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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”Ēs 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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