans to increase local production and boost OEM supply as China's automotive market expands. At the end of 2006, the company entered the battery aftermarket in China to improve JCI's business performance in the country.
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China's Motorcycle Industry in 2006:
The Government Aims to Improve China's Product Image
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In 2006, motorcycle production in China grew 20.9% from a year earlier to 21.45 million units. During the same period, domestic sales increased 20.8% to 12.69 million units. Similarly to 2005, about 40% of domestic factory shipment was bound for markets around the world. In 2006, China continued to increase exports of inexpensive motorcycles, mainly to Africa, and accounted for about half of the world's motorcycle production.
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March 26,
2007
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Guangzhou Automobile Industry Group:
Group Sales Grow Nearly 43% in 2006
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In 2006, Guangzhou Automobile Industry Group Co., Ltd. (GAIG) increased sales 42.7% year-on-year to 352,281 units. Most of the sales were generated by the Group's Japanese-affiliated passenger car JVs, Guangzhou Honda (260,096 units) and Guangzhou Toyota (61,254 units). The Group's three commercial vehicle manufacturing entities, Guangzhou Isuzu, Guangzhou Yangcheng, and Guangzhou Junwei, sold a total of 6,331 units, a 0.7% drop from the previous year.
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China's International Trade in Automotive Products in 2006:
Trade Surplus Reaches 7.6 Billion US Dollars
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Foreign trade of automotive products grew 39.2% from a year earlier to 52.09 billion US dollars in 2006. After China entered the WTO in 2001, China's trading environment has greatly improved. As a low-cost country, China has been able to increase exports of automobiles, motorcycles, and parts, further increasing the country's export surplus.
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March 19,
2007
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China's Commercial Vehicle Sales in 2006:
Export Growth Expands Factory Shipment
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Commercial vehicle sales in China grew 11.2% year-on-year to 1.83 million units in 2006, recovering from last year's downturn of 1.64 million units. The market even showed a 5.2% increase compared to 2004 when commercial vehicles were in high demand.
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Behr and Sanden in China:
German-Japanese Cooperation to Boost Market Share
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Sanden Corporation, a Japanese automotive compressor maker, and its German counterpart, Behr GmbH & Co. KG, have been joining forces in the global market to supply OEMs throughout the world. In 2004, the two combined resources to expand sales in China through a joint strategy.
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March 12,
2007
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Hyundai-Kia Automotive Group in China:
Korean Automaker Aims to Break German Dominance by 2010
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In 2006, the Hyundai-Kia Automotive Group sold 444 thousand locally-built automobiles in China. The Group aims to increase annual sales to over 1 million units by 2010 in China and capture 20% of the local passenger car market. If the Group meets its goal, it would surpass Volkswagen in China and become a top automaker in the country along with Toyota, which also has set its sales target at 1 million units by 2010.
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Dongfeng Motor Corporation Group:
Group Maintained Top Share in CV Sales in 2006
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In 2006, Dongfeng Motor Corporation increased sales of automobiles 27% year-on-year to 935 thousand units, maintaining its third place after SAIC Motor and FAW. Year-round passenger car sales rose 40% year-on-year to 657 thousand units in 2006. The company's good sales performance is possibly the result of growing demand for small cars and the launch of new models.
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March 5,
2007
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China's Fuel Tank Industry:
Changing Market Needs Demand Lighter Products
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As a result of growing demand for better fuel consumption and complying with strict emission regulations, metal fuel tanks for passenger cars are being increasingly replaced by plastic ones in China. According to FOURIN's survey, in 2006 out of the 5.23 million passenger cars assembled in China, nearly 65% were equipped with a plastic fuel tank.
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China's Passenger Car Sales in 2006 and Target for 2007:
Japanese Automakers Maintain Top Share
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Passenger car sales in China grew 28.9% year-on-year to 5.27 million units in 2006, making China the world's second largest passenger car market after the US. However, this figure also includes the so-called utility vehicles (also known as cross passenger cars), crossbreeds between a passenger car and a cargo vehicle. Even if utility vehicles, 910 thousand units in total, are excluded from 2006 sales, China still takes the third place in passenger car sales after Japan with 4.36 million units.
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February 26,
2007
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Hino Motors in China:
Automaker Sees China as New Core Market
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Hino Motors is positioning China as the company's second most important market after North America. The company dubs China as the new core market increasing local parts procurement and gearing up complete vehicle production and sales in the country. As of February 2007, Hino Motors had a heavy diesel engine manufacturing JV in Shanghai and a tourist bus producing JV in Shenyang.
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Dicastal Wheel Group:
Maker Aims to Become Global Top 3 in the Aluminum Wheel Sector
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Dicastal Wheel Corporation was established by China International Trust & Investment Corporation and two Hong Kong investors in April 1988 becoming the first aluminum wheel maker in China. The company was the first Chinese enterprise that supplied aluminum wheels for Audi-brand automobiles.
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February 19,
2007
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Reorganization of the China's Automotive Industry:
Dealing with Overcapacity and Independent Development
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China boasted 2,637 automotive industry-related businesses in 2005, up 101 companies from a year before according to China Automotive Technology & Research Center. In China's Automotive Industry Development Policy, which was released in June 2004, the central government outlines its aim to foster three to five major automakers. The country's 11th Five-Year Plan also emphasizes this goal and promotes the reorganization of state-owned automakers.
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Guangzhou Honda vs. Guangzhou Toyota:
Japanese Models to Race for Top Share
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Guangzhou Automobile Industry Group's mid-term goal is to increase passenger car production to 1.1 million units in 2010. In addition to Guangzhou Honda's Accord, the Chinese automaker attaches importance to boost the sales of Guangzhou Toyota's Camry. Since both models were launched with a 2.4L engine in the mid-passenger car segment and priced in the same price range, the appearance of the Camry on the market has caused concern for GAIG that it might have a bad influence on Accord sales.
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February 13,
2007
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Aisin Group in China:
Toyota's Expansion Spurs Capacity Increase
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The Aisin Group, including its main company, Aisin Seiki, has established 17 plants for 1.2 billion US dollars in China to supply power train parts mainly to local Toyota assembly plants. The Aisin Group established its first plant in Tianjin in 1995 and by 2004 the municipality was the home of 11 Aisin Group plants.
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China's Automotive Meter Industry:
Advanced Functions Call for Electronic Meters
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China's meter industry consisted of 19 companies in 2005, according to CATARC. Annual production in the same year increased 7.5% year-on-year to 4.28 million units. With the increase of automobile production, automotive meter output is growing as well in China, from 3 million units in 2001 to over 4 million units in 2005.
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February 5,
2007
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Foreign Investment Funds in China:
Investments in Automobile-Related Industries
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Since 2005, there is a growing interest among overseas investment funds to invest in listed automobile industry-related companies in China. Their intent is to gain profit by short-term stock trading rather than seize management rights. This tendency can be considered a sign of stable growth of Chinese automobile industry-related companies.
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General Motors in China:
Daewoo Platforms to Move GM Ahead
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General Motors' China operations are based on a combination of Daewoo's passenger car technology purchased in 2001, GM's marketing skills, and close relationship with its local partner, Shanghai Automotive Industry Corporation (Group). In 2006, GM's local production reached 450 thousand units, becoming the second largest passenger car maker in China after Volkswagen.
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January 29,
2007
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Guangxi Yuchai Machinery Group:
Engine Maker Struggles to Stay on Top
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Guangxi Yuchai Machinery Group became the largest Chinese diesel engine maker in 2005, according to CAAM. The company manufactured 257,287 units of diesel engines in 2005, exceeding DFM's 248,436 units. Furthermore, in the first three quarters of 2006, production passed year-round production of 2005 with 276,133 units, holding fast to its top diesel engine maker title.
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China's Automobile Taxation System:
Tax Reform Boosts Revenues
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The current tax system of China's automotive market strongly reflects the central government's position on automobiles as luxury items. However, as automobiles become national consumer goods generating an increasing amount of revenue for China, the country is gradually implementing tax reforms. The focal point of the reform is the merging of road maintenance fee and toll fee into the current fuel tax.
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January 22,
2007
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Passenger Car Launches in China (1998-2013):
Global OEMs Are Challenged by Local Needs
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China's passenger car production has dramatically increased as a result of the automotive industry's liberalization after the country's entry into the WTO in 2001. In 1998, when stern restrictions were imposed on the entry of global automakers and Chinese OEMs did not possess passenger car development capability there were only 19 models in production. This number has increased eleven-fold in the last eight years increasing the number of passenger cars in production by 193 models.
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Beiqi Foton Motor:
Partnerships to Generate More Advanced Technology
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Beiqi Foton Motor Co., Ltd. has been acquiring more advanced technology in engine and other key components sectors by setting up joint ventures and forging technical partnerships with several global makers. By 2010, the company aims to become the world¡Çs largest small commercial vehicle maker.
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January 15,
2007
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Automobile Ownership in China:
China's Vehicle Fleet Boosted by Private Purchase
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Automobile ownership in China grew 17.3% year-on-year to 31.6 million units in 2005, exceeding 30 million units for the first time, according to China Association of Automobile Manufacturers. Privately-owned automobiles make up 58.5% of China's automobile fleet with 18.48 million units, increasing 6.4 times in the last ten years and becoming the engine of increase in automobile registration.
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Luxury Brands in China:
Japanese Challenge to German Dominance
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As China's wealthy class expands, the diversification of luxury brands are likely to take place and annual sales are expected to reach 300 thousand units by 2015. Consequently, Toyota, Honda, and Nissan have launched or scheduled to launch their luxury brands, the Lexus, Acura, and Infiniti respectively between 2005 and 2007 in China, stepping up competition for German makers.
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January 9,
2007
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Honda in China:
Automaker to Realign JVs with Local Partners
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Honda is realigning its complete vehicle operations in China due to recently forged closer ties between Guangzhou Automobile Industry Group, Honda's main JV partner in China, and Toyota. While Guangzhou Honda is still Honda's main production base in China, the Japanese automaker is diversifying income sources and hedging risk by increasing Dongfeng Honda's capacity and launching its North American luxury brand, the Acura in China.
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ArvinMeritor in China:
Gearing Up Procurement in China to Lower Costs
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As of October 2006, ArvinMeritor operated 12 plants, eight passenger car components bases and four commercial vehicle bases in eastern- and central China. The parts supplier is planning to expand its operations in the country by establishing another commercial vehicle components plant in 2007.
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December 25,
2006
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Eleventh Five-Year Plan of the Automotive Industry:
Emphasis Is on Independent Development and Brands
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The central government's Eleventh Five-Year Plan, lays out goals for the Chinese economy for the period between 2006 and 2010. According to the Plan, the economy should maintain a healthy growth of 7.5% annually with a continued increase in employment. It also states that long-term growth can only be maintained if energy resources are efficiently used and protection of the environment is more emphasized.
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Tenneco Automotive in China:
Additional Investment to Boost Operations and Localize Engineering
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Tenneco Automotive, a US supplier specialized in emission- and ride control, operates six plants (as of October 2006) in China. The company expects the China market to see further growth, and so Tenneco aims to invest 21 million US dollars in the country during the 2006 to 2008 period to strengthen local operations.
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December 18,
2006
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BMW in China:
Unified Sales Network to Improve China Strategy
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Seeing the potential of the Chinese market, BMW aims to become the fifth largest automaker in China in terms of sales, intending to sell 50 thousand units in 2008 and over 100 thousand in the long term. After setting up its JV plant in Shenyang in 2003, BMW has focused its attention on the sluggishly selling 3 series.
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China's Automatic Transmission Industry:
Transmission Suppliers Step Up Production
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Along with a rise in automobile production, demand for passenger car automatic transmissions has been growing as well. As a result, transmission import has risen from about 430 thousand units in 2001 to nearly 700 thousand units in 2005, and expected to reach 1 million units in 2006. On the other hand, domestic production is growing as well, thanks to global automakers and major local players.
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December 11,
2006
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Dongfeng Motor Corporation:
SPVs as New Source of Profit
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Dongfeng Motor Corporation (DFM) experienced a drop in special purpose vehicle (SPV) demand in 2005 because of a slowdown in large-scale constructions. SPV production decreased 13% from about 39 thousand units (preliminary data) in 2004 to 34 thousand units in 2005. Since China's commercial vehicle market showed signs of recovery in 2006, DFM launched new products domestically targeting specific market needs.
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Shanghai Automotive:
Restructuring Is Expected to Yield Much Needed Funds
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As outlined in its 11th Five-Year Plan, SAIC aims to become one of the top 10 global automakers by 2010. Its ambitious plan is intended to be realized by establishing its own brand, entering the commercial vehicle sector in cooperation with Iveco, additional investment in Shanghai GM, and strengthening the production capacity of Ssangyong Motor. Since the plan requires an investment of over 5.5 billion US dollars, the financial backing of the project has become a major issue for SAIC.
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December 4,
2006
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Guangzhou Honda's Odyssey:
Family-Oriented MPV Strategy Brings Success
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The Odyssey is a 7-seater MPV began to be manufactured in April 2002 by Guangzhou Honda, a JV between Honda and Guangzhou Auto Group Corp. At the same plant the Accord is produced as well built on the same platform as the Odyssey. Factory shipment of the Odyssey reached 100 thousand units in September 2006.
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China's Automotive Parts Industry:
Statistical Data on 150 Auto Parts Manufactured in China
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FOURIN has selected 150 items from a list of approximately 200 parts compiled by the China Automotive Technology & Research Center. Only those items that have consecutive data available were chosen for this survey. According to FOURIN¡Çs survey, the combined share of the top 3 companies for each of the 150 items grew from 59% in 1999 to 67% in 2001, the year China entered the WTO, to 72% in 2003, and to 73% in 2005.
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November 27,
2006
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Wuxi Weifu Group:
Expanding Presence in Electronically-Controlled Pump Market
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The Wuxi Weifu Group is China's largest diesel engine fuel injection system and parts maker. In cooperation with Bosch, the Group has been expanding the sales of high-end fuel injection pumps and aims to capture 60% of the electronically-controlled injection pump market in China by 2010.
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GKN Driveline in China:
Presence in Inland China Is Expected to Boost Sales
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GKN Driveline takes advantage of low-cost human resources in China while it aims to boost orders by strengthening its local production. The parts supplier's plan is to gear up local production of constant velocity joints, powder metallurgy products, and cylinder liners.
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November 20,
2006
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China's Automotive Electronics Industry:
Industrial Growth Promoted by Local Governments
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China's automotive electronic parts industry is currently being promoted by a number of city- and provincial governments in China anticipating to build up a local industrial base. In particular, local authorities are involved in the strengthening of R&D in the engine control system and safety equipment control system sectors.
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China's Automotive Industry:
Vehicle Production Still Yields Most Profit Among Industries
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China's automotive industry has been boosted by growing domestic demand and expanding parts and motorcycle export. Sales increased over eightfold in the last 13 years from 117.9 billion yuan in 1992 to 1.024 trillion yuan in 2005. On the other hand, profits dropped from 7.4% in 1992 to 4.2% in 2005 caused by cutthroat competition among automakers.
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November 13,
2006
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Volkswagen Group in China:
Maintaining Success over Two Decades
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Volkswagen has maintained its No.1 position in China's passenger car market for the last 21 years since it began production in the country. In 2003, the German automaker increased production to over 700 thousand units, but poor management decisions and external circumstances began to erode the company's performance.
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Mitsubishi Motors in China:
Japanese OEM to Increase Sales through Own Brand
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As part of Mitsubishi Motors' decision to restructure its core business activities, the Japanese automaker began to strengthen business in China starting from 2006 by gearing up local Mitsubishi-brand production and sales. In 2005, Mitsubishi Motors made a direct investment in Southeast (Fujian) Motor, abandoning its earlier practice of having only indirect ownership of the Fujian-based automaker.
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November 6,
2006
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National Innovative Companies in the Automotive Industry:
IP Rights to Receive More Attention from the Government
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During the period of the 11th Five-Year Plan, 2006 to 2010, the central government aims to strengthen the development capabilities of the automotive- and related industries with a focus on original development. In September 2006, to promote the acquisition of IP rights, the MOST and SASAC named 103 companies, which have been selected as National Innovative Companies.
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China FAW Group:
More Emphasis on Design and Safety
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In 2006, FAW launched the Besturn, a Mazda Atenza-based medium sedan and the Weizhi, a Toyota Vitz-based basic car. The automaker aims to increase passenger car sales 2.5 times from the current level of 200 thousand units to 500 thousand units in 2010.
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October 30,
2006
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Autoliv in China:
Booming Market Ups Demand for Safety Systems
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Autoliv has established a full-set airbag production system in Shanghai and has set up a new plant in Guangzhou since 2005 to better supply Western and Japanese OEMs who have operations in China. In addition to taking advantage of China's low-cost labor, the Swedish parts supplier wishes to provide stable supply to its customers, reduce transportation time and costs and better respond to technological changes.
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Bus Rapid Transportation Projects:
Articulated Buses to Ease Road Congestion
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The rapid increase of automobile ownership mostly in large cities, coupled with the public transportation of a rising number of urban population, has been the cause of worsening traffic congestions in China. Although subway lines and commuter train lines, which connect the suburbs to the city, are being constantly built, the budget of local governments is not sufficient enough to link up all densely populated areas.
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October 23,
2006
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Shanghai Baoshan Iron & Steel:
High-Grade Steel Demand Urges Maker to Respond
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Shanghai Baoshan Iron & Steel Co., Ltd. was established in 1998 with the merger of Shanghai Metallurgy Group and Shanghai Meishan Group. The merger has created China's largest steel producer. In 2005, the company's crude steel production increased 11.2% from a year earlier to 23.8 million tons, becoming the world's sixth largest steel maker.
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PSA in China:
Signs of Recovery Make DPCA Optimistic
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PSA has been slashing procurement costs in China by increasing its products' local content. As a result, after two years in the red in 2004 and 2005, the French automaker was able to produce 190 million yuan of net profit in the first six months of 2006. PSA in China, in the first half of 2006, increased production 63.8% to 105 thousand units from the same period of a year earlier.
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October 16,
2006
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Automobile Collision Safety in China:
Strict Regulations Aim to Reduce Fatal Accidents
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China implemented new regulations on side- and rear-end collisions in July 2006, which measure up to regulations currently in force in the EU and Japan. The East Asian nation's action shows that China attaches more importance to improving automobile safety than lowering emission gases and increasing fuel economy.
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Dongfeng Motor Corporation:
Expansion of After-Sales Service to Meet Customer Needs
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Dongfeng Motor Corporation (DFM) aims to make its light truck business just as important pillar of its overall business operations as its heavy truck venture. The automaker plans to achieve more than triple sales of light trucks from less than 100 thousand units in 2005 to 300 thousand units by 2010. DFM's subsidiary, Dongfeng Automobile Co., Ltd. is in charge of light truck manufacturing.
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October 10,
2006
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FAW Group:
Growing Participation in International Business
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Since 2005, FAW has been concentrating its light truck business in the northeast at FAW Harbin Light Duty Vehicles and in the southwest at FAW Hongta Yunnan Automobile Manufacturing. Both factories function as export plants and while FAW Harbin focuses on Ukraine and Russia, FAW Hongta is making inroads into the South- and Southeast Asian markets.
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Passenger Car Sales Networks in China:
Rapid Dealership Expansion in the East
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Chinese automakers are strengthening their production system on the back of a two-digit domestic market growth rate since 2003. Along with increasing capacity, they are building up their sales network. Since June 2004, the China allows locally-built vehicles and imports to be sold at the same sales outlet, enabling global automakers to build modern sales networks in China.
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October 2,
2006
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Overseas Business of Chinese Automakers:
Bolstering Business Abroad with Foreign Partners
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The automotive industry has been designated as one of the key industries of China by the central government. China aims to push forward the automotive industry by encouraging local OEMs to initiate export. Since 2003, CBU export and overseas assembly by Chinese automakers have been on the rise.
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China's Suspension System Industry:
Growing Presence of Global Suppliers
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As new types of passenger car suspension systems hit the Chinese market, the number of front-rear suspension combinations grows as well. In 2004, along with the expansion of China's highway network, the country's high-quality paved highways and urban roads exceeded 500 thousand km. On the other hand, regional cities and village units had a total of 1.57 million km third grade or worse roads.
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September 25,
2006
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China's Automotive Air Conditioner Industry:
Rising Automobile Production Spurs Demand for A/Cs
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China's automotive air condition production increased 2.9 times in five years to reach 1.76 million units in 2004, according to the China Automotive Technology & Research Center. Since 2002, foreign suppliers have been controlling over 80% of the market.
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Motorcycle Regulations in China:
Technology Reforms Sparked by Emission Standards
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Euro II-level emission standards and new consumption tax on motorcycles, implemented in July 2005 and April 2006 respectively, have been putting pressure on makers to manufacture high-power motorcycles with smaller engine displacement. As a result, since 2005, newly launched products have been increasingly equipped with air- or fuel injection system.
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September 19,
2006
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KD Vehicle Identification Rules:
Verification Status of Complete Vehicle Features
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China has announced to postpone the implementation of the Measures for the Administration of Import of Automobile Components and Parts Featuring Complete Vehicles by two years, until July 1, 2008. Thus, for the time being tariff rate on imported KD parts for locally-assembled automobiles will stay 10%, waving away fears that imported KD parts with CBU characteristics would be burdened with the same 25% tariff rate as CBUs are.
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MAHLE Group in China:
Shanghai to Serve As China Operations Hub
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European filter and engine parts maker, MAHLE, intends to strengthen its production capacity in China and establish local development capabilities in anticipation of the expansion of low-pollution engine demand in China. The MAHLE Group operated three filter plants, three engine components plants, and a bearing factory in China as of 2005.
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September 11,
2006
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Shanghai Volkswagen:
Skoda to Attract New Consumer Groups
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Escaping from a large-scale business reduction in 2005, Shanghai VW successfully launched new products and increased production 50% to 175,258 units in the first half of 2006, compared to the same period of a year earlier. Extending to 2007, Shanghai VW is currently reinforcing its after-sales network to accommodate new debuts, such as the Skoda-brand automobiles.
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Foreign Trade of China's Auto Industry in the First Half of 2006:
Trade Surplus Is Expected to Continue in 2006
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China's foreign trade of 240 automobile and related products reached 37.93 billion US dollars in 2005 and 24.31 billion US dollars in the first half of 2006, a 47.6% growth from the same period of a year earlier, according to China Customs. After its WTO accession in 2001, China has acquired Most Favored Nation status, which has vitalized the country's foreign trade.
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September 4,
2006
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IP Rights Disputes in China:
Infringement Mostly Limited to Body Design
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IP rights disputes in China's automotive industry have gained strength since China's accession into the WTO in 2001. Although international rules on IP rights have been precisely defined in China since the country's entry into the WTO, it is rather difficult to collect evidence and prove IP infringements. As a rising number of newcomers enter the automotive industry, an increased number of low-priced imitations hit the market.
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Mini Vehicles in China:
Winner Segment of High Oil Prices
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Utility vehicle and mini truck sales increased in China from 376 thousand units in 1998 to 1.065 million units in 2005 as demand grew for small-load distribution. In the first half of 2006, sales reached 637 thousand units, up 10.6% from the same period of a year earlier. Year-round sales in 2006 are expected to exceed 1 million units.
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August 28,
2006
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Locally-Built Commercial Vehicle Sales in the First Half of 2006:
Light and Mini Factory Shipment Reached an All-Time High
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In the first half of 2006, factory shipment of locally-built commercial vehicles increased 7.7% to 1.024 million units from the same period of a year earlier. After a 0.8% shrinkage of the market in 2005, a slow recovery is seen in 2006 attributed to mostly private demand.
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BorgWarner in China:
Tier 1 Provides Technical Support to Local Companies
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As emphasis on better fuel consumption technology and emission control technology is getting stronger, engine- and drive train component maker, BorgWarner has laid out a plan to increase its business in China in the 2006-2010 period, boosting sales five times from 2005's level.
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August 21,
2006
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Delphi and Visteon in China:
Tier 1 Suppliers Localize Development to Stay Ahead
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Major foreign Tier 1 suppliers have begun a new phase in strengthening their profit base in China by taking orders not only from global OEMs but also from local automakers. The business environment has been especially tough on suppliers in North America as the US Big 3 have been seeing their share drop.
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Automobile Recall in China:
Stricter Regulations Emphasize Quality
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China has begun to strengthen regulations on automobile quality and product recall to improve automobile quality and to protect the rights and interests of consumers. Since the competitiveness of an automaker is directly connected to quality, OEMs must fully provide the quality they offer and execute swift recalls in case problems arise.
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August 7,
2006
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Domestic-Made Passenger Car Sales in the First Half of 2006:
Economic Expansion Stimulates Sales Growth
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According to China Association of Automotive Manufacturers, domestic-made passenger car sales exceeded 3 million units in 2005 while increased 45% in the first half of 2006 from the same period of a year earlier, reaching 2.02 million units. Including utility vehicles, passenger cars sales in 2005 reached 3.96 million units and 2.52 million units in the first half of 2006. Year-round sales are forecast to amount to 4.7 million units.
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Guangzhou Toyota Motor:
Making Footprint in Southern China
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Guangzhou Toyota Motor (GTMC) held its first line-off ceremony, launching the Camry mid-sized passenger car in May 2006. The plant is positioned as Toyota's main production base in southern China. The opening of GTMC is part of Toyota's plan to increase its China market share over 10%.
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July 31,
2006
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TRW Automotive in China:
OEM Expansion Spurs Supplier to Increase Operations
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Major US auto parts maker, TRW has entered China to manufacture mainly automotive safety system parts and chassis parts. As of the end of 2005, TRW has 12 operations in China, including an R&D center. The parts manufacturer maintains top share in the local seatbelt sector and aims to expand sales of commercial vehicle brakes and chassis parts of high-end heavy trucks and large buses.
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Intelligent Transportation Systems:
Projects Adjusted to Local Conditions
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China has laid out a plan to establish intelligent transportation systems by utilizing IT tools and GPS to reduce urban traffic jams and traffic accidents. In 2002, 10 cities were chosen by the Ministry of Science and Technology for the country's ITS project. Using know-how accumulated by this project, the central government intends to launch ITS projects in other major cities as well in the 2010s.
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July 24,
2006
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General Motors in China:
Rapid Growth through Existing Group Models
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General Motors in China builds its business operations on its Chevrolet, Buick, and Cadillac brands. With the use of GM group's technological resources, each brand has been actively launching models. Consequently, for the first time in 2005, Shanghai GM passenger car production exceeded Shanghai VW's production.
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BYD Auto:
Costly Development Halts Electric Vehicle Launch
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BYD Auto entered the automotive industry in 2003 with an aim to produce electric vehicles. However, the company soon realized that development and manufacturing of electric vehicles is highly cost consuming, prompting BYD Auto to temporarily cease launching electric vehicles.
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July 18,
2006
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New Automotive Industry-Related Consumption Tax:
New Tax Rates Promote Smaller Automobiles
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China introduced the country's revised automotive consumption tax system in April 2006. The change came to accommodate environmental concerns and the changing level- and structure of local consumption. China not only modified its tax rate structure but also strengthened its tax collection agencies.
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Dongfeng Motor Corporation:
Anticipated Market Growth Spurs Expansion
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Dongfeng Motor Corporation conducts its truck business through its truck division, DFM Commercial Vehicle Company. The truck division announced its mid-term plan in July 2003. According to the plan the company aims to become the largest commercial vehicle maker in China and the third largest in the world by 2007.
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July 10,
2006
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91 Listed Automotive Industry-Related Companies:
Financial Results in 2005
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In 2005, total sales of these 91 listed automotive industry-related companies increased 28.5% to 416.4 billion yuan from a year earlier. Gross profit grew 16.6% to 66.8 billion yuan from a year before, but gross profit ratio dropped from 18.6% in 2003 to 17.7% in 2004 and 16% in 2005 due to increasing materials prices and decreasing automobile prices.
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FAW Jiefang Automobile:
Local Truck Maker Aspires to Become Global OEM
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FAW has been strengthening its truck business through the introduction of licensed technology to its subsidiary FAW Jiefang Automobile from two European companies, AVL and Deutz. FAW Jiefang intends to establish itself as a global commercial vehicle maker, rivaling with M-Benz and AB Volvo.
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July 3,
2006
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New Regulation on Operating Rate:
Freezing Expansion through Government Measure
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China's central government is considering regulating surplus production by forbidding companies with less than 80% operating rate to establish new plants. If this regulation comes into force, not only new OEMs will have a hard time to acquire production approval in China but also existing automakers will not be able to expand with an operating rate below 80%.
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Shanghai Automotive Industry (Group) Corporation:
Expands Its Presence in the Commercial Vehicle Sector
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Shanghai Automotive Industry (Group) Corporation has laid out in its 11th 5-Year Plan to direct its focus not only on passenger cars, as it has done so far, but also on commercial vehicles. SAIC will invest 2 billion yuan in R&D of commercial vehicles and sell 600 thousand self-developed automobiles including 400 thousand commercial vehicles annually by 2010.
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June 26,
2006
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China's Automotive Filter Industry:
Foreign Suppliers Dominate the Market
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Automotive filter output in China, including air-, oil-, gasoline fuel-, and diesel fuel filters increased 21% from 33.66 million units to 2003 to 40.64 million in 2004. Production has tripled in the past five years in direct correlation to automobile production expansion.
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Ford in China:
Expands Operations through Chang'an Automobile
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Ford aims to increase complete vehicle production in China in the first quarter of 2007 to 360 thousand units and seize 10% of the market in the long run. The US automaker has been strengthening its China operations through its local JV partner, Chang'an Automobile.
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June 19,
2006
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Chinese Automotive Export:
Gradual Shift from Developing to Developed Markets
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China's complete vehicle export by exported unit has increased fourteenfold in the last five years to 196 thousand units, while export amount grew tenfold to 1.64 billion US dollars. An export shift from commercial vehicles to passenger cars and from developing countries to developed countries seems to be taking place in China's automotive industry.
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Employment in China's Automotive Industry:
Headcount Reached an All-Time High in 2004
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With the industrial growth and business expansion of China's automotive industry, an increasing number of workers have been employed in this sector since 2001. The number of knowledge workers is anticipated to increase as production capacity, new product development, sales network, business management, and overseas business expand.
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June 12,
2006
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Guangzhou Automobile Group Suppliers:
Localizing Materials and Component Procurement
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Guangzhou Automobile's parts procurement activity mainly focuses on Guangzhou Honda, a passenger car maker which provides 97% of total group output and Guangzhou Toyota which has just begun operations in May 2006. Japanese suppliers with close ties to Guangzhou Honda have adjusted their production to the automaker's output.
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Japanese Sub-Component and Raw Materials Suppliers in China:
Localization Efforts by Parts and Materials Makers
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The growth of China's auto parts industry has been urging parts makers lately to not only build an effective supply system but also cut costs and put more attention on quality control in China. Large-scale production of parts and materials, and the implementation of the new KD import regulation in July 2006 show their direct effect on local parts procurement.
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June 5,
2006
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Foreign Auto-Related R&D Centers in China:
Strengthening Capabilities to Meet Local Needs
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Global automakers started to establish R&D centers in China right around 2002 after having established their China operation bases. Starting from 2005, automakers have been putting more emphasis on safety and environmentally friendly products regarding automobiles destined to the China market.
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FAW Group Suppliers:
Cutting Costs through Outside Supply
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FAW's domestic parts procurement cost reached 72 billion yuan in 2005, up 9.6% from a year earlier. Starting from 2005, FAW set out a plan to lower procurement from group members and increase supply from outside sources to cut costs. The automaker urged its group suppliers to cut parts prices by 20% and laid out a plan to increase local content of models produced in JV with global OEMs.
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May 29,
2006
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Cost Reduction in China:
Adopting JIT and More Efficient Production Systems
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China's automotive industry has turned into a relentless battlefield in recent years, driving Volkswagen into the red and causing havoc for other OEMs. Global automakers are cutting costs not only in China but also in their home countries, implementing JIT and more efficient production methods.
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External Marks of Automobile Products:
Chinese-Only Regulation on Makers' Names
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In an effort to support Chinese automakers, the central government drew up a measure to November 2005, forcing automakers to indicate brand name and company origin on the external body of locally made automobiles in Chinese inscriptions. The new law caused a stir among global OEMs.
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May 22,
2006
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AB Volvo in China:
Seeking Partnership with Dongfeng through Nissan Diesel
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AB Volvo purchased a 13% stake in Nissan Diesel from Nissan in March 2006. Through the Nissan Diesel deal, Volvo is intending to expand its business operations in China's commercial vehicle segment by forming partnership with Dongfeng Motor Co., Ltd. , 50% owned by Nissan.
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Hyundai Mobis in China:
Tight Relationship with Group Members
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Hyundai Mobis has drawn up a plan to increase production capacity of cockpit modules and chassis to 1 million units by 2008, adjusting its annual capacity to Beijing Hyundai Motor and Dongfeng Yueda Kia Automobile. The Korean module supplier plays a central role in the Hyundai Kia Automotive Group's procurement strategy.
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May 15,
2006
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Sino-Foreign Joint Ventures in the Automotive Industry:
Implications of Partnership Patterns
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China's administrative regulations on global automakers restrict the number of Sino-foreign joint ventures to two per foreign OEM and foreign investment ceiling to 50%. Since 2000, cut-throat competition among OEMs in China demands rapid managerial decisions which prove to be difficult for foreign automakers with two local partners.
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Ssangyong Motor:
Upping Sales with SAIC Support
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With the support of SAIC, Ssangyong Motor is aiming to increase global sales to 340 thousand units and net sales to 7.4 trillion won annually by 2010. To realize its target the Korean automaker will invest 2 trillion won in the next five years, increasing annual investment by 25% from 300 billion won in 2005 to 400 billion won.
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May 8,
2006
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China's Independent Automakers:
Independent Brands Climbed to No.2 Spot in 2005
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In 2005, independent brand makers outperformed their European counterparts, seizing 25% of the market. The driving force behind this spectacular sales growth is an increasing demand for moderately-priced domestic-made passenger cars in inland cities. But independent Chinese automakers are unable to develop original technology on their own, making them highly dependent on foreign technology.
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Steering Systems Production:
KD Import Regulation to Boost Demand
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After a peak in steering systems production by global suppliers in 2003, output began to decline as a large number of KD assembled automobiles flooded China's market. Demand for steering systems is expected to pick up again as the new KD import regulation takes effect in July 2006, likely spurring global suppliers to strengthen local operations.
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April 24,
2006
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Regulations in 2005/2006:
Growing Emphasis on Low-Pollution Automobiles
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In 2005, the central government introduced nine administrative regulations in the areas of automobile distribution and parts procurement. On the other hand, in 2006, Beijing seems to put more emphasis on automobile taxation and environment protection, introducing four tax reforms, three environmental regulations, and only one administrative law on domestic distribution.
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Shanghai Automotive Industry Corporation Group:
Original Brand Models Are on Their Way
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In November 2005, SAIC made public that as part of its 11th 5-Year Plan the maker will invest 10 billion yuan in R&D to develop original brand models. By 2010, SAIC expects to launch 5 or mode of its original brand models, producing 200 thousand original-brand passenger cars and 400 thousand original-brand commercial vehicles.
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April 17,
2006
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China's Motorcycle Industry in 2005:
Sagging Domestic Demand Spurs Overseas Expansion
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In 2005, China's motorcycle production increased 6.7% to 17.77 million units from a year earlier. It is more than likely that the motorcycle industry will satisfy its 20 million-unit goal laid out in the 11th 5-Year Plan, but looking at 2005 sales results, it seems that expansion of export will play a decisive role in it. Since Chinese makers were unwilling to adjust output to a cooling domestic demand in 2005 they turned to overseas markets, lowering unit value to boost foreign demand.
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Great Wall Motor:
Diversifying Lineup to Maintain Profitability
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Great Wall Motor's short-term target is to increase sales by expanding its current lineup, launching not only SUVs and pickups but also other passenger cars. But GWM's heavy dependence on SUVs and pickups poses a problem for the Baoding-based maker to change its orientation from SUVs and pickups and increase its presence in the passenger car (non-SUV) sector. Currently GWM is laying the foundations for a stable business growth in other segments and from 2007 the maker will launch its own MPV and another passenger car model.
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April 10,
2006
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KD Vehicle Identification Rules:
Auto Makers Promoting Localization before Enforcement
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In April 2005, the central government put KD vehicle identification rules in force, tightening restrictions on imported content of locally assembled vehicles. Eventually the restrictions were postponed until July 2006, due to holes in the enforcement process of the new rules. For global automakers, KD regulations could put cost management in jeopardy in China.
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Hatchback Passenger Car Sales in 2005:
Growing Demand for Hatchbacks among Young Urbanites
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Since 2002, sales of domestic-made hatchback passenger cars have been on the rise with a large demand coming from urban residents under 40. In China, where sedans rule the passenger car market, hatchbacks are taking an increasing share of the market, indicating a gradual change in consumer taste.
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April 3,
2006
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China's Social Classes:
Growing Influence of the Middle Class on the Auto Industry
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According to the Chinese Academy of Social Sciences, China's middle class reached 250 million people in 2001. With the expansion of the middle class, the diversification of consumer needs is expected to grow. Given that the middle class will form China's core, the level of expansion and the average income of this class are believed to be decisive factors in the future growth of China's automotive industry.
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Hyundai Motor Group in China:
Aiming to Triple Auto Sales to 1 Million Units
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The Hyundai Motor Group predicts that China's passenger car market will grow by 9-10% until 2008 when the Beijing Olympic Games are held. The Korean automaker has set out an ambitious goal of selling 1 million passenger cars annually by 2008, capturing 20% of the market. To realize its target, the group will likely improve its products and reinforce its sales network.
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March 27,
2006
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Interviews with Global OEMs and Suppliers in China:
Original Brand is Considered a Key to Success
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As the domestic market rapidly grows, China's automotive industry is making efforts to acquire independent development capability and develop original brands. At the end of 2005, FOURIN conducted a series of interviews with foreign OEMs and suppliers in China, regarding the development of Chinese original products, deregulation of foreign investment, and the prospect of foreign-brand market share growth.
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The Steel Industry in China:
Global Makers Are Leading the Auto Steel Sector
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Surging growth in vehicle production has boosted demand for automobile steel in China. But the local steel industry is still not up the level to produce high quality steel for the automobile industry, making Chinese steel production highly dependent on global makers in terms of construction of coated steel factories and production capacity expansion.
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March 20,
2006
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Newcomers in the Auto Industry from Non-Auto Sectors:
Following the Success of Geely and Chery
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Independent automakers like Chery and Geely began operations in the late 1990s followed by 10 or so other companies from disparate industries in the 2000s. Although joining the auto industry has become stricter since, the number of companies which enter the auto sector has not been declining. Corporations from other sectors are drawn to the automotive industry expecting further growth of the market.
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National Projects and Their Influence on the Auto Industry:
Infrastructure Development Boosts Automobile Market
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To keep pace with China's rapidly growing economy the central government has recognized the importance of developing China's infrastructure and has been promoting large-scale projects since the late 1990s. The development of the nation's road network, urban infrastructure, and energy supply system has become the driving force of China's automotive industry. By 2004, China had the second longest expressway network after the United States.
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March 13,
2006
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Delphi in China:
Business Expansion through Chinese Customers
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Regardless of mounting problems that Delphi faces in North America, the company is building up its Asia-Pacific business with a focus on China. Delphi has identified China as the company's fastest expanding market and export base. The US parts supplier is aiming to increase business with Chinese OEMs by localizing R&D, testing, and parts procurement.
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Passenger Car Sales in China's Regional Cities:
Maintaining Double-digit Growth in Market Expansion
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Affluent people in large cities in China have been the driving force behind the nation's passenger car market expansion. But regional cities in China are catching up with their bigger counterparts and these newly expanding passenger car markets have been achieving double-digit vehicle sales growth since 2004. Such growth indicates that spending power is growing in China's regional cities.
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March 6,
2006
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2006 Passenger Car Sales Plan of OEMs in China:
Japanese Brands to Seize Top Position
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In 2006, domestic-made passenger car sales in China are expected to reach 4.15 million units according to CAAM, a 32.5% increase from 3.13 million units in 2005. Expected passenger car sales in 2006 are placed at a very optimistic level on condition that sales would increase 30% from a year earlier. Fierce competition is anticipated to take place in the medium/large sedan segment as a large number of new models arriving in the Chinese market in 2006.
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Isuzu in China:
Targeting at 10% Market Share of the Truck Segment
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Isuzu is aiming to capture 10% share of the Chinese truck market by 2010. To realize its target the Japanese maker increased its stake in Qingling Motors to strengthen its decision making power over management and began promoting engine sales to outside parties. Isuzu is planning to expand truck sales from 35 thousand units to 100 thousand units, most of which will be produced by Qingling Motors.
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February 27,
2006
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Jiangxi Changli Automobile Spring:
Focusing on Leaf Springs for Commercial Vehicles
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The Nanchang-based leaf spring manufacturer has been expanding its production capacity, by establishing new joint ventures and starting a new project by setting up an industrial park. Jiangxi Changli achieved double-digit growth in the first half of this decade increasing sales to 1.22 billion yuan in 2004. However net profit in the first 9 months of 2005 suffered a setback due to soaring material prices, which the maker intends lower by cutting sourcing costs.
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Passenger Vehicle Models to Be Introduced in 2006:
Chinese Predominance in New Launches
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According to FOURIN's research, 35 passenger vehicle models are scheduled to be launched in 2006 in China. The 11th 5-Year Plan of China's automotive industry is putting an emphasis on independent development of Chinese models. Supported by government incentives, 40% of all new models to be launched in China are original Chinese models. Possibly due to high oil prices and fuel consumption regulations introduced in 2005, the number of small car models to be launched in 2006 will increase from 9 in 2005 to 12 in 2006.
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February 20,
2006
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China's 2005 Commercial Vehicle Sales:
Tough Sales Year for Trucks and Buses
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A drop in commercial vehicle sales in 2005 is caused by the central government decision to rein in China¡Çs fast growing economy and soaring global oil prices. Both, truck and bus sales dropped in 2005 by 5% and 7.3% respectively. Although competitively priced commercial vehicles achieved export growth mainly to developing countries, overall sales did not reach 2004's level.
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Automotive Seat System Suppliers in China:
Promoting Localization in Sourcing and Product Development
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In 2004, auto seat production surged 85% from a year earlier. As for now, most of the customers of major global seat makers in China are passenger vehicle manufacturers. Currently commercial vehicle manufacturers produce seat systems in-house but if this tendency changes and they take notice of the advantages that passenger vehicle seats offer seat business of global makers could enjoy further growth.
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February 13,
2006
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China's 2005 Passenger Vehicle Sales:
Japanese Seized the Top Spot from Europeans
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In 2005, China surpassed Germany and became the third largest passenger vehicle market in the world after the US and Japan. Largely influenced by soaring global oil prices, consumers in China tended to purchase vehicles with small engine displacement driving up sales of Chinese automakers. As European sales share slipped to the third Japanese makers rose to the top for the first time.
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Cummins in China:
Promoting Engine Supply to Local CV Makers
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Cummins, a US diesel engine manufacturer, has a long history conducting business in China even before global automakers started setting up JVs in the world's most populous country. China is the second largest market for Cummins after the US and the maker has been establishing JVs with Chinese automakers to supply local automakers. To answer increasing demand for environmentally friendly products Cummins Westport is increasing business in China supplying LNG engines for buses used by Beijing Public Transport.
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February 6,
2006
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Geely's Detroit Debut:
Chinese Advance to the US Market
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Geely Automotive Holdings became the first Chinese automobile manufacturer to exhibit at the Detroit Auto Show in January 2006. Despite Geely's modest - one model - exhibition, the privately owned Chinese automaker has big dreams to realize in the next few years. According to Geely's US representative, Mr. John L. Harmer, 2 Geely models will hit the US market in 2008 and 5 years after launch, annual sales are anticipated to reach 100 thousand units annually.
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Volkswagen Group in China:
"Olympic Program" to Restructure China Operations
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The Volkswagen Group has launched the "Olympic Program" in China to breathe life into the company's China operations. The plan was introduced in response to the German maker's shrinking production share since 2003 in China. Declining profitability is blamed on intense competition, increase in raw material prices and drop in vehicle prices. The maker hopes that ceasing production expansion and cutting costs will stop Volkswagen's diminishing production share.
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January 30,
2006
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IT Solution in China's Automotive Industry:
Integrating Management to Cut Costs
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ERP solutions have been rapidly gaining ground in China's automotive industry as cost competition and high material- and oil prices force makers to cut costs. While Western automakers integrate their entire operations by ERP systems from receiving an order to shipping, their Japanese and Korean counterparts employ IT tools in areas only where their practical utility is considerable. Chinese firms on the other hand, take a cost-conscious approach when it comes to implementing ERP solutions.
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Guangzhou Automobile Industry Group:
Aiming to Produce 1 Million Passenger Cars and 230 Thousand CVs
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Guangzhou Automobile has set it out in its 11th 5-Year Plan to quadruple sales by 2010. The company's mid-term strategy reveals that the automaker is expanding production capacity by setting up a new greenfield plant and increasing capacity of existing factories. Unlike a number of other Chinese makers Guangzhou Automobile has not disclosed any information on the group's original brand model development efforts.
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January 23,
2006
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Low-Pollution and Fuel-Efficient Technologies:
Growing Emphasis on Next-Generation Vehicles
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In recent years, low-pollution and fuel-efficient vehicles are getting a greater share in China as air pollution and rising oil prices force the automotive industry to cope with these new circumstances. In the wake of the introduction of Toyota's hybrid Prius, other Japanese makers are readying themselves to launch their own hybrid vehicles in China. European manufacturers are focusing on the introduction of diesels in China as Europe¡Çs environmentally friendly vehicle parc is made up of such vehicles.
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Dongfeng Motor Corporation:
Setting 2010 Sales Target at 1.2 Million Units and 200 Billion Yuan
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Dongfeng Motor Corp. (DFM) went public in December 2005 to invest future production capacity expansion by initial public offering. DFM wants to expand production capacity to 820 thousand passenger vehicles and 413 thousand commercial vehicles by 2010. Besides fund raising, Hubei-based automaker is trying to achieve its ambitious goal by letting its foreign partners have more say in decision making.
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January 16,
2006
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China FAW Group Corporation:
Aiming at 2 Million Units Sales and 20% Market Share
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FAW is set out to capture a 20% market share by 2010 producing two million units annually. Half of annual production will be made up of original-brand models. While FAW VW was plagued by sluggish sales in 2005 forcing the Sino-German JV to reduce production cost, FAW Toyota seemed to be doing fine opening its second plant in March 2005 and beginning the construction of its third plant October.
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Shanghai Automotive Industry (Group) Corporation:
Self-Developed Brands Are in the Making
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SAIC has laid out in its 11th 5-Year Plan to increase production capacity and foray into the commercial vehicle business. China's No.1 carmaker not only increases production but determined to develop its own passenger- and commercial vehicle brands. Self-developed brands are expected to account for 30% of all SAIC group output by 2010. SAIC¡Çs two JV partners, Shanghai GM, and Shanghai VW are implementing changes as well to cope with new realities in the automotive industry.
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January 10,
2006
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Engine Capacity Forecast until 2010:
Passenger Vehicle Engines Are Maintaining the Lead
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China's 72 automotive engine plants had a combined production capacity of 10.57 million units in 2005. Capacity is expected to grow in the next five years by about another five million units despite KD regulations, emission restrictions, and high fuel prices that have been causing headaches for engine manufacturers.
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Toyota in China:
Shifting Focus from Expansion to Efficiency
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Toyota has been stepping up production in China establishing the third assembly plant of Tianjin FAW Toyota and a second production line at Guangqi Toyota Engine. Although the Aichi, Japan-based maker expanded its product line in China, production per model fell in 2005 causing Toyota to announce an advertisement budget increase of existing models from 2006 to improve model recognition.
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December 26,
2005
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Audi in China:
Facing Sluggish Sales Owing to Intense Competition
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Audi has been putting an emphasis on the US and China markets to up sales to one million units by 2008. The German maker launched the first foreign luxury car on the Chinese market in 1999 reaching top-brand status in 2004. However, as newcomers are eager to stake their claim of the Chinese luxury car market, Audi puts new products on the market and shortens product launch cycle to stay ahead of its rivals.
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Chery Automobile:
Acquiring Advanced Technology with an Eye on Export
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As Chery Automobile strives to become a leading independent automaker, its road to success is plagued with IP disputes with global car makers. The maker established an R&D center in 2003 to ensure future growth by self-developed technology. Supported by government incentives until 2008, Chery Automobile is aiming to expand its presence not only in developing markets of the world but also in mature markets of Europe and North America.
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December 19,
2005
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China's Truck Industry:
Economic Growth Boosts Heavy-Duty Truck Demand
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China's truck industry is going through gradual change as demand from medium-duty trucks is shifting to heavy-duty trucks boosted by a seemingly unstoppable Chinese economic growth. As demand increases for heavy-duty trucks in the construction and distribution industries, additional investors are eager to take a slice of the market. Increased competition has prompted focus to shift from cheap products to overall cost performance.
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Listed Chinese Construction Machinery Manufacturers:
Losing Profitability Due to Falling Demand
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The central government's tight-money policy, introduced in 2004, delivered a serious blow to Chinese construction machinery manufacturers in China. Not only demand but prices also well fell in the first half of 2005 however business is expected to pick up as the 2008 Olympic Games in Beijing and the 2010 World Expo in Shanghai draw closer. Having an optimistic view of the future, foreign construction machinery manufacturers were reinforcing operations in China in the second half of 2005.
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December 12,
2005
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The Eleventh 5-Year Plan:
Emphasizing the Development of Chinese Brands
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China's 11th 5-Year Plan, beginning in 2006, follows the path that has been embarked on by the previous plan. In the new plan the central government continues to encourage the acquisition of world-level technology and lays out an ambitious strategy for the Chinese automotive industry to develop Chinese brands and go global. The 11th 5-Year Plan puts a special emphasis on environment protection, emission regulations, and clean fuels as the world's most populous country soon to become the third largest automobile manufacturer of the world.
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Tire Manufacturers in China:
Local and Foreign Tire Makers Focus on Market Trends to Survive
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Thanks to China's humming automotive industry, tire demand has been on the rise in China. However, overproduction, resulting from the fluctuation of demand, has been forcing tire makers in China to look for business elsewhere, namely the aftermarket and markets abroad. Burdened by cut-throat competition and soaring raw material prices, makers will have to provide high-performance and fuel efficient products to stay in business in China.
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December 5,
2005
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Vehicle Ownership in China:
Private Registrations Reached 55% in 2004
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The number of vehicles on China's roads has been accelerating at an astonishing pace. After decades of truck domination, buses and passenger vehicles took the lead in 1998 as China's automobile production is vigorously expanding. Private vehicle consumption is helped along with extensive road construction and private ownership-friendly regulations, and is boosted by a sizzling GDP growth.
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Bosch in China:
Focusing on Diesel/Chassis Control System Operations
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Bosch is expanding operations in China as one of the fastest growing economies in Asia is expected to outperform Germany's automobile production in 2006. With the anticipation of diesel and chassis system demand growth in China, the German maker is approaching these businesses with a pioneer spirit despite the fact that current market demand in China is considerably below global levels.
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November 28,
2005
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China Brilliance Automobile:
Building a Brand Strategy for the Zhonghua
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In 2002, the China Brilliance Automobile expanded its light bus and light truck lineup with the group's own passenger car brand, the Zhonghua. However, as product diversification and price competition grew more intense on China's passenger car market, the Zhonghua lost some of its competitive edge to other brands and in the first eight months of 2005 sales results fell 45.1% to 5,380 units from the same period of a year earlier.
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Emission Regulation in China:
Both Central and Regional Governments Reinforce Emission Rules
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As a result of vehicle registration and production expansion, environmental and energy issues have become serious, which could hamper further growth of the Chinese automotive industry. Both the central government and regional authorities are forced to pursue solutions to these problems. In April 2005, the State Environmental Protection Administration decided that Euro III level emission rules would be enforced on light vehicles from July 2007.
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November 21,
2005
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China's Motorcycle Production in the First Half of 2005:
Output Plunges Despite Surging Export
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In the first half of 2005, motorcycle (including 3-wheelers) production in China dropped 7.2% to 7.55 million units from the same period of a year earlier. Domestic demand decreased 29.4% to 4.44 million units in the first six months of 2005 but export went up by 68.3% to 3.11 million units complementing sagging domestic demand. However surging export failed to improve overall output in the first half of the year.
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Impact of the Merger of Koyo Seiko and Toyoda Machine Works:
Aiming to Be A Leading Steering System Supplier in China
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In February 2005, Toyota group suppliers Koyo Seiko Co., Ltd. (Koyo) and Toyoda Machine Works Ltd. (Toyoda) decided to carry out a merger. The two manufacturers agreed to merge in January 2006, three months earlier than planned. The new company "JTEKT" aims to become a world class steering/drivetrain system supplier, and in China, to expand operations and improve efficiency by consolidating overlapping businesses.
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November 14,
2005
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Six Largest Global Players in China:
Shifting from New Model Launches to Profitability
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The top six foreign automotive manufacturers, VW, Hyundai, GM, Honda, Toyota, and Nissan, on the Chinese passenger car market are taking aim to increase their presence by expanding production and product competitiveness. While VW, Hyundai, and Honda sales share outperform each company's global sales share, GM, Toyota, and Nissan sales share in China are below those companies' respective sales share on the global market.
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Navigation System Industry in China:
Foreign Suppliers Strengthening Partnerships with Local Companies
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Demand for navigation systems or global positioning systems (GPSs) is expected to rise in China, according to sources from the related industry. As of 2004, approximately 100 thousand sets were sold. But combined OEM and aftermarket demand is expected to rise to 500 thousand sets annually targeting mostly passenger cars within the price range of 100-300 thousand yuan until the end of 2007.
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November 7,
2005
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Automotive Industry Profit in 2004:
OEMs Sustained a Drop in Income
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The combined sales of the top 30 vehicle industry related companies reached 638.2 billion yuan in 2004, up 15.7% from a year earlier. Total net earnings of the top 30 increased 45.2% from 2003 to 43.4 billion yuan. As stated by statistical figures of the Ministry of Commerce, the automotive industry's profit in 2004 was a little less than 71.985 billion yuan, a 6% or 4.552 billion yuan decrease from 2003.
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Shanghai Diesel Engine:
Partnering with Japanese Makers to Comply with Emission Standards
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Shanghai Diesel Engine Co., Ltd. is a middle-ranking diesel engine producer in China. In 2004, the maker represented 2.5% of all diesel engine production in China and ranked at No.12 among 33 diesel engine manufacturers. It seems that this engine manufacturer aims to acquire technology to reduce emission of harmful gases and cope with the introduction of emission rules, including Euro III.
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October 31,
2005
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Beiqi Foton Motor Co., Ltd.:
Business Diversification in Pursuit of More Profitability
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Beiqi Foton Motor Co., Ltd. is a major commercial vehicle manufacturer in China.The CV maker announced that it would aim at sales of more than 380 thousand trucks in 2005. However, its ambition was hampered in the first six months of 2005. Sales revenue and net profit declined in the same period.
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Vehicle Parts Sourcing in China:
OEMs are Forced to Increase Cost Competitiveness
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China's entry into the WTO in 2001 has brought about the relaxation of regulations previously imposed on China's¡¡automotive industry. However model diversification, price cutting, yuan hedging and other tactics are making cost competitiveness a difficult task.
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October 24,
2005
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Chongqing Municipality:
Development Plan to Attract Investment
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Chongqing municipality, with a population of over 30 million, is the economic center of inland China. According to the Chongqing Municipality Automobile and Motorcycle Industry Development Plan, announced in November 2004, the municipality plans to increase automobile production capacity to one million units by 2007 and 1.5 million units by 2010. The undertaking would enable Chongqing to possess 15% of China's automobile production capacity.
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Shanghai Automotive Industry Corporation Group:
Aiming to Produce Original Models Using Rover's Technology
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Shanghai Automotive Industry Corporation announced in July 27, 2005 that, together with its subsidiary Shanghai Automotive Co., Ltd., they established a joint venture called SAIC Luwei Co., Ltd. to develop original brand models. According to media reports, SAIC Luwei intends to develop its own passenger car brand, by making use of platform production technology of the Rover 75 and 25 that SAIC acquired in 2004.
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October 17,
2005
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ThyssenKrupp:
Focusing on Auto-related Business in China
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Owing to growth perspective in the Chinese automotive industry, ThyssenKrupp has expanded its presence in the auto parts and materials fields in China. The German steel making giant aims to double its sales revenues in the steel, auto parts, and industrial machinery fields to 800 million - one billion euro from the current level of 382 million euro.
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Agricultural Vehicle Market in China:
Shrinking Production Prompts Diversification
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In the first half of 2005 agricultural vehicle (also called rural transporter) production in China dropped 4.9% to 991,628 units from a year earlier. Decreasing output has been continuing for two consecutive years since 2004. Four-wheeled agricultural vehicle production slid 9.4% to 216,257 units and 3-wheeler production fell 3.6% to 775,371 units in the first six months of 2005 from a year earlier.
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October 11,
2005
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Fiat in China:
Forced to Localize Sourcing and Find a New Partner
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Fiat has operated its business through three joint ventures in China: a passenger car production joint venture Nanjing Fiat, and two commercial vehicle making partnerships, Nanjing Iveco and Changzhou Iveco. However, Fiat has suffered from sluggish sales in its passenger car business and has been forced to review its commercial vehicle operations.
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Mini Vehicle Ownership in China:
Central Government to Phase out Restrictions
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As a result of a vibrant Chinese economy, vehicle ownership grew in China by 1.7 times from 16.1 million vehicles in 2000 to 27.1 million vehicles in 2004. However, the driving force behind this trend is commercial vehicle and passenger car sales, while mini car ownership growth remained at 3%, reaching 363 thousand vehicles, in 2004 from a year earlier.
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October 3,
2005
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China's Vehicle Production Capacity:
Passenger Cars Take the Lead
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According to reports on production capacity from vehicle manufacturers and FOURIN's own research, the 184 vehicle production plants existing in China as of 2005, has the capacity to produce 10.81 million vehicles. This figure is expected to rise to 14.78 million units in 2007 and to 17.47 million units in 2010. Capacity is mostly driven up by major automobile companies who hope to increase market share and by domestic newcomers from disparate industries.
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China's Import Car Market:
Beijing's New Regulations Caused Negative Impact
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The import car market in China was expected to expand in 2005, as quota on imported cars was abolished in January 2005 and tariff on imported cars was reduced to 30.0% from 34.2-37.6% in 2004. However, the number of imported passenger vehicles in the first six months of 2005 amounted to 58 thousand units, down 29.3% from a year earlier, which means the Chinese import car market did not achieve any growth.
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September 26,
2005
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Passenger Car Sales in China:
First Half of 2005 Sees an 8.5% Increase
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China's passenger car sales (domestic sales, including import, but excluding export) rose 8.5% to 1.843 million units. As a result of 2004's tight money policy, monthly sales were sluggish from June 2004 but it regained strength again from March 2005. Sales increased in May and June by 22.5% and 48.7% respectively, from the same period of 2004. If sales can maintain their current performance in the second half of 2005 as well and exceed sales figures of the first half of the year then domestic sales in the whole year of 2005 will possibly grow 20% to 3.7 million units.
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Dongfeng Motor Co., Ltd.:
Nissan's Initiative to Sell 620 Thousand Vehicles in 2007
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In March 2005, the passenger car division of Dongfeng Motor Co., Ltd. (Dongfeng Motor), which was established by Dongfeng Motor Corporation and Nissan Motor Co., Ltd., became Dongfeng Nissan Passenger Vehicle Company, in order to make use of Nissan's brand recognition. It became clear that Nissan will take the initiative in Dongfeng's passenger car business. In November 2003, Dongfeng Motor unveiled its mid-term strategy called "Plan Two Cubed", which aims to double sales units and revenue in 2007, compared with 2003's figures.
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September 20,
2005
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Commercial Vehicle Sales in China:
Demand for CVs Starts to Slow Down
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In the first half of 2005, 917,826 units of domestically produced commercial vehicles were sold in China, an 8.3% increase from a year earlier. Truck sales rose 10.9% to 795,146 units. However growth in demand for trucks slowed down, as truck sales grew 23.8% in the first half of 2004. Bus sales growth also dropped from 16.7% in the first half of 2004 to 5.7% in the same interval in 2005. Regarding CV sales, a general slowdown seems to be evident.
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Clarion in China:
Shifting Focus from Export to OEM and Aftermarkets
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Clarion has made use of China as a production base to supply low-cost products to the world. However, recently, the car audio system maker has been focusing on OEM products for Chinese auto makers and aftermarket products as a result of the growing auto market in China. For Clarion, China is not only a place to produce export-oriented products, but an important base to supply their products for the Chinese market.
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September 12,
2005
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Mazda in China:
Aims to Triple Sales by 2010
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Among Japanese automakers, Mazda is the last one that forayed into the China market. However according to its China business plans announced in the beginning of 2005, Mazda aims to triple sales from 100 thousand units in 2004 to 300 thousand units in 2010. To stay true to its announcement Mazda will have to sell over 30 thousand units of each of those eight models that will launch in the coming years. It will take some brand equity improvement to turn this plan into reality.
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The Chinese Small Bus Market:
Makers Forced to Differentiate Products
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Demand for small buses in China has expanded to 407 thousand units in 2004 from 184 thousand units in 1998 (these figures include factory shipments and imports). In China, classification of vehicles into small buses (3.5 - 7 meters long) is not clear, because vehicles categorized as small buses include some SUVs, MPVs, and special purpose vehicles. As of 2004, demand for actual small buses for mass transport in China is estimated at approximately 180 thousand units.
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September 5,
2005
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Shanghai International Auto City:
New Phase in Shanghai's Auto Industry
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Along with the economic growth of Shanghai since the 1990s, starting with labor cost, various expenses rose. As a result Shanghai's competitive strength as a production base for labor-intensive products gradually dropped compared to other regions of China. Because of that, vehicle-related companies that start new business in Shanghai have shifted to open high added value production bases. By making the best use of the accumulated local facilities related to the automobile industry, an increasing number of product engineering centers and China or Asia-Pacific headquarters have been established.
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Revaluation of the Yuan to the US Dollar:
Impact of the Revalued Currency on Auto Makers
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On the evening of July 21, 2005, the People's Bank of China, China's central bank, announced that China abandoned the yuan's peg to the dollar (8.28 RMB to the dollar) and let it float against a basket of currencies, including the US dollar and the euro. As a result of the revaluation of the yuan, prices of imported auto parts will decrease, while prices of dollar-based exported vehicles and auto parts will increase. Companies operating in China will be forced to minimize the risk caused by the yuan's exchange rate fluctuation.
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August 29,
2005
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FAW Group:
Output Growth Calls for Partnership with Banks
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As the output of FAW is expanding, product payment recovery rate has been dropping. To break this cycle of chronic lack of short-term funds, for the first time, China Construction Bank (CCB) along with China Merchants Bank (CMB) expands its services by offering settlement and credit inspection.
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Dongfeng Group in Partnership with Banks:
Reinforcing Fund Management and Auto Loan Services
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Dongfeng Motor Corporation has formed partnership with four major national banks in China in various fields, such as auto loan services and settlement. The auto maker has also built up business relations with private financial corporations.Furthermore, in March 2005, Dongfeng agreed to partner with foreign banks in order to introduce know-how on fund management from foreign financial institutions.
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August 22,
2005
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Fujian Motor:
Aiming to Secure 5% of the Market by 2010
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Fujian Motor Industry Group is a major automobile manufacturer headquartered in Fuzhou, Fujian. The company has set up Southeast (Fujian) Motor as a joint venture with Taiwan's China Motor and owns several listed subsidiaries. Fujian Motor's aim is to hold 5% of the Chinese vehicle market by 2010. The maker intends to produce 500 thousand vehicles by that time relying on its superior logistic system in the coastal regions, efficient resource management, subsidiary integration, and through joint ventures with foreign investors.
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Protection of Vehicle-related Intellectual Property in China:
Foreign Automakers Act against Counterfeits
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China adopted rules on protecting of intellectual property rights as a result of WTO affiliation in December 2001. However, disputes over intellectual property have not come to an end. In fact, recently, copied products are created in a more professional way. Therefore, foreign manufacturers in China have been actively collecting information on counterfeit products and thoroughly inspecting those with an aim to disclose products that infringe makers' intellectual property rights.
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August 8,
2005
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Siemens VDO Automotive:
Shifting Focus to China
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Siemens VDO Automotive expects that business operations in Asia, especially in China will help the maker achieve further growth. Therefore, the maker has increased capital investment in its joint ventures, relocated its Asia HQ office to Shanghai, and promoted automotive electronic products that will create more demand in China, in order to reinforce its China operations.
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Major Automobile Machinery and Equipment Makers:
Coping with Growing Demand
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With demand growth, automobile and parts production capacity of the industry's machinery and facilities is expanding. Along with exporting high-performance machinery to China, major machinery manufacturers of the world are intending to expand equipment production in line with local customer demand. Furthermore, to strengthen maintenance and after service, makers are engaged in service station constructions mainly in the coastal regions of China.
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August 1,
2005
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Comparative Analysis of Hit Models in China:
Fuel Efficiency as Major Purchasing Factor
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As of May 2005, 82 passenger car models out of the 122 China-produced models went into production since China's WTO entry at the end of 2001. Throughout 2004 and in the first five months of 2005, there were 14 so called hit models that were able to maintain sales expansion compared to the same period of a year earlier.Out of these 14 models, six were developed by Japanese, three by Korean, and four by Chinese makers, and one by a German manufacturer.
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DaimlerChrysler Group in China:
Overcoming Challenges
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DaimlerChrysler in China has faced a number of challenges. The auto maker will have to revive declining production of Beijing Jeep, promote local auto parts procurement that supports local production of Mercedes-Benz brand vehicles, and consolidate its commercial vehicle business partnerships with local partners. Furthermore, DaimlerChrysler is forced to improve business efficiency of several brands, including Chrysler, Jeep, and M-Benz if the maker wishes to maintain M-Benz's luxury brand image.
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July 25,
2005
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Light Truck Market Reaching 1.4 Million Vehicles in 2015:
Promoting Lower Emission Engines and Customer Service
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According to CAAM, demand for light trucks in China grew to 808 thousand vehicles in 2004 from 292 thousand trucks in 1998. In the first four months of 2005, it reached 275 thousand vehicles, up 3.6% from a year earlier. FOURIN forecasts that demand for light trucks in China will grow more than 5% annually until 2015, due to increasing need for small-load, short-medium-distance transport vehicles for intra- and interurban use.
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SAIC-GM Capital Raise for PATAC:
Transforming China's Vehicle Industry
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Pan Asia Technical Automotive Center Co., Ltd. (PATAC) is a technical and design center, which was established in 1997 as a 50:50 joint venture between SAIC and GM. PATAC is involved in next generation vehicle and parts design, such as vehicle systems, engines, chassis, transmissions, and exhaust systems. It also tests, adjusts, and validates vehicles and performs interior/exterior technical service. In 2004, SAIC and GM increased capital by 250 million USD to build China's most advanced vehicle testing ground and several new world-class facilities.
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July 19,
2005
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Shanghai Baosteel Group Corporation:
Expanding Auto-related Business to Join Big 3 Steel Makers
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Shanghai Baosteel Group Corporation is the largest iron and steel manufacturer in China. The conglomerate, whose main products are automobile steel, ship building plate, etc, produced 21.41 million tons of steel products in 2004. Regarding its auto related business as the most important strategic field, Baosteel is to invest 50 to 60 billion RMB with the aim of becoming one of the top three steel makers in the world.
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Honda's Motorcycle Venture in China:
Business Localization Yields Growth
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Honda's motorcycle business in China started in 1981 with a technological cooperation agreement with Jialing Machinery Factory (now China Jialing Industrial). By 2005, Honda has expanded its operations by establishing four joint ventures in China. Because of the ban on motorcycles within city limits and stricter emission regulations, Honda has reformed its production system in China.
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July 11,
2005
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Japan's Vehicle Export to China:
Focus Shifts to Luxury Vehicles
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In 2004, Japan's vehicle export (incl. passenger cars, trucks, buses, special purpose vehicles, used vehicles, and CKDs) to China tumbled 31.5% to 760 thousand units and export revenue dropped 20.4% to 175.5 billion JPY from a year before. On the other hand, in 2004, the average price of exported vehicles reached 2.28 million JPY, the highest average since 1990.
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Dana Partnered with Dongfeng to Produce Axles:
Aiming to Be No.1 Commercial Vehicle Axle Maker in China
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In March 2005, a leading supplier of axles and driveshafts Dana signed an agreement with Dongfeng Motor Co., Ltd. to set up a joint venture that produces axles for commercial vehicles. Dongfeng has the second biggest production capacity for commercial vehicles in China (only behind FAW). Through the partnership with Dongfeng, Dana aims to expand its presence in the Chinese commercial vehicle market.
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July 4,
2005
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China Luxury Car Market:
Makers Target the New Rich
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Since the 1990s China's planned economy has been transformed into market economy and private entrepreneurs appeared in real estate, light industry, IT industry, and commerce. The executive body of major state-owned companies and foreign-affiliated businesses expanded in recent years, which created a wealthy consumer base for luxury cars.
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BMW Faces Challenges in China:
Forced to Increase Local Content and Decrease Inventory
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In October 2003, BMW started the 3 Series production at its joint venture, Brilliance BMW Automotive's production site. It also began to produce the 5 Series in December 2003. Total production from October 2003 to April 2004 reached 27 thousand units, while factory shipments during the same period amounted to 17 thousand units.
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June 27,
2005
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Dongfeng Group Auto Parts Procurement:
Reorganization through Outsourcing In-House Parts
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Prices were a crucial factor for Dongfeng Motor Co. in auto parts purchase during the 1980's and the 1990's. The vehicle maker sent orders to several manufacturers and chose the ones that supplied low-price parts. In recent years, Dongfeng began to rely on outside manufactures to procure auto parts that it produced in-house.
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Guangzhou Motors' New Strategy:
Streamlining Procurement
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Guangzhou Motors has been building up its vehicle parts business by taking the lead in component supply to Japanese makers. It has set up production plants in joint venture with Honda, Toyota, and Isuzu. As an effort to reduce procurement cost, Guangzhou Motors procures more and more components from local makers.
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June 20,
2005
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Suzuki's Market Strategy:
Selling Low Price Vehicles in Inland China
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Suzuki has been strengthening its product lineup, production system, and sales structure in China. As many of the products produced by local mini vehicle makers are based on Suzuki models, the Japanese manufacturer has been having a hard time in differentiating its models. So while focusing on low-price products, Suzuki offers high-level service.
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China's 85 Listed Automotive Manufacturers:
The Automotive Industry Sees Growth Slow Down
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According to the financial reports from 85 automotive makers listed on the Shanghai and Shenzhen stock exchanges, the total sales revenue of those makers amounted to 312 billion RMB in 2003. Looking at the average financial results per company, both sales and profit ratio saw a slight decline.
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June 13,
2005
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Auto Shanghai 2005:
Independent Makers Show Development Capabilities
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The 11th International Automobile and Manufacturing Technology Exhibition (Auto Shanghai 2005) was held April 22-28, 2005 in Shanghai. Local automakers displayed a number of independently developed models, showing that they have enhanced their design and development capabilities. Chinese makers aim to establish approved brands with the help of technology they have gained.
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FAW Auto Parts Procurement:
Aiming for Efficiency and Competitiveness
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In 2003, First Auto Works announced its auto parts procurement strategies for 2004 to 2008, aiming to reform FAW Group's parts purchasing system by making it more streamlined and efficient. In order to establish a competitive parts purchasing system, the group will follow current trends, such as adopting modularization and IT technology.
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June 6,
2005
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Aftermath of Anti-Japanese Demonstrations:
Latest Developments in Japanese Auto Sales
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Amid the fear of negative consequences of April 2005's anti-Japanese protests, CAAM announced in May its April statistics on vehicle sales and production. Japanese passenger car production share remained unchanged compared to the same period of 2004, but it slipped 2.3 points to 25.9% from a month earlier. Sales also decreased by 2.0 points to 27.2%. Production has been slipping for two months in a row, whereas sales have been decreasing for three consecutive months.
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SAIC's Joint Ventures:
Current Trends in Parts Procurement
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Shanghai Automotive Industry Cooperation's (SAIC) passenger car business is mainly built on two joint-ventures, Shanghai VW and Shanghai GM respectively. Both joint venture partners, VW as well as GM have different procurement policies, which means that the SAIC Group, as a whole does not have a universal procurement system.
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May 30,
2005
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Visteon in China:
Business Expansion in Partnership with Local Players
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Visteon, which is a former in-house auto parts production division of Ford, is one of the major autoparts manufactures in the world. In China, the US parts maker has succeeded in accepting orders from western vehicle manufacturers such as VW and GM, as well as becoming a supplier of Ford. In the Asia Pacific region, sales revenue in 2003 grew 25% from the previous year to reach 1.5 billion USD, majority of which came from business activities in China.
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Shanghai Aerospace Automobile Electromechanical:
HVAC Maker Stakes Its Claim in the Electronics Industry
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Shanghai Aerospace Industry Corporation, a subsidiary of China Aerospace Corporation, established Shanghai Aerospace Automobile Electromechanical Co., Ltd. (SAAE) in May 1998, which was listed on the stock exchange in June 1998. It is involved in a number of industries, such as aviation and energy, but particularly in the car parts industry. SAAE manufactures sensors, motors, power antennas, and other electronic controlled systems, but its major profit maker is car air conditioners, which account for 50% of its earnings. Its sales share is considered one of the best in the domestic market.
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May 23,
2005
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2004 Vehicle Production by Region:
Car Industry Extends Reach with New Production Bases
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By CAAM's count, Jilin, Shanghai, Beijing, Chongqing, and Hubei topped vehicle production ranking by region in 2004. Compared with 1998's ranking, Tianjin dropped out of the top five and Beijing jumped to the third in 2004. The top ten regions accounted for 88.0% of 1998's production share. But by 2004, this figure tumbled 12.4 points to 75.6%, indicating that vehicle production has been taking roots in other parts of China as well. Beijing owes its success to Hyundai's joint venture, the rapidly expanding Beijing Hyundai and China's biggest light truck manufacturer, Beiqi Foton, which has been swiftly increasing its production.
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MPV Market:
Mid and Large MPVs were 2004's Preferred Models
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In 2004, China's small and mini MPV sales experienced a 5.2 percent tumble, but mid and large MPV sales rose 15.7% compared to the year before. According to market estimates, in 2005 manufacturers will produce 190,000 units in total despite the fact that only about 145,000 units are expected to be sold. They are going to make up for this gap by slashing prices by 5 to 8 percent.
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May 16,
2005
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Auto Battery Industry:
Manufacturers Face Shift to Maintenance-free Batteries
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According to CATARC, in the first half of 2003 there was an 11 percent or 7.85 million KVAh increase of car lead-acid battery production in China. This figure includes mainly OEM production. The top three battery manufacturers produced 57 percent of all output in 1997, and that figure rose to 73 percent in 2003. During the same period, production of foreign-affiliated enterprises increased from 50 percent to 61 percent.
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Automotive Related Manufacturing:
Financial Results of 200 Major Players
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According to CATARC's 200 auto manufacturers' business results in 2004, the eastern region topped the sales revenue ranking with 334.8 billion RMB. Although Shanghai saw a decline in sales and production, the eastern region scored the best, thanks to a number of auto production sites concentrated in Jiangsu and Zhejiang. However, that region lost some points in revenue share, from 41.4% in 2003 to 38.8% in 2004.
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May 9,
2005
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Volkswagen Group in China:
Multi-Faceted Approach to Maintain 25% Share to 2013
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Volkswagen has been active in China longer than any other automaker, and the company hopes to build on that advantage to maintain their status as tops in the market. VW is expecting the passenger car market to reach around 7.85 million units by 2013, and they aim to maintain a 25 to 30% share of it. Working towards that goal, the company needs to continue to build its brand image, product line-up, and financial services to meet the demands of Chinese consumers.
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2004 Domestic Passenger Car Sales:
Revenue Up an Estimated 5%, Koreans Up, Europeans Down
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Passenger car production in China climbed from 2.15 million units in 2003 to 2.49 million in 2004. That 16% growth in unit sales was countered by heavy price cutting, and by comparing end-of-year prices and unit sales by model, FOURIN estimates that revenues climbed 5% over the same period. In 2003, 18 brands with local assembly capacity pulled in an estimated 304 billion RMB in revenues, and in 2004, those numbers grew to 21 brands and 320 billion. At the same time, the average retail price (on a sales weighted basis) went from 140,938 RMB in 2003 to 128,269 RMB in 2004; a 9% drop.
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April 25,
2005
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Mini Vehicle Manufacturers:
Looking to 2.5 Million Units Production by 2015
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Production of mini vehicles (equivalent to or based on the Japanese mini class) in China exceeded 1 million units in 2003 and reached 1.13 million in 2004. There is increasing demand for fuel efficient, entry level vehicles with reasonable maintenance fees, as well as delivery vehicles in big cities and short-distance transportation in rural areas. Based on those trends, mini vehicle production is forecast to reach 1.9 million units in 2010 and 2.5 million in 2015.
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Sumitomo Group in China:
Wire Harness Business Targets Non-Japanese OEMs
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Sumitomo Group has been active in China since the early 1990's, but development accelerated when the company set-up a flurry of new operations in 2004. While the group's automotive business spans a range of products including wire harnesses, sintered metal parts and brake systems, China operations have largely focused on labour-intensive wire harnesses. The company looks to realize cost savings as well as meeting growing demand in the Chinese market.
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April 18,
2005
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2004 Passenger Car Sales Trends by Model:
330,000 Unit Growth with 56 Gainers and 33 Decliners
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Sales of locally manufactured vehicles in 2004 rose 336,540 above 2003's results according to CAAM's count. Broken down by model, 40 nameplates showed sales growth and the year saw 16 new debuts. Together, those resulted in 681,579 unit sales growth. That figure was offset by the 39 nameplates that saw sales slip 345,039 units altogether. A large number of those cars that saw sales declines were introduced in 2002 and 2003. With restrictions on KD assembly lifted, automakers flocked to bring new models to market, but by 2004 the newness had worn off those designs, making it hard for them to make headway in the sagging market.
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China's Big 3 Automotive Groups:
Joint Venture Strategies Dictate Development Path
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Each of China's Big 3 Automotive Industry Groups has a mandate to move forward with their business through joint ventures, technological co-operation and independent initiatives. The powers in Beijing have laid-out in their auto policy how these automakers should develop, but each of these big players has taken a different approach to their operations. Patterns of management control and commitment to co-operation vary between these top three groups.
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April 11,
2005
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Weifu High Technology:
Bosch Partnership Aimed at Dominance in Fuel Injector Market
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Weifu High-Technology Company Limited, is China's largest manufacturer of diesel fuel injection systems and related parts. Technology acquisition began with a deal to make Bosch fuel injection pumps was reached in 1994, and relations with Bosch were reaffirmed with another tie-up in August 2004. With tougher emissions standards going into effect for commercial vehicles, the company sees opportunity in high-end fuel injection systems.
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Automotive Import Regulations:
New Definition of CBU Aims to Thwart CKD Assembly
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The Chinese government will enforce their "Administrative Regulations on Imported Autoparts Constituting Complete-Vehicle Characteristics" or "KD vehicle identification rules" on April 1, 2005, covering passenger cars, trucks, and buses but not including special purpose vehicles. After WTO required that import content restrictions for locally assembled be abolished, knock-down assembly was used by a number of global automakers to gain presence in the last few years. This latest move will make similar efforts more costly in the future.
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April 4,
2005
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Diesel Engine Manufacturers:
Production Expansion and Technological Development
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Diesel engine production in China amounted to 1.31 million units in 2004, up 22.1% from 2003, as demand for commercial vehicles was sparked by crackdowns on overloading of trucks. Trends show a shift towards higher output 280 hp engines for heavy-duty trucks and a preference for fuel-efficient engines for light trucks. In September 2003, standards equivalent to Euro II were put in place for trucks with GVW of 3.5t or more. Domestic manufacturers face the challenge of creating high-power, fuel-efficient and low-level gas emission engines. Acquiring the necessary technology is a major hurdle.
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China's Automotive Import/Export:
Auto Related Trade Deficit Halved in 2004
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China's automotive import/export value reached a record 30.57 billion USD in 2004, while the trade deficit in the auto sector became closer to balanced: After ballooning to 4.8 billion USD in 2003, the figure dropped to 2.5 billion USD in 2004. Since China's WTO agreement in January 2002, import tariffs have come down and restrictions on import content of locally assembled cars have been abolished. With that, automakers were free to expand operations through knock-down (KD) assembly, resulting in a sharp increase in autopart imports. That trend is starting to reverse as local production of autoparts becomes more competitive, and more suppliers start looking to export, as was seen in 2004.
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March 28,
2005
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Hyundai in China:
Local Production and a Full Line-Up to Reach 20% Share by 2010
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Looking to capture 20% of China's passenger car market by 2010, Hyundai estimates that will require about 1 million unit sales, based on their forecast of a 5 million car market. To reach that goal, the company plans to add two new models to their line-up in 2005, and one more model for every year to 2008. Along with an expanded line-up, achieving this growth will require efforts to localize production; a new factory and expansion of existing facilities should realize a capacity of 1 million units by 2008.
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Delphi in China:
Growth Seen in Electronics, Diesel Technology Sectors
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Delphi launched their first Chinese operations in 1993, and since then have expanded business to include manufacturing of a broad range of products. The company now sees opportunity in the fields of electronics and diesel engine technology, and is improving local technical capabilities to take on development work in those areas. Outside of OEM supply, Delphi is also looking to offer more products on the aftermarket, and establish a stronger presence there.
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March 22,
2005
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Japanese Suppliers' Investment in China:
Shanghai, Tianjin and Guangzhou Take On New Projects
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By FOURIN's count, between 1986 and December 2004 there were 570 cases of Japanese autoparts or material suppliers investing in China. The last four years have seen an average of more than 60 cases per year, as suppliers respond to local manufacturing projects from Toyota and Nissan. Broken down by form of investment, 58% of the projects (332) were joint ventures, while the remaining 42% (238) were wholly-owned operations. As a result of WTO affiliation, investment rules have been relaxed to some degree, prompting suppliers to choose 100% ownership in more cases than joint ventures since 2002.
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China's Taxi Market:
Fleet Replacement Demand Reaches 200,000
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The number of taxis on China's roads grew from 585 thousand units in 1996 to 903 thousand units in 2003, according to figures from China's National Bureau of Statistics. That represented expansion of more than 50% over 7 years. Demand has fed the growth of urban taxi fleets, but since 1998, taxi numbers have been rising less than 10% a year. Only about 30 thousand units are added to fleets every year, but on average, vehicles are being replaced every four to five years, creating demand of between 150 and 200 thousand units per year.
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March 14,
2005
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Independent Engine Manufacturers:
Emissions and Cost Targets Demand New Technologies
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According to the China Association of Automobile Manufacturers (CAAM), by the end of 2004 there were 24 automotive gasoline engine manufacturers in China. Of these, three independents stand out: Shenyang Aerospace Mitsubishi Auto Engine Manufacturing Co., Ltd., Shanxi Huaihai Machinery Factory and Mianyang Xinhua Internal Combustion Engine Factory. Not relying on single automakers, these companies have diversified customer bases. One of the major challenges they face in the future is meeting more stringent exhaust gas regulations, while at the same time more and more automakers are bringing engine production in-house.
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China's 2004 Passenger Car Market:
Curbs on Lending Depress Growth, Shift Down-Market
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By FOURIN's count, China's passenger car market was up 13% in 2004 to 2.54 million units. While the market showed remarkable growth in the past few years ? 30% in 2001 and more than 60% in 2002/2003 ? the powers in Beijing decided to rein in a booming economy in 2004 through curbs on lending, and that has led to a sharp drop in growth. A host of new models introduced in 2003 and later was a boon to the market, but automakers were quick to cut prices on those new models as well. Honda and Hyundai proved to be the big winners in the 2004 market, with Volkswagen one of the hardest hit.
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March 7,
2005
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2004 China Commercial Vehicle Market:
Government Regulations Prompt Replacement Demand
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Sales of domestically manufactured commercial vehicles in China came to 2.74 million units in 2004. That represented growth of 16%, as the segment's consistent growth outshined the passenger car sector, where growth was hit hard by the government's efforts to cool the economy. Since banks were ordered to be more tight granting loans, would-be buyers have been cut out of the market. In the commercial vehicle sector however, this was countered by crackdowns on vehicle overloading, which forced many businesses and contractors to upgrade to medium and heavy trucks.
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Guangzhou Honda's Accord:
Smart Investment Successfully Attracts Private Users
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Launched in November 1998, the Accord has been Guangzhou Honda's most important model, and can take much of the credit for the success of the joint venture. Even with the popular Fit Aria, hatchback and Odyssey in the line-up, Accords still made up more than half of the automaker's output in 2004. Accumulated production reached 299,397 units over the course of six years, putting it among the most popular models on the market alongside Volkswagen and General Motors. Led by the Accord, Guangzhou Honda chalked up 4.01 billion RMB in operating profit in 2003, the most recent figures available, achieving a 17.8% margin.
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February 28,
2005
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Heavy-Duty Axle Manufacturing:
2010 Demand Expected to Reach 570 Thousand Units
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Production of heavy-duty rear axles in China has grown in response to the growing market for heavy trucks and large buses. Production expanded from 214 thousand rear axles in 2002 to 386 thousand in 2004, and according to Shaanxi Automobile demand is expected to reach 566 thousand units by 2010. In the late 1980s, a number of domestic manufacturers brought in technology from European companies like Steyr and Benz. By the 1990s, China¡Çs emerging economy was creating strong demand for long-haul transportation, and that translated to demand for heavy-duty axles.
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Automotive Technical Centers in China:
Global Players Meet Local Needs with Local Talent
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To support local manufacturing, many global automakers and parts manufacturers are now setting up technical centers, research and development operations, and procurement departments. Local engineering talent are being groomed so that in future they can tailor designs for the Chinese market. At the same time, however, the lower wages make research in China attractive for companies looking to bring down global development costs through integration with overseas centers.
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February 21,
2005
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China's First Auto Works:
Rethinking New and Used Car Dealer Networks
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China's First Auto Works (FAW) has a wide-ranging lineup of products, including commercial vehicles and passenger cars, with budget priced locally made models and high-end imports all in the mix. While the group has pursued growth in a number of segments, and with a number of business partners, the result of this expansion has been fragmented sales and service networks. The group has set goals in consolidating these operations to lower costs, raise efficiency and provide better customer service.
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Fuyao Glass Industry Group:
Global No.6 Strives For Further Overseas Presence
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Fuyao Glass Industry Group got its start as a small flat glass manufacturer in 1983. By 2004, it had become the largest automotive glass supplier in China, and was looking overseas for further growth as an aftermarket and OEM supplier. Globally, the company already ranks as the sixth largest manufacturer of auto glass. Rapid growth in exports has been somewhat tempered by trade friction, and in particular, a dumping case filed by the United States in 2001. That case was cleared in 2004, opening up growth opportunities again.
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February 14,
2005
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Gasoline/Diesel Standards in China:
Mileage, Emissions Regulations Demand Quality Fuels
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China is keen on maintaining economic growth in the long term, but a heavy reliance on imported oil represents a threat beyond the government's control, and so efforts to minimize consumption are under way. Automobile fuel-economy legislation has been tabled as a part of these efforts, and a fuel tax has been in the works for some time. At the same time, exhaust emissions standards aim to address urban air quality issues, and these require cleaner fuels.
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2004 Full Year Sales in China:
Market Cracks 5 Million, Growth Rate Drops to 13%
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China's automobile market grew from 4.5 million vehicles in 2003 to 5.1 million in 2004 (from preliminary data). As trade restrictions came down with WTO affiliation, the market added a million units in 2002 and 2003, but Beijing's efforts to cool the economy had a harsh impact on car sales. Growth in overall automobile sales fell from 30% to 13%, still resulting in 700 thousand more unit sales. 2005 sales should see continued moderate growth.
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February 7,
2005
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Guangzhou Showa Autoparts:
Efforts to Purchase Locally, Match Honda's Expansion
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Showa set up its first Chinese operation in 1994 with Guangzhou Showa Autoparts, and has since established production in Chengdu, Sichuan province in 1996, and Shanghai in 2002. The company's product focus of shock absorbers for both motorcycles and automobiles, power steering systems and gas springs puts them head to head with competitors such as ZF Sachs and Tenneco. In November 2004, FOURIN had a chance to speak with Mr. Kiyoshi Nagashima, CEO of Guangzhou Showa.
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An Analysis of China's Autopart Production:
Top Manufacturers and Foreign Efforts Expand
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Autopart production data from the China Automotive Technology and Research Center (CATARC), includes breakdowns by part category, and allows further categorization of foreign-invested manufacturers vs. domestic, as well as unit output of top producers. Taking this data, FOURIN presents results in 150 part categories, including production of the top 3 companies and share of foreign-affiliated business.
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January 31,
2005
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Shanghai Automotive Industry Corporation:
MG Rover Take-over Realizes Global Top 10 Status by 2010
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Shanghai Automotive Industry Corporation (SAIC) released their mid to long term business plan in August 2004. Outlining passenger car production capacity increases to 1 million units by 2007 and 2 million by 2010, the company sees a period of accelerated growth in future. If realized, their revenue target exceeding 400 billion RMB by 2010 would make the company number one among Chinese automakers, and in the top 10 globally as well. The long range target of 4 million units of manufacturing capacity and 800 billion RMB in sales by 2020 would further put them into the top 6 globally.
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2nd Annual China Automotive Industry Development Forum:
Event Held Against a Background of a Softening Market
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The Second Annual China Automotive Industry Development Forum was held in Guangzhou city on November 22, 2004, with about 250 in attendance. Speakers included Dr. Qihui Shao, Standing Committee Member of CPPCC, Mr. Fangyou Zhang, Chairman of GAIC, Mr. Etsuo Hattori, Chief Representative of Toyota China, Mr. Xieqing Wang, Research Institute of Petroleum Processing at SINOPEC, and Mr. Shijin Liu, Director at the State Council Center for Development.
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January 24,
2005
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Auto Industry Development by Region:
Balancing Competitiveness and Government Will
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Since the 1990's, the entry of global automakers has led the establishment of related industries. This has led suppliers to congregate near their best customers. With the stunning growth of 2002 and 2003 now in the past, competitiveness is less about rapid expansion and more about controlling costs. With that in mind, automakers are rethinking logistics and layout of supply networks. Further, part manufacturers with several production sites spread across China may look to close down plants to improve volumes at reduced cost.
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Domestic Supplier Focus:
Shanghai SIIC Transportation Electric a Joint Venture Hub
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Shanghai SIIC Transportation Electric Co., Ltd. (STEC) is a subsidiary of Shanghai Auto Industry Co., Ltd., and brought in 496 million RMB in revenues for that company in 2003, according to the China Automotive Technology and Research Center (CATARC). That represented a 28.2% growth rate over 2002's results, with strong sales at the company's joint ventures with Valeo, Brose and Delphi. Joint ventures were also set up with Lear in 2003 and ArvinMeritor in 2004. In addition to supplying local automakers, substantial revenues are coming from exports.
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January 17,
2005
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China's Regional Market Variations:
Faltering Sales Reveal Growth Factor Insights
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The Third China Auto and Auto Parts Market Analysis and Forecast Meeting of 2005 was held in Shenyang city, November 29, 2004. One of the findings from this event was a comparison of four market regions: Beijing, Liaoning, Shanghai and Guangdong. Auto sales all over China were hit hard by the government's action to rein in the economy in April 2004. With financing more difficult to obtain and government purchasing held back, the market had the wind taken out of its sails. These efforts to ease economic growth are clearly having their effect, and controls are expected to be lifted by early 2005.
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Automotive Steel Production in China:
Supply Shortages Encourage Foreign Investment
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Consumption of steel by China's automotive industry rose from 3.69 to 8.08 million tonnes between 1998 and 2003, according to the China Automotive Technology and Research Center(CATARC). While demand continued to rise in 2004, global steel shortages and price hikes made headlines, and securing steel supply contracts became a critical issue for automakers and suppliers alike. Despite China being the number one steel producer in the world, its capacity to produce the high surface quality required for automotive bodies remains limited, and many domestic automakers have to rely on imports for sheet steel. A number of recently begun projects aim to change that.
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January 11,
2005
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China's 2003 Vehicle PARC:
More than Half of 23.8 Million Units Privately Owned
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The number of vehicles on China's roads (PARC) reached 23.83 million units in 2003, according to the China Association of Automobile Manufacturers (CAAM). While only a few short years ago, government purchases accounted for the vast majority of vehicles on the road, in 2003, privately owned vehicles took the lead, accounting for 12.19 million units, or 51.2% of the total. Looking at automobile ownership by population, the number of vehicles per 100 persons rose from 0.52 in 1991, 0.88 in 1995, 1.08 in 1998, to 1.84 in 2003. China's rapid shift to an age of motorization is demonstrated by the fact that vehicle ownership only broke through the 10 million barrier in 1995.
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Torch Automobile Group:
Parent Company' Financial Problems Curtail Business
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Based in Hunan province, Torch Automobile Group Co., Ltd. is a domestic investment company concentrated on the automotive industry. The group got its start as LuKou Internal Combustion Engine Parts Factory in 1961. Through a number of acquisitions and international tie-ups, Torch has grown into one of the top 500 companies in China, and in 2002, moved into the complete vehicle manufacturing field. According to the company's own financial reports, 2003 saw revenue jump 160% to 10.3 billion RMB. Growth in the first half of 2004 registered 32%, with revenue up to 6.2 billion RMB, with the company blaming this weaker growth on a shortage of capital.
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December 27,
2004
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Toyota Suppliers Advance in Guangzhou:
Rapid Production Start Demands Quick Localization
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Guangzhou Automobile Industry Group (GAIG) received approval from the central government in July 2004 to go ahead with a proposed Toyota joint venture. In September of the same year, Guangzhou Toyota was established with plans to begin manufacturing the Camry in 2006. The Camry will go head-to-head against the popular Buick Century, produced at Shanghai GM, and Accord, assembled at Guangzhou Honda. Toyota has no supplier network in the Guangzhou area, however, and so the company and its group part-makers must work quickly to establish in the region. Group suppliers in the auto part, materials and tool fields are now in the process of setting up shop around Guangzhou.
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Shanghai Automotive Industry Corporation:
Profits, Stock Listings Finance Major Acquisitions
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In the last several years, Shanghai Automotive Industry Corporation (SAIC) has seen success from its two joint ventures with General Motors and Volkswagen. With joint venture partners VW and GM both looking to increase investment, SAIC is looking to stock listings in Hong Kong and New York to match funds with those two global heavyweights. The group will use the resulting financial flexibility to continue its string of acquisitions, but this time overseas: In addition to a 10% share in GM's Daewoo, the company is in the process of two takeover bids, one for Ssangyong Motors in Korea, and the other for MG Rover.
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December 20,
2004
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Automotive Brake Manufacturing in China:
International Co-operation Meets Demand for ABS Systems
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According to China's Ministry of Public Security, 2003 saw 660 thousand traffic accidents resulting in 104,372 deaths, the third year in a row that the death toll was above the 100 thousand mark. An industry journal claimed in August 2004 that more than 30% of those accidents were caused by a failure in automotive systems.
China¡Çs early response to this issue included standards and regulations announced in 1992 that eventually led to the requirement of ABS for heavy commercial vehicles starting in October 2003. Despite that deadline passing, local manufacturers have been slow to respond, and lack of technology has meant that the bulk of heavy vehicles now rely on imported ABS systems.
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Global Supplier Focus:
Hitachi Expands to Match Local Automobile Assembly Growth
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Hitachi Group is working to enhance its automotive component division, and with Hitachi Ltd. leading the enterprise, they are striving to make a name for themselves in China's market, while taking advantage of the manufacturing opportunities there as well.
There are five Hitachi subsidiaries active in the automotive business in China: Hitachi Ltd, which merged the former Hitachi Unisia Automotive and Tokiko Ltd in October 2004, Shin-Kobe Electric Machinery and Hitachi Construction Machinery. The group covers all of China, with nine joint ventures or wholly-owned companies manufacturing automobile-related products nationwide.
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December 13,
2004
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Automotive Trade Policy Draft:
Aiming to Modernize Vehicle Sales Channels
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The China Ministry of Commerce released a draft version of an updated automotive trade policy on October 25, 2004. Inviting comments and suggestions from those in the automotive business, the policy covers five topics; namely single-brand sales (exclusive dealer networks), sale of used vehicles, sale of auto parts, recycling of defunct automobiles and automobile trade. They are Beijing's first administrative guidelines encompassing all these fields in one document.
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Global Automaker Focus:
Ford Group Resources Aim to Overcome Late Market Entry
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Although Ford holds a 33% stake in Mazda, the two companies have gone their separate ways in China. Mazda chose to contract out assembly of their vehicles to local companies, while Ford invested in local production in a 50/50 joint venture. In 2004 the two companies are starting to come together, however, with Mazda investing in Ford's joint venture as well as new assembly plants that will be put in operation over the next few years. By 2010, Ford expects China to be the company's third largest market after the U.S. and Europe.
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December 6,
2004
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China's Automotive Electronics Sector:
Demand Expected to Soar to 250 Billion RMB by 2010
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The market for automotive electronics in China was estimated at 17 billion RMB in the year 2000, rising to 55 billion by 2003. Some estimates see that growth continuing apace, reaching 100 billion RMB by 2005, and 250 billion by 2010. Looking at trends of electronic equipment installed on locally built automobiles, up until now, improved performance and fuel economy have been the driving factors for the bulk of components. Looking to 2006 and beyond, safety, environment-friendly, ITS, information and communications technologies are expected to be the new growth area, centered on basic electronics and materials.
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Local Automaker Focus:
Geely's Plan Sees 2 Million Cars in 2015, Exports to Grow
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Geely Automobile Holdings Ltd emerged as China's first privately-owned automaker, under the direction of Chairman and major stockholder Li Shufu. In 2003, Geely produced 82,553 cars, and in the first ten months of 2004, accumulated production had reached 86,420 units, up 36.6% from the same period a year ago. A flat new car market in 2004 has forced the company to readjust their sales targets for the full year from 185 thousand units down to 125 thousand as of October. The company found success with their low-price products strategy, despite walking a fine intellectual property line.
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November 29,
2004
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Automotive Wheel Manufacturing in China:
Aluminum Segment Sees New Entries, Capacity Upped
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In 2003 there were 31 and 12 companies manufacturing steel and aluminum wheels respectively, according to data collected by the China Automotive Technology and Research Center (CATARC). Their total output was 18.47 million and 10.84 million units. According to customs data, wheel exports rose from 220 million USD in the year 2000 to 562 million in 2003, and had reached 439 million in the first half of 2004.
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FAW's Medium, Heavy-duty Truck Business:
Foreign Sourced High Output Technology Drives Sales
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First Automotive Works (FAW) announced long-term plans in 2003 to capitalize on their leading position in China's truck market and make their Jiefang brand a top manufacturer globally. Working towards this goal, the company is bringing together both foreign funding and technology, and boosting domestic sales with the introduction of high-output engines for their heavy truck line-up. FAW's medium and heavy-duty trucks accounted for 47% of 2003 production in China at 182,866 units. As of September 2004, production is up 26% over the same period a year ago.
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China's SUV market:
Coming MPG Regulations a Challenge to Growth
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China's SUV market was estimated to be 20 thousand units in 1994, and grew to 100 thousand units by 2003. Among those, domestically manufacturing accounted for 74 thousand, and imports came to about 30 thousand units. Locally produced models like the Mitsubishi Pajero V33, Pajero Sport, Jeep Cherokee and Nissan Paladin make up the core of the market. In the first 9 months of 2004, sales of domestic models had already reached 98,619 units, just over double the same period in 2003.
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November 22,
2004
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Luxury Car Manufacturers in China:
Cadillac, Mercedes-Benz Follow BMW in Local Assembly
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With a growing economy, China's cities are home to a rapidly growing class of high-income earners, and the country is turning into a strategically important market for global luxury car brands. With WTO affiliation, duties will be uniformly reduced to 25% by 2006, and this is providing further incentive to improve sales networks to handle accelerating imports. BMW began local assembly in 2003, and by the end of 2004, both Mercedes and Cadillac were expected to have local assembly under way, although plans at BAIC have apparently been delayed until July 2005.
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Vehicle Financing in China:
Business Sparked by New Policy and Foreign Entries
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Vehicle financing has been officially available in China since 1998, when state-owned commercial banks were given the green light to begin offering services. By June 2004, along with automobile sales, the market for financing had grown to 183.3 billion RMB, and that figure is expected to exceed 500 billion RMB by 2020. Standing in the way of growth is the lack of any reliable system of credit checks, and this has contributed to a rash of bad loans at China's big banks. In early 2004, Beijing ordered banks to be more strict in the granting of loans, and that has led to a slowdown in vehicle sales growth. New government policy and market entries from VW, GM, Toyota, Ford and other major automakers' financing wings will bring a new level of competition with the established banks.
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November 15,
2004
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Yamaha Motor in China:
With Jianshe Industrial, 1 Million Bike Sales Target in 2006
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Yamaha Motor, along with their partner Jianshe Industrial, is in the midst of a business revival plan in China to bring production and sales volumes up from an actual 289 thousand units in 2003 to one million units by 2006. Yamaha's motorcycle business in China dates back to 1982, and until recently, they had two major production joint ventures in China. Jianshe has since taken over from another partner, Nanfang. That now leaves Yamaha concentrated on one business partner in China. Yamaha has a good foundation for local parts procurement in China, and is working towards exports to feed Japanese operations as well.
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China Motorcycle Exports:
2004 Set to Break 3.5 Million Units with Core Below 125cc
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Motorcycle production in China has remained above the ten million unit mark with continued growth since 1999. At the same time, exports have risen from 260 thousand units and 130 million USD in 1999 to 3.02 million units and 1.06 billion USD in 2003. 20% of production is now sold overseas. In 2004, production is on the way to reaching 17 million units, with exports accounting for 3.5 million of those, according to industry forecasts. Most exports are in low-end models of 125cc or less. Recently overseas brands have begun to use China as an export base, and so more and more shipments are headed to Europe and North America.
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November 8,
2004
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China Complete Vehicle Export Growth:
Trade Liberalization and Overcapacity Motivate Automakers
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Until recently, exports of complete vehicles from China have totalled around 20,000 units per year. Products have been typically limited to the low-end commercial vehicle segments, and overseas markets were developing countries. That situation is starting to change, with 2002 WTO affiliation resulting in trade barriers being lifted, and more competitive automakers looking for ways to use up overcapacity. With these factors in mind, CBU exports could reach half a million units by 2010. The government is setting a target of 100 billion USD in annual automotive exports (including auto parts) by 2010, attracting concern in Washington.
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Mitsubishi in China:
New Models Introduced as Mitsubishi Brand
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In May 21, 2004, Mitsubishi announced a turnaround plan which sees development of the Chinese market as their second largest, next to Japan. That plan will mean investing 25 billion JPY in improvements to all aspects of Chinese operations, to chalk up 310 thousand unit sales under their own brand. In 2003, 121 thousand Mitsubishi vehicles were manufactured at five different facilities in China, but only 6,029 of those (Pajero Sport models produced at Beijing Jeep) were sold under the Mitsubishi brand, all others were sold under local brand names. This will change as new models will be introduced under the Mitsubishi banner in an effort to improve brand image and unify sales resources in China.
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November 1,
2004
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Automotive Technical Standards in China:
Working Towards Global Harmonization and Progress
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In November 2000, China's acceptance the UN's global standard harmonization initiative: Working Party 29, (WP29) helped set a course for the development of China's technological capabilities through international cooperation and exchange. This is helping technology in China's automotive industry achieve global standards. At the same time as trade barriers are being lifted with WTO affiliation, the auto industry is experiencing a period of explosive growth, and these factors have also helped promote technological trade and cooperation with overseas companies and institutions. As a measure of technical progress, in the 30 years from 1974 to February 2004, 1,124 new or updated standards were put in place, with a recent trend towards safety and environmental protection.
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China's Auto Recall Legislation Effective October 1st:
Final Version Answers Concerns over Draft
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As the number of vehicles on Chinas roads rises, so too are the number of problems related to automobile manufacturing defects. In 2003 there were 5,651 reported claims related to vehicle defects, up 44% from 2002's 3,919. With ineffective legislation in place, many automakers have not recalled vehicles despite potentially dangerous faults. In February 2002, the State quality inspection bureau announced draft legislation regarding defective vehicle repair, exchange and quality guarantees. A second bill introduced in October of the same year concentrated on recall of defective automobiles. The final legislation was made public on March 15, 2004, and was to officially go into effect October 1, 2004.
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October 25,
2004
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Lear in China:
Production Spread Across China Targets OEM Business
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As the top supplier of automotive interior systems, Lear is playing a leading role in China's growing auto industry and growing alongside global automakers' OEM joint ventures. Lear's first manufacturing operation in China was set up back in 1994, and since then, they have added another 11 locations. Geographically spread out, Lear has both joint ventures and wholly-owned companies on the East and Northeast coastline, and as far inland as Chongqing and Wuhan. Products range from seats and instrument panels to wire harnesses, condensers, cooling fans and other electrical accessories.
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China's Agricultural Vehicle Industry:
New Taxation Measures Push First Half Output Down 19%
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Production of agricultural vehicles in the first half of 2004 was down 18.5% over the same period last year, with 1,042,781 units produced. The major reason for the decline in production was a change in taxation designed to discourage the purchase of the polluting and unsafe vehicles and thereby promote the sale of trucks. According to the Shandong government machinery department (Shandong province hosts a large portion of the agricultural vehicle industry), taxes applicable at the time of purchase will rise on the order of 20 times. With an average three-wheeled model selling for 8,000 RMB, 3,000 RMB in taxes apply, or roughly 40% of the vehicle price.
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October 18,
2004
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Securing the Key to Cost Competitiveness:
Building Efficiency in Local Supply Networks
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China's affiliation with the WTO brought about change for the automotive industry, and one of the biggest factors was the loosening of restrictions on local production. Specifically, the lowering of import duties on parts intended for knock-down (KD) assembly allowed automakers to easily enter the market and quickly expand vehicle line-ups. This has allowed rapid market expansion and a wider variety of models, but KD assembly has meant that localization of supply has lagged production growth.
To stay profitable as prices fall, KD assembly operations must procure parts locally, and setting up a reliable and efficient supply networks is critical for automakers to stay competitive.
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October 12,
2004
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Auto Industry Logistics in China:
Automakers Tackle High Cost and Inefficiency
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According to industry sources, 2.497 trillion RMB was spent on domestic shipping and transportation in 2003, representing 21.4% of GDP, up from 20.0% last year. Looking at transportation costs for automakers in China, on average, they account for more than 15% of total revenues, substantially higher than in Japan (5%) or Western Countries (8%). This clearly represents room for cost cuts for local companies and possible business opportunities for global players in the logistics field. 'Milkrun' systems are just now gaining popularity as a means to connect part manufacturers and vehicle assemblers.
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Local Automaker Focus:
BYD Jumps From Batteries To Electric Cars
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BYD entered the Chinese automobile market with the January 2003 purchase of Xi'an Qinchuan, a unit of North Industries Group. After reorganization, the company produced 20,080 vehicles in 2003, according to CAAM data. BYD claimed 500 million RMB in revenues from automotive related business in that year. Taking advantage of expertise gained as the number two rechargeable battery manufacturer in the world, BYD Auto aims to provide electric and hybrid gasoline/electric vehicles in time for the 2008 Beijing Olympics. While ramping up capacity, the group is also investing heavily in new technology and bringing new models to market, with a 2.4 liter sedan due for release before the end of the year.
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October 4,
2004
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Business Strategies for Foreign Automakers in China:
Focusing on One Partner, or Hedging Bets with Two
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In the most recent automotive industry policy released this spring, foreign automakers are restricted to joint ventures with no more than two local partners. Still, competitive and cooperative relationships become difficult to discern when both foreign and local partners alike are tied up with other partners. Put simply, by allowing automakers to form multiple partnerships, the Chinese government is promoting competition not just in the marketplace, but on a business level, as companies must compete with other business partners. Major players like FAW, SAIC, Dongfeng, Volkswagen and Toyota have formed multiple partnerships to hedge their bets and gain maximum brand presence. Automakers like GM and Nissan, on the other hand, are putting all their eggs in one basket, aiming to better develop their supply network by not splitting up investment.
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September 27,
2004
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2004 First Half Vehicle Sales:
Trucks, Buses Continue Growth; Car Market Cools
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The first half of 2004 saw China motor vehicle sales grow 24.2% to 2,553,567 units, based on factory shipments. Passenger cars (including some vehicles otherwise classified as small buses) saw growth of 31.6%, and accounted for 1,252,093 of the total. Bus sales climbed 13.6% to 666,023 units, while trucks were up 23.8% to 755,565 units. While growth in passenger car sales is above 30%, this is sharply down from the 94.8% growth seen a year earlier. Sales growth in buses was down as well, if only slightly, from 15.8% in 2003, while truck sales got a second wind, up from 7.5% growth a year ago. Contrasting performance by sector clearly shows varying effect factors, as the government's efforts to cool the economy have meant vehicle financing is more difficult to obtain.
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September 21,
2004
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Alternative Energy Development:
Urban Air Quality and Oil Import Dependence Fuel Research
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At the same time that the number of cars on China's roads is increasing rapidly, air pollution and rising energy demands are becoming a concern. Fuel economy legislation being put into effect in 2005, as well as tightening emissions standards are part of the response to these issues. Beyond those measures, Beijing is recognizing the importance of alternative energy sources, and is ensuring that efforts get put into developing and promoting hybrid, hydrogen, liquid natural gas (LNG), electric and other eco-friendly, energy efficient technologies. Major centres such as Beijing and Shanghai are taking steps towards these goals, and research and development is progressing at major automakers, universities and public research institutions.
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China North Industries Group Corporation:
Expanding to Meet Auto Policy's 15% Share Demand
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Split off from NORINCO in 1999, China North Industries Group Corporation (CNGC) has grown along with the heavy-duty truck and large bus fields in China. The state-owned enterprise' business was traditionally that of arms supply, (its Chinese name is 'Weapons Industry Group'). According to their reported figures, the group's consolidated sales in 2002 totaled 9.1 billion RMB, (of which 3 billion RMB was automotive-related, 2.85 billion in complete vehicle assembly alone) and altogether 108,000 people are employed at their operations. China North Industries Group Corporation (CNGC) has grown along with the heavy-duty truck and large bus fields in China. As one of the majors in the automotive industry, the group intends to capture 15% market share in China, thereby qualifying as a major conglomerate by China's recently introduced auto industry policy.
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September 13,
2004
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Automakers' Expansion Plans in China:
16 Million Units by 2010 Suggests Over-Capacity
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Between 1998 and 2004, vehicle production capacity in China grew from 3.94 million to 8.33 million units. Over the same period, production grew from 1.63 million units to an expected 4.8 million units. That means the industry is now running at 58.5% capacity, versus 41.4% five years ago. While the market is expected to continue to expand, albeit at a more modest pace; investment in assembly capacity is outstripping demand. This is partly because much of China's assembly capacity is in outdated models that have trouble competing on the market. Still, this looming overcapacity is a future threat to the industry.
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September 6,
2004
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Passenger Car Price Cuts:
Average Price Drops 8.5% In One Year to 148 Thousand RMB
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In China's passenger car market, sales had been rapidly climbing despite prices well above international levels. Many manufacturers are capable of maintaining profits after cutting prices, so it was always clear that prices would come down eventually. In the second quarter of 2004, partly as a result of the government instructing banks to grant fewer loans, new car sales dropped. Shanghai GM was quick to drop prices, but since then nearly every manufacturer has followed suit in a bid to control rising inventory levels. Average prices have come down 8.5% over a one year period, but price wars are by no means over.
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Clutch Manufacturing in China:
Local Market and Export Opportunities Attract Investment
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2002 clutch production in China reached 4.365 million units, (17 major companies counted, data from CATARC), more than double the total counted in 2001. With production climbing rapidly, the number of companies active in the sector also jumped, up from only 10 in 2001. With Japanese, European and American manufacturers investing in local production, the industry is maturing, and local subsidiaries are beginning to take more control of operations. Considerably more clutches are exported than imported, but the average unit price of imports is much higher, so the total value of imports was half again the value of exports.
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August 30,
2004
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Transmission Manufacturing in China:
Global Players See Promise in ATs for Cars and Heavy-duty MTs
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2003 automotive transmission production in China reached 3.97 million units, according to FOURIN's estimates. This represents 25% growth over 2002's 3.18 million unit estimate. Vehicle production in China is now pushing the 5 million mark, and demand for transmissions could continue to grow at 15% a year or more. For passenger cars, overseas giants have established themselves locally to provide automatic transmissions so popular with Chinese consumers. Demand is also strong for higher capacity transmissions for heavy trucks and large buses, and manufacturers are investing heavily in that field.
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August 23,
2004
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Japanese Motorcycle Makers in China:
Brand Power and Low-cost Manufacturing to Reclaim Market Share
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The three Japanese motorcycle manufacturers active in China, Honda, Suzuki and Yamaha, began to reorganize their product lineup in 2003. In the past, the three had focused on high quality and strong brand power to demand premium prices. The new direction for these three companies sees a focus on cost-performance at much lower prices. To meet local needs and consumer preferences, R&D centres are being set up locally, procurement of low cost parts is jointly managed with a local partner, and other strategies are being put in place to reclaim the market share the Japanese have lost over the last several years.
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Guangzhou Automobile Industry Group:
Taking on Major Players through Japanese Investment
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Guangzhou Automobile Industry Group (GAIG) is located in the province of Guangdong, a region that accounts for one quarter of the country's passenger car sales and one third of the country's exports. Taking advantage of this as a base, GAIG is looking to rank up with China's Big 3 automakers: First Auto Works, Shanghai Automotive Industry Corporation, and Dongfeng Motor. With Honda and Toyota joint ventures producing passenger cars, an Isuzu joint venture competing in the bus field, the company has a strong presence in the motor vehicle sector. A joint venture to produce motorcycles with Honda (Guangzhou Wuyang) was formed in June 2000, helping to put the company next to SAIC in terms of size. Unit production in 2003 amounted to 117,178 passenger cars, 5,390 commercial vehicles and 306,259 motorcycles.
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August 9,
2004
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Global Suppliers in China:
Faurecia Expands Exhaust and Seat Manufacturing
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Faurecia is the number one interior and exhaust part manufacturer in France. 71.5% owned by PSA, Faurecia has expanded in China alongside PSA's joint venture, Dongfeng Peugeot Citroen (DPCA). PSA is putting another wave of investment into China, and re-introducing the Peugeot brand, and Faurecia will expand to meet increased demand for seats and related components, as well as providing upgraded exhaust systems to meet tightening emissions standards.
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Passenger Car Brand Strategies:
Domestic and Foreign Brands Present Different Images
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The landscape of China's auto market is changing rapidly. While VW controlled more than half the market as late as the year 2000, that company's share dropped below 23% in the first half of 2004. While VW struggles to maintain share, other players are trying to establish presence, a serious challenge with 38 brand names competing at some level or another as of May 2004. With 87 different models now being assembled in China, diversity and choice is growing, as automakers seek to target specific niches and take advantage of their own strong points.
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August 2,
2004
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China's Original Passenger Cars:
Global Design Firms Bridge the Development Gap
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Beijing has encouraged local development of original automobile designs. Original locally-developed cars now take nearly 13% of the market. While many companies have taken up the challenge, a good number of them have faced criticism and legal action for violations of intellectual property rights. But now a new breed of car is hitting the market, one whose design is contracted to engineering firms, to match the needs of China's market. Many of these fresh designs, however, still borrow platforms and other technologies without permission.
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July 26,
2004
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Auto Industry Reorganization in China:
Government and Industry Share Initiative for Change
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Beijing's new auto industry policy aims to oversee consolidation of the industry, something that has already been accelerating since WTO affiliation in 2002. For many smaller players, being bought out by another company is their best chance of survival in a more competitive market. At the same time, the government has suggested tax incentives or other measures to promote large groups that capture a 15% share of the market. These factors are driving change in the industry, as 100+ automakers fight to survive.
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July 20,
2004
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China's Medium-Large Bus Sector: Accelerating Demand Spurs Industry Reorganization
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2003 production of large and medium buses in China totaled 73,279 units, down 7.3% from 2002. While medium size buses are considerably more popular than larger buses (more than 10m in length), a shift upwards in size is being seen, as production of large buses grew as medium bus production fell. The rise of sightseeing tours and long distance transportation along newly completed expressways is driving demand for the more efficient, high-speed capable coaches.
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China's Special Purpose Vehicle Sector: Reorganization and 400 Thousand Unit Production
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Special purpose vehicle production in China reached 400,000 units in 2003, according to preliminary figures from the China Automotive Technology and Research Center (CATARC), continuing year on year expansion seen since 1999. China's construction industry is booming on the back of rapid infrastructure improvements, and the special purpose vehicle industry is expected to see continued strong growth as a result. Manufacturers are adding capacity to keep up with this demand, and are offering a more diversified range of products.
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July 12,
2004
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China's New Automotive Industry Policy:
Rapidly Changing Auto Sector Demands Revision
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After last year's draft automotive industry policy sparked controversy among foreign automakers, China released the final version on June 1, 2004, reflecting some of the concerns that were expressed. China's new auto industry policy now does not mention the 50% market share for domestic brands with their own intellectual property rights, but the hope is clearly still there. The 50% ownership limitation for foreign partners in joint ventures remains, but some restrictions have been relaxed.
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Appendix: Automotive Industry Development Policy 2004 (Complete Version)
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The official automotive industry policy of the National Development and Reform Commission of the People's Republic of China, as released June 1, 2004, and incorporating the changes resulted from broad industry and government consultation over the last year. Translation provided by Tsinghua News Agency.
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July 5,
2004
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China's Vehicle Imports:
Demand Continues to Shift Upmarket into 2004
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In 2003 there were 103,017 passenger cars and 39,699 off road vehicles (SUVs) imported into China. These numbers were up 47% and 23%, respectively. The first quarter of 2004 showed passenger car and offroad vehicle imports up 34% and down 44.9%, respectively, over the same period in 2003. Import quotas are rising going towards the 2005 deadline when they are scheduled to be eliminated. Also, as more and more choice becomes available in locally assembled models, the focus of imports is shifting further towards luxury models, as evidenced by rising average unit prices.
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Airbag Manufacturing in China:
Tightening Safety Regulations Prompt Expansion
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As the number of cars on China's roads, so too do the number of accidents. In 2003 there were 667,507 motor vehicle accidents, causing 104,372 deaths. In response to this, Beijing is raising collision safety standards for automobiles, and automakers are using safety as a sales point. The several airbag manufacturers in China are expected to produce 2.4 million sets by 2005, and local and global players alike are expanding to meet growing demand.
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June 28,
2004
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Local Automaker Focus:
SAIC-Chery Works Towards Original Development
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SAIC-Chery is a unique automaker in China, set up privately by five Anhui companies in 1997, and selling 20% of their stock to Shanghai Automobile in 2001, in exchange for a permit to manufacture cars. Production has jumped from just 3,000 cars in the year 2000, to over 90,000 units in 2003, nearly 5% of the market, and Chery is even expanding with an assembly plant in Iran. Chery's future success, however, will depend on intellectual property rights, as Beijing is expected to clamp down on the violations that Chery's products seem to be based on.
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Dealer Network Expansion in China:
New Government Policy Encourages Global Brand Power
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While both local and global automakers struggle to ramp up production, a strong dealer network is another important element of their sales strategy, and in a country as vast as China, that takes time. Automakers have had to work their plans around government policy as well, as previous laws had restrictions such as not allowing imports to be sold beside locally assembled vehicles, etc. In the recently introduced Auto industry policy, this restriction was knocked down, making it easier for global brands to present a unified marketing strategy for their products.
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June 21,
2004
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China's 2003 Forklift Industry:
Logistics Demand Lifts Production to 47,000 Units
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In 2003, there were 47,047 forklifts manufactured in China, 46% more than in 2002. Industry experts predict that by 2020 the count could expand to 150,000 units, making China the world's top producer. Global manufacturers are either setting up in China or expanding operations. Production mostly goes towards meeting local demand, with imports outnumbering exports in all but one of the last ten years. With tariffs coming down upon WTO entry, imports will likely continue to meet demand for high-end forklifts, while exports of low-priced models may increase in the future.
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Automotive Lighting System Manufacturing in China:
Koito Looks to Overseas Business, Valeo on Domestic Growth
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As counted by the China Automobile Technology and Research Center (CATARC), there were 40 million lighting units produced in China in 2002, up 73% over 2001, the results of 32 companies' production, up from 31 a year earlier. With rapid expansion of some of the major players, the market share of the top five companies grew from 59% to 62%. There were three major new entrants to the field in 2003 and early 2004. Looking at production of light bulbs, in 2002, CATARC reported 105 million units produced, just over double 2001's result.
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June 14,
2004
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Global Suppliers in China:
Bosch Pushes Technology, Delphi Expands Exports
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As two of the world's top automotive part suppliers, Delphi and Bosch are both putting their business skills to work in China, but with slightly different strategies. Bosch is putting its technological skills to work, and sees expansion with tightening emission standards for diesel commercial vehicles. Delphi is also expanding in the local market, but has its eye on exports to automakers around the globe.
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Passenger Car Makers' 2004 Sales Targets:
VW, GM and Toyota Stand Apart
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FOURIN gathered production and sales targets from China's passenger car manufacturers, 43 of 45 major companies. 2004 targets total up to 3.22 million sales and 3.24 million units of production, up 49% and 48% over 2003's results. VW and GM appear to be holding the lead, but including FAW Xiali and Daihatsu, the Toyota group has its sights on surpassing Honda to capture third place among Chinese automakers.
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June 7,
2004
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China's 60 Listed Automotive Companies:
Financial Performance Varies by Sector
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As of 2003 there were 60 automotive-related companies listed on the Shanghai and Shenzhen stock exchanges, well up from the 10 listed as of 1993. A wave of new listings was seen in 1993, and an even bigger wave in 1997, but IPO activity has settled down with only two listings in each of 2002 and 2003. FOURIN ranked these companies by a number of financial indicators, showing that on average, sales revenue in 2003 was up by 35% over 2002, and asset turnover rose from 0.87 to 1.03.
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Local Supplier Focus:
Wanxiang Looks to Expand Beyond China
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Wanxiang group is an independent Chinese automotive part manufacturer specializing in drivetrain parts. Growing from a small, local blacksmithing operation in 1969, the group grew to become the number one part manufacturer in China, with sales of 11.8 billion RMB, and net earnings of 750 million RMB. Beyond China though, Wanxiang has sales offices in North America and Europe, and is reportedly considering entering Japan as well, possibly by buying out a local company.
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May 31,
2004
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Local Automaker Focus:
Shanghai Auto Sees 1 Million Unit Production by 2007
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Shanghai Automotive Industry Corporation was the number one passenger car maker in China as of 2003. Its vehicle production total of 612,666 accounted for 30% of domestic car production, plans see 1 million units produced by 2007, including commercial vehicles. With ambitious plans driven by VW and GM, as well as an independently developed model in the pipeline, Shanghai looks capable of maintaining its lead.
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2003 Engine Production in China:
Gasoline Engine Leads Growth, 3.85 Million Units
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Led by strong growth in passenger car production, gasoline engine production was up 38% to 2.77 million units in 2003. Diesel engine production growth was more modest, at just 3%, reflecting a sagging heavy-duty and medium truck sector. Manufacturers are gearing up for more growth, but they must also prepare for tightening emissions standards: officially, Euro II equivalent standards became effective on some trucks in September of 2003, and will apply to all motor vehicles by September 2004.
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May 24,
2004
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Research and Development Patterns:
Manufacturing Technology the Focus of Research
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China's draft automotive industry policy released in 2003 envisioned a strong market in 2010 with at least 50% held by local brands with their own intellectual property rights. While this is said to be dropped in the soon to be released final policy, there is an undeniable desire to foster independence in the industry. The focus of R&D has reflected that, with a majority of projects focused on manufacturing technology. The number of cases where this technology was actually introduced to the industry are very few, however. Other sectors fared better.
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May 17,
2004
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Production Ventures and Investment in China:
Japanese Automakers Lead the Charge in 2003
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Chinese investment by foreign suppliers has come on waves over the last 20 years. In 1995, an announced auto policy spurned a surge of new factories and expansion. The current boom in passenger car sales has attracted another wave of investment, and with Toyota and Nissan investing heavily, related suppliers have moved en masse, with a peak of 92 Japanese new ventures and investments in 2003 alone.
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May 10,
2004
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Major Auto Industry Groups in China:
Revenue Up 49%, But 23% of Companies Still See Red
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With the auto industry booming over the last several years, business at major vehicle manufacturing groups is also booming, although not consistently so. The China Association of Automobile Manufacturers counted 15 major groups in 2003, consisting of 176 individual companies. In total, 2003 sales of these companies worked out to 470 billion RMB, and gross profit margins averaged just over 20%. This is despite the fact that 40 of these 176 companies posted losses in 2003. The contrast between successful and loss-making companies is clear.
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Automotive Research and Development in China:
Can Technology Catch Production Growth?
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In the last few years, China has made a rapid shift from relatively small scale production to what can truly be called mass production. Some parts of the industry were prepared for this, but in truth, much of the technology required for mass production is still lacking. Much of this is being provided through licensing and joint ventures, but challenges still lie on the road to competitiveness forced by WTO entry and barrier-free trade. Some of the most significant research and development projects were recognized by CATARC, and are listed here.
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April 26,
2004
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Passenger Car Production by Model:
2.2 Million Units Raises Operating Ratio to 77%
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Forecasters are calling for increased production capacity in China over the next few years, and more specifically, increased excess production capacity. Operating ratio at Chinese auto plants was below 50% for a long time, but a booming market saw that ratio jump all the way to 77% by 2003.
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Automotive GPS Systems in China:
Navigating to a 7 Billion RMB Market by 2007
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By the end of 2003, there were estimated to be 100 thousand GPS navigation systems in use in China. Major cities are installing the systems in buses, taxis and municipal service vehicles as a means of tracking fleets and determining traffic flow patterns. At the same times, with luxury cars one of the hottest segments of the car market, navigations systems are expected to be a hit among fashionable upper-class urbanites. The market is predicted to be worth 7 Billion RMB by 2007.
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April 19,
2004
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Local Automaker Focus:
Beiqi Foton Aims to be China's Number 4
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Beiqi Foton got its start in 1996, and is majority owned by Beijing Auto Industry Corporation. Unlike many state-owned enterprises, one of Beiqi Foton's strong points is efficient management. Starting as an agricultural vehicle manufacturer, the company quickly jumped into the light truck market, where it captured 32% of the market in 2003. The company moved into the heavy-duty truck field in 2001, and aims to build and sell 450 thousand vehicles in 2006.
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China's Construction Equipment Industry:
Sales Up One Third for 100 Billion RMB
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The rapid expansion of China's economy and massive government infrastructure projects create tremendous demand for construction vehicles, sales are estimated to have surpassed 100 billion RMB in 2003. In unit sales, it is estimated that the market in China surpasses that of the U.S. and Europe combined. Imports have little chance in the low priced China market, and so global manufacturers are moving to set up production ventures with local makers.
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April 12,
2004
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2005 Fuel Economy Standards:
Manufacturers Gear Up to Meet the Challenge
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China became a net importer of oil in 1992, and since then, has grown to rely on imports for more than 30% of its crude oil supply. A surging economy, exploding manufacturing sector and motorization of urban areas is compounding the problem. In addition to this, air quality is a serious issue that needs to be addressed. Fuel economy standards are expected to come into effect in two phases, in 2005 and 2008, as a precursor to a long awaited fuel tax. Reports indicate China's standards will be 15 to 20% tougher than U.S. CAFE standards.
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2003 China Motorcycle Production:
14.7 Million Units, 125cc Account for Half
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Motorcycle production in China continued its climb in 2003, to 14.7 million units. Comparing 2003 results to 1998, we can see a strong shift upwards in displacement. In 1998, motorbikes up to 100cc accounted for nearly 2/3 of the market, but by 2003, that ratio had dropped to 1/3. For 2004, the industry is in opposition to municipal governments' efforts to rid the streets of motorcycles, but a proposal to abolish a 10% consumption tax may boost sales.
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April 5,
2004
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2003 China Automotive Trade:
20 Billion Dollars Total, 4.8 Billion Trade Deficit
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China's total trade of motor vehicles and related parts reached 21.98 billion dollars in 2003. This is roughly triple 2001's value, before China's WTO entry agreement. Imports were up 62.7% over 2002 to 13.4 billion US dollars. Exports saw a still impressive 34.1% growth to 8.59 billion US dollars. Broken down by category, we can see that imports of engines and engine components are showing an overall decline, a sign that local production of these vital components is progressing.
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China's Tire Industry:
Foreign Funded Joint Ventures See Rapid Expansion
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Tire production of the top 50 manufacturers in China reached 92 million units in 2002, including agricultural vehicles, but excluding motorcycle tires. Global tiremakers have invested heavily in China, and currently foreign-funded ventures account for 40% of overall tire production, and a significant 70% of radial tire production. Looking at planned capacity expansion, overcapacity is a distinct possibility within a couple of years.
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March 29,
2004
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China's Agricultural Vehicle Market:
Shifeng Group Dominates, Moves Into Light Trucks
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Agricultural vehicles range from extremely primitive single cylinder diesel powered three-wheeled carts, to four-wheeled vehicles that could easily be re-classified as light trucks. Altogether 2,675,813 units were produced in 2003, down from the peak in 1999, but still above passenger car numbers. The Shandong Shifeng Group accounts for 35.9% of this production, and the group aims to follow the path of Beiqi Foton, taking its low cost production know-how to the light truck sector.
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Intellectual Property Rights in China:
WTO Entry Puts Pressure to Enforce Rules
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China's record of intellectual property disputes is cause for concern among automakers. Some of the more high-profile cases involved GM and Chery, Toyota and Geely, Honda and a host of motorcycle manufacturers. With WTO membership, China promises to improve its record in this area, but from the standpoint of automakers, it has a long way to go. At the same time, Chinese companies have strong ambitions to develop their own industry, and global automakers must balance protection of their own rights with satisfying this need for Chinese originality.
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March 22,
2004
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Local Automaker Focus:
Dongfeng's Multibrand Strategy Sees 6 Global Partnerships
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Dongfeng Motor is the third largest vehicle manufacturer in China, and factory shipments in 2003 reached 471,594 units, with passenger car shipments up 60% but truck and bus shipments down 7.9% and 12.6% respectively. Growth in the passenger car market looks impressive, but it is off the pace of the market, and Dongfeng is losing share. Nevertheless, Dongfeng has chosen to partner with a number of foreign automakers to diversify its interests, and has agreed to the biggest joint venture in China with Nissan, valuing $2 billion overall.
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2003 Passenger Vehicle Market:
Major Players See Market Share Slide
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China's passenger car market was up 69.9% in 2003, and that follows a 62.3% gain in 2002. Looking at these results by segment, and on a month to month basis, we can see some trends behind the gains. While medium sedans (including luxury cars) nearly doubled in 2002, we can also see that the big jump in sales came in late 2002 and early 2003. Later in the year, sales leveled off as no new models were introduced. By contrast, the basic car segment saw tremendous growth at the end of 2003, more than its 78.9% full year growth would suggest.
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March 15,
2004
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2003 Commercial Vehicle Report:
Restructuring Promotes Diversity and Strengthens Industry
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Production of commercial vehicles has more than doubled since 1998, meaning a generally stronger industry. Analysed by segment, results vary: the market for mini-trucks has remained remarkably flat over the last five years, while the heavy-duty truck market has taken off, with more than 7 times 1998's production. With the market growth, the share of 1998's dominant players is fading, as new players enter the market.
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Global Automaker Focus:
Suzuki's Single Brand, Two Company Strategy
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Suzuki has been involved in China since 1995, and currently operates two joint ventures there. Suzuki has successfully localized production and brought costs down while boosting sales to become the third selling brand in China, after Volkswagen and GM. Suzuki's next challenge is a engine plant located closer to its production base, and the launching of the global 'Concept S' small car.
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March 8,
2004
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China's Motorcycle Industry:
Mergers and Acquisitions Aim at Profit Gains
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China's factory shipment of motorcycles in 2003 rose to 14,754,513 units, up 12.9% over 2002. At the same time, the industry is consolidating, evidenced by an increase in share of the top 10 manufacturers from 51% in 2002, to 56% in 2003. This is important for a fragmented industry hurt by low production volumes of many manufacturers. At the same time, some of the top companies are looking to export, or diversifying into other industries such as automobile production.
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Global Supplier Focus:
Dana Expands Drivetrain Component Production
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Dana has had a strong presence in China since the 1990's, and manufactures filters and driveline components. With wholly-owned and joint ventures in operation and more in the works, Dana is a major player in its fields. With an upcoming joint venture with Dongfeng, Dana could become the number one commercial vehicle axle producer in China.
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March 1,
2004
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China 2010 Automobile Market Forecast:
7 Million Vehicles and Global Number 2
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With China's auto market up 80% in 2003 after a big year in 2002, market watchers are putting out their mid-term forecasts and not surprisingly, they vary widely. In the long term, few argue with the idea of China as the number one market in the world, overtaking The United States by 2025, but the next five or ten years is more difficult to predict. FOURIN's method relates past performance of regions whose economies are ahead of China's overall figures, and provides three different scenarios for consideration.
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February 23,
2004
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Car Rental, Leasing and Taxi Business in China:
Growth Triggered by Deregulation
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In the period between 1989 and 1999, the number of registered taxis on China's roads went up 8 times, and though this growth has now slowed, the demand for replacement of older, inferior vehicles is now driving the market. At the same time, the popularity of automobiles is creating demand in the rental and leasing business. Currently however, regulations are still restrictive for the industry, yet at the same time, a lack of administration and a clear set of guidelines is making healthy growth of the industry a challenge. A serious obstacle is the lack of credit information on customers and other liability concerns.
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China's Special Purpose Vehicle Industry:
Infrastructure Development Projects Create Demand
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China has entered a phase of rapid economic development, and the government is serious about keeping up with infrastructure development. This amounts to huge investment in construction projects in major centers and in rural regions as well, reflecting commitments to develop the poorer Western regions of China. This construction drives the market for construction vehicles, heavy trucks of all kinds - most of which are classified as special purpose vehicles. Local production of these semi-custom and modified vehicles totaled 355,295 vehicles in 2002, showing growth of 22.5%.
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February 16,
2004
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Diversified Enterprise Ownership in China's Automotive Industry:
Privatization Policy Accelerates Change
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Ten years ago, China's auto industry was virtually monopolized by state and province-owned enterprises. To a degree, these companies still hold a commanding role, but only to the extent that they have formed successful partnerships with foreign companies. Looking at the average output per company, foreign invested firms (including joint ventures) come out well ahead of state-owned enterprises in any measure of efficiency. But state-owned enterprises are not standing still, and the government is out to further privatize and modernize these giant institutions.
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2003 China Automobile Market:
Passenger Cars Push Total to 4.5 Million, Global Number 3
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In 2003, China's automotive market overtook Germany to become the third largest market in the world. Counting factory shipment, subtracting exports and adding imports, the market totalled 4.51 million, up 33% over 2002. While the truck and bus markets are up significantly, it is growth in passenger cars that accounts for three quarters of overall growth. Imports are up, but not significantly ahead of the rest of the market. The trend to high-end luxury car imports continued in 2003.
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February 9,
2004
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2003 China Automotive Industry Development Forum:
Guangzhou Plays Host for Potential Investors
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The 2003 China Automotive Industry Development Forum was held in Guangzhou on November 24th and 25th. FOURIN attended along with more than 200 guests, and reported on speakers and presentations. Despite Guangzhou's role as a base for Japanese companies Honda, Nissan and Toyota, the event was attended by a broad range of industry and government people.
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February 2,
2004
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China's Vehicle Registration System:
Simplified and Changed to Facilitate Automobile Financing
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For many years, vehicle sales in China were stagnant, and so the vehicle registration system had little demand placed on it. Inefficiency was never addressed, and issues such as using a vehicle as collateral on a loan were not considered. China's current registration system was introduced in October 2001, and updated a year later. It is designed to better handle growth in vehicle sales and ownership, and has become more efficient and user friendly. It is an important step in China's gradual transition to a society of automobiles.
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2002 China Automotive Part Production:
Strong Growth in Parts for Passenger Cars
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The tremendous growth in local vehicle production is naturally leading to similar performance in part production. But while China's auto industry is booming overall, its the passenger car sector that's leading this growth - up over 80% in 2003. Many of these vehicles are every bit as modern and technically advanced as what's sold in other major world markets, and require expertise to produce the precision parts. In many cases these parts are successfully produced locally, but some parts still must be imported.
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January 26,
2004
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Regional Auto Industry Production:
Jiangsu and Guangdong Compete for Industry Concentration
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Automotive industry production value by province and provincial level cities, including employment numbers and broken down into five subcategories, plus the overall vehicle industry. While the long established production centers of the big 3 vehicle producers in China maintain a solid lead in most categories, the younger players like Guangdong and Jiangsu show promise and strong growth. Shanghai has both the established industry and strong attraction for new investment, and so will maintain its lead for a long time.
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Local Automaker Focus:
FAW Shifts Resources to the Passenger Car Sector
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Although FAW formed a joint venture with Volkswagen back in the late 1980's, until 2003, FAW remained primarily a commercial vehicle maker: In 2002, 3 commercial vehicles were sold for every 2 passenger cars. With a booming car market, this ratio reversed in 2003, as FAW capitalizes on its VW joint venture, and further expands with Mazda and Toyota vehicle production. Shifting production away from its home base in Changchun, and making smart acquisitions, FAW holds on to its leading position among China's automakers.
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January 19,
2004
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Automotive Infrastructure: Advertising, Parking Businesses and Service Stations Thrive in a Booming Auto Market
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China's automotive market - in particular privately owned vehicles - is growing at a tremendous rate. A challenge that must be addressed is the health of related businesses that support this growth. China's cities are not designed with cars in mind, and illegal parking is becoming a serious traffic problem in many places. As the car market matures, advertising is becoming more and more important, and global oil companies are rushing to set up business in China as well.
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Transmission Makers in China:
Rising Car Sales Drive 5MT and 4AT Transmission Production
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Though transmissions have been manufactured in China for decades, the current boom in passenger cars has led to demand for modern, high quality transmissions. The shift to private buyers is also leading to demand for automatic transmissions, as the Chinese upper class prefer them. Foreign ownership restrictions are less strict than for auto production, and global transmission makers are taking advantage of this.
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January 13,
2004
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2002 Chinese Auto Industry Review:
Overall Revenue Increased, Some Sectors Fare Better than Others
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Looking at the 2002 auto industry as a whole, a total of 2436 companies were active in various sectors of automobile, motorcycle, and parts production. Total sales were up 39.8% over 2001, and the industry net profit margin rose 1.5 points to 6.3%. 26.5% of companies posted losses, however, showing the wide spread of performance within the industry. Not surprisingly, growth was strongest in sectors and companies related to the booming passenger car industry.
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China Manufactured Product Certification:
WTO Entry Leads to Improvements and Tightened Controls
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China is using WTO admission as an opportunity to revamp its outmoded CCEE and CCIB product certification systems, essentially merging them into the new and improved CCC system. This should not only reduce frustrations for manufacturers looking to certify products, but increase safety assurances for Chinese consumers. Separate certification for each product will make it difficult for smaller manufacturers with short production runs.
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January 5,
2004
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Private Vehicle Ownership on the Rise,
Urban-Rural and Regional Disparities Also Growing
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China's auto market is growing faster than any other, and shows tremendous potential. Examining more closely, its quite clear that this growth is concentrated almost exclusively in urban areas, particularly in the economically prosperous coastal regions. The snowball effect of the booming economy is trickling into rural areas as well, but the development gap between rural-urban, coastal-interior areas is growing wider. This is seen clearly in average income, road development and vehicle ownership.
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Local Automaker Focus: Brilliance Group Restructures, Focuses on High-end Vehicles, Aims for 200,000 Vehicle Production Scale by 2008
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The Brilliance Group has made the news recently because of an alliance formed with BMW, and a complicated ownership battle between the Liaoning Government and a former Brilliance board chairman. With the legal battles behind them, Brilliance is prepared to use its network in China and access to foreign financing to carve out a niche in the growing China market with the 3 and 5 series, HiAce light buses, the Blazer SUV and their own branded sedan in their lineup.
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December 22,
2003
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Passenger Car Market:
Competition on Price Forces Out Older Models
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With high import tariffs and quotas further limiting automotive imports, prices of automobiles in China have been well above international levels. With the passenger car market taking off, and a number of global automakers seriously competing to take a larger share of that growing market, prices are starting to come down. WTO accession will provide further stimulus for this trend. Increasing competition and falling prices will begin to weed out less competitive automakers, as well as older, less desirable models.
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Supplier Focus:
Nissan-Dongfeng Venture Prompts Nissan Suppliers to Invest in China
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In July 2003, Nissan and Dongfeng Motor Corp. agreed to form an ambitious joint venture that aims to produce 550,000 vehicles a year by 2007. Nissan has been producing the Bluebird in Guangzhou for several years, but this new venture represents a five-fold expansion over the current capacity. With that in mind, Nissan's traditional suppliers as well as Taiwan-based Yulong suppliers are setting up and expanding operations in China. Parts production in China is set to become more competitive with these changes.
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December 1,
2003
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Guangzhou Automobile Ties with Honda and Toyota;
Aims at Producing Half a Million Cars Annually by 2010
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Centered in the fastest growing automobile market in China, in a province that accounts for a third of China's exports, Guangzhou Automobile Industry Group is well placed to take a major share of China's exploding market. With Honda thriving in the passenger car market, and a deal signed with Toyota to produce up to 300,000 Camrys and 500,000 engines, the group has its sights set on exports in the future. With three bus companies, two motorcycle companies, and a host of suppliers under the umbrella, Guangzhou has its interests diversified in the auto sector.
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China's Commercial Vehicle Market:
Foreign and Locally Funded Firms Form Complex Competitive Relationships in an Expanding Market
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With strong economic growth, rapid infrastructure development and the upcoming Beijing Olympics in the background, the commercial vehicle industry in China is maintaining double digit growth. Sales in the first 8 months of 2003 totaled 1.56 million vehicles, up 10.8% over the same period in 2002. Growth was down from 28.2% in the same period from 2001 to 2002, but growth in light trucks reached 24.2%. With 53.0% of the truck market, up from 41.4% a year ago, we can say light trucks represent the engine of growth in the commercial vehicle sector.
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November 4,
2003
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World Auto Parts Makers' Advances in China:
Supplying Local Auto Production and Eying Cost Savings for Global Supply
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From 1983 to July 2003, FOURIN has counted 616 cases where foreign suppliers invested in Chinese production facilities.
Over a period of time when production in China increased more than 13 times, we can see patterns in investment strategies in China. These patterns differ according to date of entry, products produced, and country of origin. With vehicle production set to surpass 4 million this year, suppliers are making their China operations a priority, taking control of management and taking other steps to compete. This competitiveness translates to integration into global supply chains, eventually fulfilling the goal of lower production costs for world automakers.
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Chinese Automotive Trade Value Approaches $10 billion US in the First Half of 2003 Led by Strong Import of Passenger Cars and Related Parts
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In the first half of 2003, China auto related imports were up 86.9% over the same period last year. China's WTO agreements have resulted in the lowering of tariffs and an increase in demand for imported passenger cars. At the same time, the booming market is leading to increased local production and a rise in exports. In particular, parts manufacturing in China is starting to become globally competitive in some fields, resulting in strong exports. With tariffs on imported vehicles scheduled to be reduced to 25% by 2006, along with import quotas being struck down, there will be pressure on locally produced products to compete. However, the central government's goals see increased local competitiveness, and total automotive imports (including parts) held to 12% of the market by 2010.
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October 6,
2003
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Prospects for the Chinese Automotive Industry:
Challenges of Local Players Facing Fierce Competition
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With the opening of markets and rapidly accelerating demand, vehicle production in China reached 3.25 million units in 2002, up 39% from a year earlier. This is continuing in 2003, and by 2010, production is expected to reach 8 million vehicles. In preparation for this, global automakers are investing heavily in local operations while local automakers look abroad for capital and technology to bring their products up to world standards. WTO accession has not prevented the government from favouring local automakers, and so foreign automakers must take a balanced approach between promoting their own brands and working closely with local automakers.
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Chinese Market: 2003 Full Year Outlook Passenger Car Sales May Reach 1.8 Million in 2003 despite of Rising Inventories
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Passenger car sales in the first 8 months of 2003 reached 1.16 million vehicles, up 73% over the same period last year. With a number of new model introductions and factors such as SARS convincing people to stay away from public transit, the market showed diverse growth, with basic cars and MPVs showing strong sales. Although production capacity has caught up with demand for some models, resulting in increased inventories, 2003 will still see full-year sales reach 1.8 million.
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