China car times
Great Wall, BYD and Geely are all recognized as leaders in the Chinese automotive market, all have developed on different trajectories with a differing product mix which has given them different histories.
Great Wall are a relatively new company when compared to international brands, with just 30 years of history under its belt it could be considered a minnow stuck in a third tier city. With its headquarters in the dusty satellite city of Beijing, Great Wall’s international developed plans could be brought into question, especially as it doesn’t have easy access to the levels of talent that cities such as Beijing and Shanghai easily bring in. Great Wall has developed itself from a village communal business to a global leader in the truck and SUV field.
In 1964, Wei Jian Jun was born into a military family, his family eventually created the first privately owned business in the Baoding area. Wei Jian Jun’s father was a military man for 20 years, rising through the ranks to the very top before changing his career. Mr. Wei De Yi gave up his Beijing family registration book, a much admired registration, in 1983 and moved his family back the ancestral home in Baoding. A crazy decision, but one that would eventually pay dividends. Senior Wei established the Tai Hang Group that created plumbing supplies for home heating and drinking water. Wei Jian Jun’s uncle created the Great Wall Industrial Company which was aimed at developing the automotive industry, the young Wei Jian Jun jumped into the family business.
After graduating high school Wei Jian Jun went to Beijing Tong County Micro-Electronics Factory and a Baoding Carpet factory to work, when he was 22 he entered into the TaiHang Group’s factory. At that time he was one of the few drivers in the Baoding area in his Lada which he often gave driving performances that earned him the nickname of ‘Car God’.
In 1989 Senior Wei saw that the auto parts market had strong potential, he bought an imported car and begun to strip it down, from his findings he began to develop independent suspension systems and eventually created the Baoding Tai Hang Dong Wei Automotive Suspension Systems. The Senior Wei passed away in a car crash in the same year, which led to the company having a rough year. Nantong Yuan Xiang Village Government would send someone to continue running the company but losses mounted and debts reached 2 million RMB – an astronomical sum for the early 90’s. Nan Tong Yuan Xiang had no option but to find a partner to take over running the company.
Wei Jian Jun didn’t take the time to talk with his family, he snapped up Great Wall Industry Company and made it his own. Eventually Wei would receive family approval with him taking over the Operating CEO from July 1st 1990. At the time, Great Wall only had 60 people and total assets reaching 3 million RMB but he had a five year mandate to turn the company around. Could a young manager with his only work experience being in a plumbing supplies and carpet factory turn Great Wll around? Some believed in him, the majority questioned his ability.
Wei Jian Jun took to the CEO position with relative ease, he spent his days working with technicians and engineers on the production lines stripping down vehicles to learn from them and analyzing the technical details of famous foreign cars.
Great Wall focused their energy on finding small chances in a big market, developing and modifying vehicles for the needs of larger companies that required refrigerated vehicles or for oil companies that had special needs from their vehicles. From these small chances Great Wall’s economic outlook turned from red to black, and thanks to his father’s earlier research Wei decided to move on from modifying vehicles and into creating vehicles at the age of 29.
Wei started from a base level; tractors. Wei found that the agricultural business had paper thin profits and a myriad of stronger competitors, he killed the project and looked to passenger cars. In 1993 he made his first sedan, based on the suspension design of his father and also a bought in platform, the first Great Wall CC1020 sedan was created and sold for 100,000RMB. It was initially only sold in the Beijing area where it performed quite well, making Great Wall its first pot of gold.
In 1994 the Central Government scuppered Great Wall’s car making plans with the introduction of new regulations to control the fledgling auto industry. Great Wall became an illegal child of the automotive industry overnight, sending Great Wall’s profit down. Wei went to America, then he went to Thailand, where he found that pickup trucks were in large demand. Wei concluded that Thailand and China were relatively close culturally and as such pickup trucks had the potential to become big in China.
Upon his return to China, Wei went straight to work researching the truck market. At the time China only had three mold factories all of which produced parts and couldn’t produce full cars but at the same there were lots of small scale Chinese state owned factories producing trucks. Wei found that there quality was low, pricing was high and technology was out of date which led to them not reaching the levels of market acceptance – Wei decided to create a new level of truck.
In the mid 90’s China underwent fast development which led to the demand for fuel sipping machines that were capable of pulling goods at a low price. At that time the Central Government was highly restrictive of personal ownership of vehicles which meant that only state owned business could register a vehicle. These businesses often opted directly for pickup trucks, which gave Wei his first major shot.
To speed up his research, Wei brought in over a 100 imported vehicles and begun testing and research them – the same as nearly every other Chinese automotive enterprise at the time. Wei was entranced by the big styling of American trucks but it was the compact design of Japanese brands that really got Wei hooked, the Toyota Hilux would especially fascinate Wei.
In 1994 Great Wall Group Limited Company was officially founded. Wei signed a continuation of their original 5 year contract. In January 1996 the company’s slogan would become ‘Develop a little, day by day” which would outline their efforts until today.
Zotye are a small but plucky company that have managed to ride the waves of the Chinese auto market with relative ease, especially difficult as they are in the shadows of some larger, more ruthless competitors. Their latest model is the below Zotye T600 SUV which was unveiled several years ago at the Beijing Auto Show as a concept but failed to make it into production until earlier this year. What is underpinning this SUV is still a mystery, Zotye did buy a few Lancia platforms from Fiat previously so it maybe a Lancia based product.
Engine power comes from a self developed 2.0T engine producing just 177bhp which seems relatively low in what soon will be 2014 – but it is more than enough for China. Power from that turbo will sent through automatic and manual gearboxes.
The T600 will be on the market in early 2014 without fail, and on the international market shortly afterwards.
Figures realeased by CAAM yesterday showed that the Chinese market continues to be strong in November 2013. China produced 2.13 million cars and sold 2.04 million. In the first eleven months of 2013 China produced just over 19.86 million vheicles and consumed 19.8 million units, a higher output than the same time frame than 2012.
In November China’s vehicle production increased 11.39% month to month and a 21.17% year on year increase. Vehicle sales increased 5.75% month to month and increased 14.12% year on year. Commercial vehicle sales were up 5.42%, indicating the Chinese economy is still ticking over slowly but surely.
The top selling vehicles in China in November where
1. Ford Focus – 38,800
2. Nissan Slyphy – 31,300
3. Buick Excelle 25,700
4. Chevrolet Cruze – 24,900
5. VW Jetta – 24,200
6. Chevrolet Sail – 23,000
7. Geely Emgrand 22,500
8. VW Sagitar – 20,800
9. VW Lavida 20,700
10. VW Bora – 20,000
The top selling SUV’s were:
1. Great Wall Hover 39,500
2. Honda CRV – 19,300
3. Toyota RAV4 – 18,600
4. VW Touran – 14,400
5. Hyundai ix35 – 14,300
6. Nissan Qashqai – 13,000
7. Ford Kuga 10,400
8. BYD S6 – 10,100
9. Toyota Highlander – 9,900
10. Kia Sportage – 8,800
The top selling MPV’s were:
1. Wuling Hong Huang – 60,200
2. Chang’an OuNuo – 9,400
3. Dongfeng ZhiLing – 9,200
4. Dongfeng Jingyi – 8,300
5. Buick GL8 – 6,800
6. Honda Jade – 6,800
7. Dongfeng XiaoKang – 6,100
8. JAC Rui Feng – 5,700
9. FAW Lin Ya – 3,900
10. Zhengzhou ShuaiKe – 3,700
Chinese consumers continued with their SUV love affair with the SUV market increasing by 58.24%
Qoros are continuing to epxand their China sales network with the addition of a new Shanghai dealership, the second dealership in China after the opening of the Nanjing dealer earlier this year.
The Shanghai dealership opening was attended by senior members of staff from Qoros including the Chairman Guo Qian whom personally gave the authorization to the Shanghai dealer to commence selling Qoros vehicles.
The Qoros 3 hit the market priced at 119,900-167,900RMB for the naturally aspirated and turbo assisted models in November at the Guangzhou Auto Show. Qoros have already signed up 120 dealers across China with many coming online in the next few months, Qoros are aiming to develop their network to 150 dealers by the end of 2014.
What is this mystery new vehicle outside of Shanghai-VW’s Headquarters? From the looks of the vehicle it seems to be a sixth generation Golf from the front and a Skoda Octavia at the rear, complete with the hatchback Skoda look and possibly a crossover styling (note the black plastic rear arches). Shanghai-VW are developing an entirely new vehicle which is apparently codenamed A-Plus.
The new car will probably be a Shanghai-VW variant of the FAW-VW Sagitar (Jetta) for the Chinese market, with an MQB based platform.
The Chery V5 has been on a mission for the past few years. It started off as a Chery V5 MPV under the Chery brand in 2006 but didn’t really roll out nationwide until 2008. Sales were okay, but then it became a Rely and shifted to the then brand new Rely brand, again as a V5, and now it is back with a mild ‘facelift’ that somehow makes it look worse than when it began.
The new V5 is likely to be on the market in early 2014 wit the same 1.8L engine as before, as well as manual/CVT gearboxes.
After years of seeing their Chinese breathen take Toyota models and make them their own in the Chinese market, Toyota have been overly cautious over the past few years by sending their international market models through the Chinese patent registry office to stop local offenders from getting Xerox happy once again. The latest model from Toyota to see such action is the below 4Runner which is so far only sold in the North American market and some other select nations. The 4runner is somewhat related to the Chinese made Toyota Prado SUV which is built in Chengdu and shares its heritage with the latest generation of Hilux pick up, but that’s not to say that it will be made in China in the near future, nor imported to the Chinese market.
Body on frame SUV’s are a dying breed in China, and should the 4Runner enter into the Chinese market it would largely be competing with other vehicles in the Toyota range, such as the Prado or the soon to be dead FJ Cruiser hence making it a long shot for China.
If the 4Runner does come China-side, don’t expect it to be a cheap low cost SUV, this will soon shoot up the luxury car charts and be priced in the low 400,000RMB segment.
“Dont look at me” “Dont Look at me” “Dont Photograph me and put me on the internet!”
Of course, that’s exactly what Tianjin Xiali what you to do. So here’s the new Xiali T012 hatchback in fetching tiger print camo. Under the hood there is a 1.5T engine which will hopefully be a little more powerful than the MG5′s 129 turbo supplied horses.
The Audi Q4 is heading to production in VW’s new plant in Foshan according to Chinese media reports. Despite there being no pictures or official images of the Q4 in testing or launching.
The Q4 is being sold as a crossover coupe which will be based on the new MLB platform and will of course rival the forthcoming BMW X4 when it comes into play later this year. The standard 2.0TFSI and 3.0TFSI models from the VAG portfolio will of course be the standard fare for the forthcoming crossover.
Pricing will be an interesting quandry for Audi China, the Q3 already fills the 300-380,000RMB gap and the Audi Q5 follows up from 390,000RMB so clearly there will be a slight amount of overlap.
Cinturx is the long rumored brand from Chang’an Mazda, the two joint venture partners are reportedly planning to create a new sub brand in order to further their sales. Sub brands were introduced as a means to hand over technology to the Chinese side and to develop greener new energy vehicles for the Chinese market.
Cinturx is thought to have been a ‘styling design’ which is hard to believe as the Cinturx seems to be a badge attaching exercise.
Weichai have aspirations beyond being one of the biggest Chinese parts suppliers, they hope to join the rest of the industry in making cars.
The new SUV has been codenamed S201 internally and will be put under the Ying Zhi name when it comes to the market in mid to late 2014.
Weichai have officially – on the quiet – named the car ‘YZ6410YFAB0Z’ which will be produced in Chongqing City under the production plants at Jiang Ling Chuan Jiang Automotive Productive plant.
The exterior of this new SUV is on par with Jinbei’s own compact SUV. The trucklet measures in at 4066*1737*1657mm with a wheelbase of 2502mm and will have a total weight of 1206kg. Power plants come from a domestic Minyang 1.5L petrol engine producing 102bhp.
From 2005 onwards Geely entered into a period of high speed development, the Zi You Jian or Freedom Vessel prepped the way for Geely’s vastly improved products: The Jin Gang and the Yuan Jing, both of which helped Geely to get to where they are today with vastly improved engines including the 1.8L CVVT engine which at the time was a vastly improved.
In 2006 Geely looked to the international market and took 19.97% of the UK’s Manganese-Bronze which resulted in the two companies developing a new joint venture in the Chinese market based in Shanghai to produce the TX4 London taxi for the Chinese market and also for the international market, eventually Geely would take over all of Manganese Bronze after the company went bankrupt, buying their shares for a pittance. The TX range of cabs were not a success in the Chinese market, they were not fit for the local taxi market but they did find a good niche as VIP cars for ambassadors and hotel VIP cars. Chinese cab drivers took to them in Beijing, Hangzhou, Shanghai etc but elsewhere cabbies found that they were gasoline thirsty and Chinese emission controls virtually barred the much loved diesel variant from the market.
2007 saw the launch of Geely’s first affiliate TV show named Sui Yue Feng Yun, a drama based on the development of a Chinese auto brand which may or may not have been based on Geely and the competition between multiple car owning families in the Chinese market, as well as the romances. Think Romeo and Juliet but with cars. The show was a huge hit in the Chinese speaking world, which is no shock as the development of the show cost 600 million RMB.
The ‘Ningbo Declaration’ was signed in 2007 in Ningbo. This was when Geely declared it was under going a strategic change from working and selling on cost alone to making leading technology vehicles with strong quality levels as well as strong sales and after sales service. As part of this Li canned the ‘Old Three’ HaoQing, Meiri and YouLiOu models, along with their production lines and brought in new equipment as part of an 800 million RMB investment, the ‘New Three’ Yuan Jing, Jin Gang, and Zi You Jian would survive for a little longer.
Geely’s strategy was much like its previous JunMa, XiongShi etc strategy – big numbers that were hard to reach but the new strategy was more practical and realistic. In 2008 Geely to sell 300,000 units, in 2009 that was to reach 500,000 units, in 2012 one million and by 2015 two million units. The multi brand strategy was introduced, the Geely brand would eventually die out. Under the new branding plans HuaPu became known as Shanghai-Englon, and Emgrand was introduced as an affordable premium brand from a Chinese manufacturer in 2009.
The world economic crises showed its head in early 2007 and hit hard in 2008, Geely as a private manufacturer was well prepared with a huge pile of cash and government support. Whilst other manufacturers were hiding away from the storm in their proverbial ports, Geely was gung-ho about going out into the forthcoming tsunami with bags of cash. Geely found a wash of international companies that were interested in cooperating with Geely.
Automatic gearboxes were becoming increasingly popular in the Chinese market due to ever worsening traffic and higher fuel costs, but Geely’s own tech was a little behind the international marques but ahead of Chinese domestic brands. One way that Li pushed to put Geely on an even level with the international brands was by buying Australia’s DSI. Geely bought DSI in March 2009 for $40 million Australian dollars which gave Geely the technological breakthrough it needed, at the time DSI was one of the world’s biggest automatic gearbox companies supplying Ford and Ssangyong but the onset of the global financial crises put DSI into the red. DSI was focused on developing high torque gearboxes for truck and SUV application which is where they excelled, but they were also developing a range of new gearboxes for FWD and AWD application, as well as dual clutch models which is why Geely sought to buy them. With new technology under their belts, Li believed that Geely could now launch 4 to 5 new car models every single year at a minimum.
When it was announced in 2010 that they were in talks with Ford to buy the Swedish brand Volvo. Chinese media ran amok with headlines such as ‘Chinese village boy to marry European Princess’ Li was reportedly unsure about the Volvo takeover to begin with, it was a huge chunk for Geely to bite off – in fact Volvo’s global sales at the time were larger than Geely’s but Geely had ready access to the capital it needed to take on Volvo. From December 2008 to February 2009 Geely continued to deny that it was involved in the process up until August that year when it was announced that Geely were a player in one of the biggest, and most successful takeovers of an international company to date. Only once did Li believe that Geely was ready did they make a move.
Li surprised everyone yet again after the takeover by announcing that Geely would remain Geely and Volvo would be Volvo, there was to be no mixing of the two, the two would not be merged into one company and he wouldn’t impose Geely’s Chinese management on the Swedes and vice versa. Li was painted as a savior of Volvo, protecting it from outside and internal conflicts.
By the end of 2010, Geely had made a breakthrough on its own plans. The 2007 strategic turn that Li had implemented following the Ningbo Declaration was finally paying dividends. Over the past four years Geely had established their three main brands: Global Eagle brand (2009), Emgrand (2009) Shanghai Englon (2010) with the following products; Panda, EC7, EC7-RV, EC8 sedan etc and sold more than 415,000 vehicles. By 2015 Geely is aiming to have an extremely competitive mainstream brand.
From 2010 onwards Geely’s fast growth had slowed to a period focused on more mature growth with added investment in product range, quality and sales service centers as well as the all important technology side. Geely’s technology levels were given wide recognition during the 2009 crash testing of the Geely Panda model which received 5 starts, the best ever score for a small Chinese car and helping to drive home the point that not all small Chinese cars are unsafe. The Emgrand EC7 sedan also received a highly respectable 4 stars alongside the MG6 sedan in the during NCAP crash testing in the UK in 2012. Geely continued on its crash testing parade in China with the GX7 SUV receiving 5 stars, the first five star Chinese SUV.
900 dealers. That’s how many 4S dealerships that Geely currently boasts in China split across its three brands, roughly 300 each. Geely are not sitting back either, the company is focused on developing the network further and also pulling up the level of service offered. Geely’s sales in 2012 reached just over 483,000 units, for 2013 this level has been moved to 560,000 units.
On the international market Geely has been admittedly slow to react when compared to its regional rivals at JAC and Chery both of whom have set up serious international operations targeting South America and the Middle East. However, in 2012 Geely’s international sales broke through the 100,000 units barrier, an increase of 164%: Russia, Ukraine, Iraq, and Saudi Arabia are major markets for Geely’s models and have become long term customers. Elsewhere, Geely has set up a CKD factory in Egypt producing Geely models.
Geely’s work is not finished, nor is Li’s. The man at the helm may have come from humble beginning’s but he now runs two major car companies, his desk is likely burdened with the growing popularity of Geely vehicles internationally and the growing popularity of Volvo vehicles in China. On the global stage Volvo seems to have taken a hit since Chinese ownership, but this is likely due to stale models rather than ownership issues. Geely are continuing with their work on their own brands, with their first turbo powered vehicles coming soon as well as a range of MPV’s and SUV’s for the Emrand range.
The history of Geely and its tireless CEO Li is testament to the often talked about ‘Chinese Dream’ He came from a poor background, built up an ‘illegal’ car empire at a time when private investment in the car industry was actively discouraged, he was mocked along the way but has become a global figure. Geely itself has matured as a company, from a simple company making Daihatu’s with Toyota engines under a funny badge, it has developed into a company with products that are actually worth buying. The next decade at Geely remains a critical one, key players within the company have departed but the momentum to succeed is still ongoing.
From Refrigerators to Volvo Part Four: The Geely Story – Making More Cars, Sports Cars, and Factories
From the turn of the millennium onwards Li Shu Fu started to believe that the wider global automotive industry. On January 6th 2000 Li Shu Fu did his first media tour, over 1300 people, including dealers and media, descended on Guangzhou to view Geely’s latest cars. The results were strong with Geely being remembered.
To promote Geely globally Li Shu Fu took to the promotional circuit giving talks at conferences or different events, the result was that this down to earth, somewhat country bumpkin-esque car making businessman was mocked constantly. On one particular TV show Li talked extensively about his technology, investment and branding but was quoted as saying “Making cars? Making cars is nothing special, is it not just four wheels, two sofas and an exterior shell?” the host quipped back “So this is how Geely cars are made….” The audience roared into laughter but it was like water off a ducks back to the down to earth Li, he believed that all promotion was good promotion.
2001 was a good year for Geely, Li Shu Fu was anointed by the China Entrepreneur magazine as the most ideologist person of the year, with the reasoning being that no matter what he chooses he is always determined to do it, for example making cars. Li Shu Fu’s nickname of “Crazy Car Guy” followed him wherever he went, with increased exposure – no matter if positive or negative, helped Geely’s sales go from strength to strength.
One particular day is revoured in China’s economic history, and that is November 9th 2001, the day China formally joined the World Trade Organization. At the same time good news came for Geely in the form of an announcement from the National Development and Reform Council in which Geely’s JL6360 model made it onto the list. Geely had gone from being an ‘unregistered child’ into a ‘registered citizen’. The celebrations at Geely were explosive, Li sat down with upper management, engineers, designers and line workers alike to celebrate by drinking, and rumor says they drank a lot. On December 26th of the same year, Geely’s first sedan was approved along with their original first two hatchback models, meaning Geely was now a legal automotive enterprise.
With the support of Central Government policy Geely’s development was exceptionally fast. In June 2002 Li announced a long term development plan which included ‘three projects’ of which contained the JunMa Project, Liebao Project, and XiongShi Project. The Junma project involved producing and selling 300,000 cars by 2005 with the Ningbo plant producing 100,000 and Linhai 50,000, Qiaolu 100,000 and the Shanghai factory producing 50,000 with sales income reaching 1.8 billion RMB and 100 million profit. The Liebao project set goals of 1 million sales by 2010 with Zhejiang province absorbing 500,000 units alone and sales reaching 4 billion RMB with sales income of 2.5 billion RMB. The XiongShi Project – which translates as ‘Ferocious Lion’, was to sell 2 million cars per year with 1.5 million years being absorbed by the Chinese market and the rest being exported, with an estimated income of 80 billion RMB and taking 10% of the Chinese market. As current statistics show, the plans did not meet expectations at any level but it did show that Geely had a heart to aim big.
Geely continued with its car models, bringing the Geely YouLiOu to the market, which was essentially a sedan version of the existing Meiri and helped Geely promote itself as a producer of not only hatchbacks but sedans too. Shortly afterwards, Geely launched the Geely MeiRenBao, ‘Beauty Leopard’ which was the first Chinese sports car and was designed by an Italian design house.
The Beauty Leopard had all the looks of a sports car, but lacked the engine power with it having a 1.3L and 1.5L four cylinder engine. Both engines produced 86 or 94bhp, producing 110Nm and 128Nm of torque respectively when mated to a 5 speed manual gearbox. Official 0-100km/h times were set at 12.8 seconds and 12 seconds for the 1.5L, nothing to write home about. The Beauty Leopard did have one thing for it, it was cheap at 129,999RMB to 148,888RMB.
From 2001 to 2005 Geely used the Haoqing, MeiRi and YouLiOu models to improve its fortunes and continue to invest in infrastructure with renewed investment.
The most notable factory was Geely’s Shanghai facility, which was then producing the HuaPu range of cars under the ownership of Li Shu Fu’s younger brother. As HuaPu’s fortunes ran in a different direction to Geely’s own successful road, the company failed to gain central government support and thus didn’t have the official license to produce cars – but did so anyway, like many other small auto companies in China during that period. To get around the lack of legality at Huapu Li rolled his brothers enterprise into his own, calling the new company Shanghai Maple. The factory is located into Shanghai’s suburbs of Jinshan District and is able to produce 150,000 cars per year with the models includes HaiFeng, Hai Shang, Hai Xun, Hai Yu etc – the majority of which were loosely based on clones of the popular Citroen ZX.
In 2003 Toyota was unhappy with Geely. In a case which was called ‘The Auto Industry’s First IP Protection Case’ by the Chinese media, Geely was accused of treading on Toyota’s own IP. Toyota claimed that Geely’s logo was too similar to Toyota’s own logo, and at the same time Toyota were unimpressed with Geely using ‘Toyota Powered’ as part of its advertising campaign. Geely was asked to compensate Geely 14 million RMB.
Li Shu Fu put forward his own case in court, he said the Geely logo was based on the Chinese characters ? and ? which could be loosely translated as beautiful day rather than intentionally aiming to copy Toyota’s logo. On the ‘Toyota Powered’ issue, Li claimed that he was being honest as Geely models were at that time Toyota powered with engines bought from Tianjin-Toyota who did not disagree with sales to plucky little Geely – on this point Geely won. Despite Toyota products being cloned by other Chinese manufacturers, it seems that Toyota has lost heart in the Chinese legal system and hasn’t ventured forth since.
By 2005 Geely’s JunMa Project had its first year harvest after being implemented, although Geely sold 150,000 units it was still far away from its intended 300,000 units but at the same time it had a stellar 36% growth rate which pushed Geely into the Top Ten World’s Biggest Car Makers on volume. At the same time, Geely listed its shares on the Hong Kong stock market.
Geely Freedom Vessel or ‘Zi You Jian’ was also launched in 2005. This model was developed in partnership with multiple international partners including Korea’s Daewoo and Japan’s Kyocera, for the Chinese market this update was considered impressive.
Geely’s technical prowess continued – the Zi You Jian came with three engine options: a 1.3L, 1.5L and 1.6L with the latter two being self-developed by Geely. Gearboxes came in the form of 5 speed manual and also an automatic model – again, developed by Geely in house and the first Chinese automatic gearbox.
Renault has secured Chinese government approval for a joint venture with Dongfeng Motor, giving the French group its first manufacturing foothold in the world’s largest car market by units sold.
Renault has long been rumored to be in the process of setting up a joint venture with on and off savior, Dongfeng. Rumors have been persistent since 2005 but nothing concrete has been landed until the Chinese government gave the french company official approval to establish its new business in China.
Dongfeng and Renault are planning to invest 7.8 billion RMB in a dormant company, Sanjiang Renault, which was established in 1993 with Sanjiang Space Industry Group which Dongfeng later absorbed into their group. Renault established the company relatively early in the Chinese market when compared with its rivals but sales were slow, leaving Renault to eventually abandon the partnership after building the Renault Traffic Master van and also extremely limited number of Renault Espace MPV’s.
Since the abandonment of the joint venture, Renault has been importing vehicles from its Korean partnership with Samsung which has meant their Chinese market offerings have been priced slightly higher than rivals. The Sanjiang Renault JV will be officially renamed to Dongfeng Renault Automotive Company and will be based in Wuhan, the home of Dongfeng.
Dongfeng has already established a long term and highly successful joint venture with Renault’s partner, Nissan, but at the same time it also has a parntership with Renault’s rival PSA where the Citroen and Peugeot models are produced.
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In what may come as a surprise to many, India is quietly becoming a production hub of high-end vehicles meant for export to China. Iconic US motorbike maker Harley Davidson, Austrian motorcycle manufacturer KTM and Mahindra & Mahindra have preferred to set up manufacturing facilities in India than in the relatively low-cost China and export the output.
KTM, 48 per cent owned by Bajaj Auto, has identified two of its products under the Duke brand for export to China as completely knocked-down (CKD) units. The initial target is to sell over 10,000 CKD units of these high-end bikes annually. Exports are expected to commence in 2014. The two bikes are Duke 200 (Rs 1.35 lakh, ex-showroom, Delhi) and Duke 390 (Rs 1.88 lakh) manufactured at Chakan in Pune as part of the company’s joint development programme with Bajaj Auto. The KTM strategy is to sell high-power bikes from Europe and low-power ones from India. The bikes would be assembled at an outsourced facility in China.
Confirming the plans, S Ravikumar, senior vice-president (business development), Bajaj Auto, said, “The China strategy for KTM is clear. They want to target the niche upper end of the motorcycle market in China. They are not interested in the lower end where there are many players and huge volumes. We expect there to be a large market for high-end bikes in China.” The China thrust is part of the joint strategy of Bajaj-KTM to treble exports to around 70,000 units per annum from India, from about 25,000 currently. That effectively means about 13 per cent of the exports would come from selling to China.
Stefan Pierer, CEO, KTM Motorcycles AG, said, “We are in the process of setting up an assembly unit in China, which is expected to be commissioned sometime next year.” Keeping KTM company will be Harley Davidson, which has lined up for export models developed on the recently unveiled Street platform from its facility in Bawal (Haryana). Currently, Harley does not have any plants outside the US, except in Brazil and India, and it wants to leverage those plants for export to China. Anoop Prakash, managing director, Harley Davidson India, said, “Harley Davidson has developed the Street platform after a gap of 14 years. Both Street 750 and Street 500 will be manufactured in India, the only other production hub for the models apart from Kansas in the US.
These bikes will be exported from India to markets in Europe and Asia, including China.” Production and export of both models on the Street platform are expected to commence in India mid next year. Prakash, however, declined to specify a timeline for starting exports to China.
Whenever there seems to be a problem in China, the issue is blamed at the feet of foreigners. The one sided fued started by China’s state owned Central Television Service started earlier this year aimed to address the issue of high prices on imported cars, but now the issue has moved over to the price of replacement parts.
China’s state broadcaster, China Central Television (CCTV), has accused some foreign auto makers, including Land Rover, Subaru and Audi, of profiteering and called for revision of auto market regulations.
A common rear end accident costs the owner of an imported Range Rover100,000 yuan (16,313 U.S. dollars) to fix, because of expensive parts on which the manufacturer has a monopoly, while the car costs a little over 1 million yuan.
Likewise, owners of imported Subaru and Audi also have to buy parts at a high price, according to Tuesday’s CCTV program “Half-Hour Economy”.
It also takes time to get parts because they can only be ordered from foreign producers, according to the program.
Industry insiders said duties and taxes on imported car parts, usually about 29 percent, do not make a big contribution to the prices.
The program blames the 2005 guideline on car sales management for excessive prices. The regulation allows foreign car makers to set up their own franchisees to handle sales, after-sales service and the supply of spare parts, which gives them monopolies.
Volvo’s first factory in Chengdu under Chinese ownership is on the verge of producing its first model for the Chinese market, the S60L. The S60L is for all intents and purposes the same car as the European made S60 but given the addition of an extra 80mm in the wheelbase to keep rear seat Chinese passengers happy and comfortable. Another point of note is the Volvo S60L’s addition to the government procurement catalogue which will surely give the Swedish-Chinese company a solid boost in the coming months when govt depts are looking to clean out their 2013 budget.
Chinese media are reporting that the S60L will launch with six models in the coming weeks with pricing starting at just 269,999RMB and rising to 384,900RMB for the top of the line T5 model. All of the six models come up with a 2.0T engine so there is a potential for a LWB 1.6T in the near future at a lower price point.
The S60L’s pricing, if confirmed to be correct, will put it in direct competition with the BMW 3-Series and Audi A4L family both of which offer stretched models but at the 300,000RMB and rising price area.
An official launch date of December 13th has been announced, with the car being in dealerships shortly afterwards.
General Motors and its joint ventures in China saw their domestic sales increase 13.3 percent on an annual basis to a new November record of 294,500 vehicles. It was the second-best sales month of 2013.
During the first 11 months of 2013, domestic sales by GM and its joint ventures increased 11.4 percent year on year to 2,889,368 units and will reach 3 million units for the first time in the middle of December.
Shanghai GM sold 142,009 vehicles in China during November, a year-on-year increase of 4.1 percent. SAIC-GM-Wuling’s domestic sales rose 23.4 percent to 146,296 units. FAW-GM sold 6,015 vehicles in the domestic market, an increase of 24.4 percent.
Buick sold 76,085 vehicles in China during November, an increase of 8.4 percent on an annual basis. The brand was led by the original Excelle family, which experienced sales growth of 9.8 percent to 25,673 vehicles, and the Excelle XT and GT, whose sales grew 12.2 percent to 19,877 units.
Chevrolet sales in China dropped 5.3 percent year on year to 59,647 units. The brand continued to be led by the Cruze, with demand rising 12.1 percent to 24,909 units. Demand for the Malibu was up 20.3 percent to an all-time monthly high of 9,257 units.
Cadillac sales in China increased 92.5 percent on an annual basis in November to 6,277 units. The SRX and XTS had all-time monthly sales of 2,783 units and 2,561 units.
Wuling sales in China during November totaled 135,830 units, a year-on-year increase of 25.4 percent. It was led by the Hong Guang family, which had sales of 60,168 units – an increase of 143.1 percent from last November. Baojun sales were up 2.3 percent from last November to 10,466 units.
During the first 11 months of 2013, Shanghai GM’s domestic sales grew 13.5 percent to 1,386,092 units, SAIC-GM-Wuling’s domestic sales grew 9.7 percent to 1,446,767 units, and FAW-GM’s domestic sales increased 4.3 percent to 52,489 units. In addition, Buick sales rose 16.4 percent year on year to 752,161 units, Chevrolet sales were up 3.1 percent to 591,214 units, Cadillac sales increased 57.8 percent to 42,717 units, Wuling sales were up 11.7 percent to 1,359,108 units, and Baojun sales grew 16.3 percent to 87,659 units.
After 4 years of preparation, the first Geely model was finally rolling down the production lines. That first car was of course the Geely Hao Qing model, a car that would aim to revolutionize the Chinese car market. On the auspicious date of 1998 August 8th at 8am the first Geely Haoqing hatchback came down Geely’s Linhai production line. The Haoqing resembled a Benz from the front, a nod to Li Shu Fu’s desire to create a luxury model with a price that could attract the masses rather than the minority. The Hao Qing was based on the Xiali platform which itself was bought from Daihatsu, the engine came from Tianjin-Toyota 8A platform and a gearbox from Fiat, not quite an entirely indigenous vehicle from Geely but it was a good start for a fledgling company.
During the start of production ceremony Li ran into a major issue, he sent out 200 invites to local leaders and celebrities, but not one of them came to lend support and the reason being that the automotive regulations of the day where still against private investment in the auto industry. Li found a comrade in the then vice minister of Zhejiang province, Mr. Ye Rong Bao, who also believed that Zhejiang would benefit from being a car producing province. With Ye’s attendance confirmed, other leaders would fall in line and attend.
At the end of 1998, Li had produced the first 100 Haoqing hatcbacks and invited potential dealers to come and check the goods. Another barrier was thrown up in Li’s dream – dealers saw the car, shook their heads and left. Quality was a major problem, rain testing proved the cars to be less effective than an umberella in keeping occupants dry, the brake system would fill with water, the lights filled to the brim and when road testing, road dirt would blow through the air vents suffocating the driver and the tops of the door were coated in glue and the door thickness left even Li thinking that the car was substandard and wouldn’t get market support. Li was furious and ordered the cars destroyed, resulting in a net loss of millions.
Li moved to streamline his workforce, he retired workers with poor welding skills and hired a new bunch of highly skilled workers. Quality, therefore, increased several fold. By November 1999 a new batch of Haoqing’s had been produced and entered into the marketplace, within a short few months over 2000 models had been sold. But as car dealers shook their heads at the original Haoqing, Li had to use his motorbike network to sell cars thus limiting potential sales.
Under Li Shu Fu’s command Geely moved to create “China’s cheapest car”, borrowing heavily from the then Xiali model and pushing Xiali into a price war. As soon as Xiali lowered their prices Geely would match it or beat it. Xiali dropped their price to 31,800RMB, Geely met them at 29,999 RMB which resulted in the entire auto industry cursing Li Shu Fu, later Li would admit that he was only making several hundred RMB on each Geely Haoqing sold.
Although Geely had its products, quality was nonexistent, a popular saying at the time in Taizhou was “When going up hill you have to push it, and when it rains you have to open your umbrella inside.” To tackle this Li hired over 100 technicians from Tianjin-FAW and hired fresh graduates to push technology and quality levels higher. Geely established a relationship with Hangzhou university, offering students scholarships and in the end spending 10 million RMB to hire 60 recent graduates but finding that nearly none of them were willing to work from the bottom rung on the ladder, eventually all of them would leave.
With Li being a practical man he didn’t want to wait for graduates to come to him after university, he wanted the graduates to come directly to him. He thus created his own technical high school where students could learn a trade – the Zhejiang Economic Management Technical School was created in 1998. In November 1999, Geely University was officialy created in Beijing’s Changping district.
From 1998 to 2007, over a near decade Geely Group established a strong educational base in the Chinese market with 8 of its own educational facilities that educate at multiple teritiary education levels from apprenticeships to associate/technical degrees and undergraduate to post graduate degrees. Geely currently boasts 3500 teachers and over 57,000 students on campus.
Li was not content with his lot in Taizhou’s Linhai, he looked north to the coastal city of Ningbo where a Japanese businessman was ready to sell over 300mu of factory land and thus the Geely Group Ningbo Plant was born. It was in Ningbo that Geely produced its second car; the Mei Ri or Merie in export markets. When the Hao Qing opened the automotive market’s door for Geely, the Mei Ri allowed Geely to make money.
Despite the rumor mill here in China saying Porsche’s latest baby SUV, the Macan, will be made in China foreign media have heard directly from Porsche saying the SUV will not see Porsche will not see Chinese production lines. What is happening first is that the Macan will see Chinese sales, at least according to these patent office filings.
The 3.0L V6 twin turbo and also a 3.6L V6 turbo mated to a 7 speed PDK gearbox. Chinese pricing is still a mystery, we think it will be circa 700,000RMB or circa 120,000USD which makes it relatively affordable, although expect demand to be high and dealers will likely add on their own extras.
A Beijing Auto Show launch is expected next April with sales starting shortly afterwards.