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Brilliance debuts in Egyptian market	07-11-2007
China Auto Firms Take on Trade Friction	07-11-2007
Domestic auto startups have long shot at Toyota	07-11-2007
China regulates development of new energy automobiles	05-11-2007
Beijing to introduce tougher auto emission standards	05-11-2007
China to encourage foreign auto joint ventures to export	02-11-2007
Shanghai GM to Export Cadillac SLS to Middle East	02-11-2007
Carmakers urged to adopt new fuels	02-11-2007
Lawyers hunt Chinese auto investment	02-11-2007
GM sets up clean fuel research lab in China	02-11-2007
Hyundai aims to double China sales in 2008	02-11-2007
Brilliance to set up factory in Russia	02-11-2007
Dongfeng Motor to invest RMB 10 bln in own-brand cars	19-10-2007
Chrysler vows not to give up production of Jeep in China	19-10-2007
China: Slowdown on the Car Lot	19-10-2007
VW to boost China JVs' R&D, no own-brand car plans	19-10-2007
Chery Auto Jan-Sept exports up 220 pct yr-on-yr at 77,000 units	18-10-2007
Chery Auto to build hybrid	18-10-2007
Volkswagen considers China expansion	18-10-2007
F1 opens doors to China's auto market	18-10-2007
SAIC eyes 2m vehicle output by 2010	18-10-2007
BASF to Invest in China's Auto Market	18-10-2007
FAW Group increases auto sales 23 percent for Jan.-Sept. period	18-10-2007
Honda Motor Jan.-Sept. China auto sales rise 32%	18-10-2007
Skoda says sold over 14,000 Octavia cars in China since June	16-10-2007
Great Wall to double overseas facilities	16-10-2007
Toyota to recall 21,000 Coaster vehicles in China	16-10-2007
Chery expects record car export in 2007	16-10-2007
Fiat, Daimler launch plagiarism complaints vs Chinese carmakers	16-10-2007
Passenger vehicle sales rise 23.84%	16-10-2007
Chrysler Takes Aim At China's Small-Car Market	16-10-2007
BYD seems to change it's logo	12-10-2007
Mazda to Start Compact Car Production in China	12-10-2007
FAW-Toyota Plans to Sell 400,000 Vehicles in China Next Year	12-10-2007
China Geely Auto Sept vehicle sales by volume up 16 pct vs Aug, up 24 pct on yr	12-10-2007
China's FAW Xiali Auto sees Jan.-Sept. net falling 50%-100%	12-10-2007
Volkswagen raises China target after sales surge	12-10-2007
BYD launches cheap electric cars	10-10-2007
More Audi Cars Sold in China than United States	10-10-2007
Ford Jan-Sept China retail vehicle sales up 30 pct	10-10-2007
China's Chery buys shipyard to boost auto exports	10-10-2007
China becomes world´s 2nd largest auto market	09-10-2007
Renault seen to drive more imported models into China	09-10-2007
China has 156 million motor vehicles	09-10-2007
Ferrari 430 Scuderia Heads to China	08-10-2007
Fiat CEO sees good chance of SAIC China bus deal	08-10-2007
Micro vehicles still not welcomed by motorists in China	08-10-2007
The China Strategy	08-10-2007
China Invades Detroit	07-10-2007
Chinese auto producer Yutong exports more buses to Cuba	06-10-2007
Chery to invest in southeastern Iran	26-09-2007
Custom-made cars drive sales in China	26-09-2007
Buick Prospers -- in China	26-09-2007
General Motors signs 800 million dollar China export deal	26-09-2007
Chery Ramping Up Export Plans	24-09-2007
Electric-Car Maker Zap Joins Forces With the Chinese	24-09-2007
Shanghai Auto says parent to buy 10% of 8 bln yuan CB	24-09-2007
Ford: China Car JV's New Nanjing Plant Begins Operating	24-09-2007
Low-priced Chinese cars quietly gain a foothold in Europe	24-09-2007
China's Chery group matures into global auto player	24-09-2007
China's Vehicle Exports to Rise 46%, Official Says	24-09-2007
China observes 'Car Free Day' with the usual gridlock	24-09-2007
China's Great Wall May Export Compact Sedans Before Selling Them at Home	21-09-2007
'Kingdom of bicycles' under 'Tyranny of cars'	21-09-2007
Chinese threat to Indian dominance in Lanka vehicle market	21-09-2007
Peugeot Has Big Plans for China	20-09-2007
Hyundai in drive for the luxury market end	20-09-2007
To Fight Pollution, China Orders Cars Off Road On September 22	20-09-2007
China's Chery Auto eyes rapid growth in exports	20-09-2007
BMW Sues Shuanghuan's Importer in Germany, But Not the Company	19-09-2007
GM drives up its ambitions	19-09-2007
Shanghai Automotive Co. Ltd renamed	19-09-2007
Nanjing Automobile Names New Executives for Nanjing Fiat	19-09-2007
Luxury cars hit China's west	18-09-2007
Chinese Cars Find Easy Road in Russian Market	18-09-2007
Brilliance is making progress in Europe	18-09-2007
China Encouraging Automakers To Be Actively Involved In Setting International Standards	18-09-2007
China to hold first-ever 'no car day' on Saturday	18-09-2007
China's Car-Price Wars Dent Profits	18-09-2007
Brilliance BS6 crash test pictures	14-09-2007
Spyshots: Chery QQ5	14-09-2007
China ready to introduce fuel tax	14-09-2007
Chinese car makers face road blocks on exporting to EU	14-09-2007
Beiqi-Cummins tie up	14-09-2007
Jaguar launches XJ8L in China (and about the luxury car market)	14-09-2007
U.S., China Reach Auto Safety Agreement	13-09-2007
Chery enters new stage of global expansion	13-09-2007
Peugeot, Hafei mull $266 mln-plus China JV -source	13-09-2007
SAIC-GM-Wuling Auto's Liuzhou Engine Plant Begins Production	13-09-2007
GM China president's confident automaker can meet 2007 tales target of 1 million	12-09-2007
China's Brilliance Auto to boost export effort after car passes Spain crash test	12-09-2007
Shaunghuan IS in Frankfurt	12-09-2007
At Frankfurt Motor Show, weeding out Chinese knockoffs	12-09-2007
China's Brilliance Auto Jan-Aug unit sales up 50.8 pct yr-on-yr	12-09-2007
Chinese Lessons: What GM Has Learned in China	12-09-2007
Auto sales up 25% in 1st eight months	11-09-2007
Of course we'll be at Frankfurt - Shuanghuan sais	11-09-2007
Toyota Considering China Plant Expansion	11-09-2007
The role of international managers (China Daily on Murtaugh)	10-09-2007
China says auto overcapacity getting more serious	10-09-2007
China's auto output, sales both to hit record 9m units in 2007	09-09-2007
Iran-China joint auto confab opens	09-09-2007
Bajaj Auto still scouting for 'right partner' for China	09-09-2007
Road rage in the West as copycat cars from China start to make their marque overseas	09-09-2007
Tiny Chinese electric car plugs into a wall outlet	09-09-2007
Fiat's unit Magneti Marelli in gearbox component jv deal with China's Chery	09-09-2007
Murtaugh quits China's SAIC to join Chrysler	08-09-2007
Ford executive: Company considering third plant in China	07-09-2007
FAW Group Aug auto sales up 19.4 pct yr-on-yr at 117,000 vehicles	07-09-2007
Hino Motors to set up new auto project in China	07-09-2007

China regulates development of new energy automobiles

Xinhua, Beijing. China has made a substantial move to advance the development of automobiles powered by new energies amidst concerns on energy conservation and environmental protection.

A new regulation regarding the qualifications of manufacturers for automobiles powered by new energies was promulgated Thursday by the country's top economic planner, the National Development and Reform Commission (NDRC), after seven months of public discussion.

New-energy automobiles were defined by the regulation as hybrid cars - battery electric vehicles (BEV), fuel cell electric vehicles (FCEV), hydrogen-fueled vehicles and vehicles powered by other new types of fuel.

Professor Zha Daojiong, director of the Center for International Energy Security at Renmin University of China in Beijing, said the regulation came out against a background of increasing domestic and international energy demands.

The promulgation of the regulation coincided with the announcement of a sharp gasoline price rise by the NDRC. The prices of gasoline, diesel oil and aviation kerosene increased by 500 yuan (US$67.02) per ton, a rise of almost 10 percent, to lessen the gap between soaring international crude prices and state-set domestic oil prices.

The document said China would accelerate the research, development and production of new energy vehicles step by step.

Auto enterprises applying to manufacture vehicles powered by new energies should have adequate research, production and after-sales service capacities and need to ensure the reliability of the autos, it said.

"Enterprises wanting to manufacture new-energy cars should pay attention that their development of new type of energies should be truly energy-efficient rather than only new in name, Zha said. "It is also crucial to avoid creating new sources of pollution in the process of the production of vehicles fuelled by new energies."

Special testing institutions will be entrusted to supervise the quality of the vehicles powered by new energies, according to the regulation.

To tap the country's rapidly expanding car markets and cater to the government's requirements on environmental protection, many domestic automobile manufacturers have already started research on new, cleaner energy.

Central China's Anhui-based Chery, for instance, has signed a strategic cooperation agreement with the China Petroleum and Chemical Corporation (Sinopec) for the latter's technical support in developing green alternative energy vehicles.

With an estimated 38 million motor vehicles on the roads, including 22 million private cars, China has a taste of not only the efficiency and convenience of modernization but also the harm this can bring, with damage to ecology and polluted air.

Statistics from the Ministry of Construction showed that transportation accounted for 16.3 percent of the country's total energy consumption in 2005. Moreover, more than 80 percent of the carbon monoxide and more than 40 percent of nitrogen oxides in air are from the car emission, figures from the State Environmental Protection Administration revealed.

Beijing, the host city for the 2008 Olympics, had 3.08 million automobiles by the end of August, the highest in China, and this figure is increasing by more than 1,000 a day.

Professor Zha Daojiong suggested the government increase the tax on the use and consumption of high-emission vehicles, especially in big cities like Beijing, where roads would often resemble car parks during the rush hour.

"The government should impose higher fuel consumption taxes on the high-emission cars," he said.

As America's development and production of ethanol, an alternative fuel to petrol, has boosted the global food price surge to some extent since last year, Zha said that the government must take social, economic and ecological factors into consideration in specifying the new energy development scheme.

China has hoped to cut energy consumption per unit of gross domestic product by 20 percent, or 4 percent each year from 2006 to 2010. But, the consumption actually fell by just 1.2 percent last year, far from accomplishing the set goal.

Beijing to introduce tougher auto emission standards

Xinhua, BEIJING - Beijing will introduce tougher auto emission standards at the beginning of next year to curb air pollution in this host city of the 2008 Olympic Games, an official has said.

The new standards will reduce the amount of sulfur dioxide in automobile exhaust by 1,840 tons every year, said Feng Yuqiao, an official with the Beijing environment protection bureau.

Automobile distributors in Beijing have got prepared for the new China IV standards that are equivalent to the Euro IV standards in the European Union, the official added.

Feng also said "all the gas stations in Beijing will provide gasoline and diesel that meet the requirements of the new standards starting from January 1."

The current China III standards, equivalent to the Euro III standards, have reduced sulfur dioxide in automobile exhaust by 2,480 tons annually since it was enforced at the end of 2005, according to the official.

However, "air pollution caused by automobile exhaust is still serious," Feng added.

To reduce pollutants in emission, some buses in Beijing have already used fuel that meets the China IV standards.

There are 3.1 million motor vehicles in Beijing at present.

China to encourage foreign auto joint ventures to export

SHANGHAI (XFN-ASIA) - China will encourage foreign joint venture automakers to export their output, an official with the economic planning agency said.

'We cannot talk about the future of the auto industry without mentioning joint ventures and foreign companies,' Chen Jianguo, deputy inspector of the Industrial Department of the National Development and Reform Commission (NDRC) said at a forum here.

Chen said Chinese companies could move into 'global alliances' with partners to help export locally-made vehicles.

'The government will principally stick to a policy of independent development for the auto industry,' Chen said, noting that auto firms need to be strong enough not to rely on policy.

China expects to export more than 500,000 automobiles this year with exports of auto parts expected to hit 8.85 bln usd, up 32.4 pct year-on-year, according to the Ministry of Commerce.

In the first seven months, China exported 294,000 automobiles, up 70.3 pct compared to a year earlier, the ministry said in a statement last month.

Shanghai GM to Export Cadillac SLS to Middle East

Shanghai General Motors announced that it would start to sell the Cadillac SLS, the lengthened version of the STS luxury sedan, in the Middle East in the first quarter of 2008. It's the first export deal for the Chinese-made Cadillac, built under a joint venture formed by Shanghai Automotive Industry Corp and General Motors.

The SLS went on sale in China starting this March. The car has helped to boost overall Cadillac sales in China by 128 percent in the first nine months of 2007, compared to the same period in 2006.

Shanghai GM will also debut the model at the Middle East International Auto Show in Dubai beginning November 13, ahead of the official launch. The car maker said the model has passed all road tests.

Carmakers urged to adopt new fuels

Chinadaily. The auto industry must switch its attention from oil to alternative fuels if it is to help combat the global energy crisis and slow environmental deterioration, Chinese experts have said.

The development of energy-saving technologies has to be the priority for China's auto industry, which is expected to become the world's largest in 10 to 15 years, Zhen Zijian, deputy director of the New Energy Vehicle Key Project of the National Hi-Tech R&D Program, said.

"China's auto industry has attached great importance to the development of 'clean' vehicles using our own core technologies to give us a competitive edge," Zhen said.

The government has earmarked 1.1 billion yuan ($147 million) for its clean vehicle project during the 11th Five-Year Plan (2006-10), up 220 million yuan on the previous five-year period.

The State Development and Planning Commission has also launched the New Energy Vehicle Production Access Regulation, effective from Thursday, to ensure the healthy development of the clean vehicle industry.

"We need to promote the development of clean vehicles with support from the government, private enterprises and research institutes," Zhen said.

Participants at the Clean Vehicle Innovation Forum, held on Friday in Beijing and sponsored by the Ministry of Science and Technology, agreed.

Professor Ouyang Minggao of the automotive engineering department of Tsinghua University, said: "New energy is the driving force for the sustainable growth of the auto industry and we need to form an innovation union of private companies, research bodies and universities."

China's clean auto research is currently being driven along three paths - hybrid, clean fuel and electric vehicles, Ouyang said.

The Zhejiang-based Geely Automobile, for example, which produces small cars, last year spent 30 million yuan on the development of a hybrid vehicle that combines a standard internal combustion engine with electric power.

Chery Automobile, one of the country's largest carmakers, began clean vehicle research in 2003.

Its hybrid vehicle, which the company claims uses up to 30 percent less gasoline than a standard car, will be launched early next year.

Lawyers hunt Chinese auto investment

Grand Rapids law firm Warner, Norcross & Judd is willing to travel to China to drum up some business.

For them and for western Michigan.

Three Warner lawyers have spent the past two weeks in China on a hectic schedule, visiting with auto original equipment manufacturers and lobbying for investment in Michigan. Traveling with economic developers from the Right Place Inc., the group met with or presented to more than 100 Chinese companies, lawyer Albert Yu Chang said from China.

"This is really geared toward educating Chinese OEMs on how to do business in the international market, specifically North America," Yu Chang said, following a Beijing seminar led by Warner Norcross's Tom Manganello, based in Southfield and president of the MichAuto trade association.

Warner's Andrew Thorson also traveled with the group.

The Michigan Global Partnership, an informal group including Warner Norcross, the Right Place, Fifth Third Bank and others, and focused on developing "Michigan's reputation in China with the aim of promoting Michigan as an investment destination," arranged seminars in Han Cho and Chongquing, Yu Chang said.

"In both cities are significant auto industries," he noted. "The push would be to have them set up offices in the U.S., perhaps sales or R&D or even manufacturing."

The group has exercised persistence and patience in its goals to attract Chinese investors.

"This is our third time to participate on these trade missions," Yu Chang said. "It's always been a biannual event. We meet companies in October and go back to visit them. In the U.S., business creates a relationship. In China, it's the other way around -- relationships create business. People go into business transactions because they have relationships."

During last April's visit, the partnership set up a booth at the Shanghai Auto Show for the first time. Michigan was the only state with a booth there, he noted.

At least one Chinese company has set up an entity in Michigan following a visit, though Yu Chang declined to say who.

One difference between U.S. and Chinese cultures is the role of an attorney, Yu Chang noted. There lawyers are not included in negotiations.

"They call in a lawyer after the terms of the agreement have been negotiated ... to document the agreement," he said. "Lawyers are not part of that process or strategy."

GM sets up clean fuel research lab in China

BEIJING (AFP) — US giant General Motors said Monday it would launch a 250-million-dollar alternative fuel research centre in China, as it looks to dramatically ramp up production of more environmentally friendly cars.

The new centre in Shanghai, which will conduct research into fuels and vehicles, will be launched in conjunction with the firm's Shanghai auto partner, SAIC, GM's chief executive Rick Wagoner told reporters.

GM also said it would begin selling a hybrid vehicle model in China next year using locally made engines.

"GM is proud to be announcing one of the most important and far-reaching collaborative strategies to promote energy efficiency and environmentally friendly transportation in China and around the world," Wagoner said.

GM expects hybrid and biofuel vehicles will comprise around 10 percent of its worldwide production of 9.2 to 9.4 million units this year.

"(But) if you look out five years or so, I think that number is going to be significantly higher. It could be 50 percent of global production," Wagoner said.

The first phase of construction, in which the Chinese government is a partner, will be completed next year.

The centre will focus on developing bio and other alternative fuels, and the engines for them, Wagoner said.

An additional agreement with SAIC and Beijing's Tsinghua University will establish a five-million-dollar clean fuel research laboratory in the Chinese capital.

"The centre is responsible for reducing China's dependence on petroleum-based fuels," Wagoner said.

"China has the potential to become the market leader in the adoption of alternative propulsion systems."

With climate change and pollution in the global spotlight, China's auto industry, one of the main engines of its booming economy, has come under scrutiny.

A recent report from the State Environmental Protection Administration said car fumes caused 79 percent of air contamination in China's highly polluted cities on bad days.

Auto sales in China, the world's second largest car market after the United States, soared in the first nine months of 2007 to 4.58 million units, a 23.84 percent increase from a year ago, Chinese state media said.

Detroit-based General Motors expects to sell more than one million vehicles in China for the first time this year, compared with 876,747 units in 2006.

For his part, SAIC chairman Chen Hong said his company planned to produce 10,000 hybrid fuel vehicles a year by 2010, as it steps up a commitment to find cleaner ways to power vehicles.

The global automobile industry is in the process of movoing production away from highly-developed countries and into emerging markets.

Sales in countries like China, India, Russia and South Africa have taken off. GM said in August these markets will account for a quarter of its new car sales, exceeding North America.

Hyundai aims to double China sales in 2008

SEOUL, Nov 1 (Reuters) - Hyundai Motor Co, South Korea's top auto maker, aims to almost double its sales in China in 2008 after it opens a second plant in the world's fastest-growing auto market, a company official said on Thursday.

Hyundai, the world's sixth-largest car maker with its affiliate Kia Motors Corp, also targets 10 percent growth next year in the United States with new models, the official told Reuters.

"As we plan to begin mass production in May next year, China's sales would rise to 500,000 units in 2008 from this year's 260,000," said the official, asking not to be identified.

China's booming economy has drawn the world's top car makers, including General Motors Corp, Toyota Motor Corp and Honda Motor Co, all keen to sell cars to an increasingly wealthy population.

The fierce competition forced Hyundai, which saw a 21 percent drop in Chinese sales during the first nine months of 2007 from a year ago, to cut its sales target for 2007 for the country by 16 percent to 260,000 units from the previous 310,000.

Analysts say Hyundai's sales in China are unlikely to pick up until late next year, when the company hopes the new Elantra compact car and the Sonata sedan, modified solely for China, will attract more customers and after the second factory opens.

Its capacity in China will double to 600,000 units per year when the new $1 billion plant on the outskirts of Beijing starts mass production.

In India, Hyundai targets 50 percent growth after it introduced the i10, a sub-compact sedan, the official said, with an overall sales goal of 450,000 units next year, compared to this year's target of 300,000.

Hyundai expects its new models such as the premium BH sedan, which will have a V-8 engine, to help increase U.S. sales net year, the official said. It aims to sell about 20,000 units of the BH annually in the United States.

Global auto makers have taken a hit in the world's largest auto market due to a slowdown in the U.S. economy, and analysts say Hyundai is not an exception.

Last week, a Hyundai senior official admitted the company would miss its revised sales target in the world's top economy, saying it would sell 475,000 units there.

The auto maker decided to halt production at its U.S. plant for 10 days in the fourth quarter after lowering its sales target in the country to 510,000 vehicles from the previous 555,000.

The weaker performance came as the won hovered around levels which have not been seen since the Asia financial crisis.

Hyundai is setting up business plans for the next year with a foreign exchange rate of 880 won per dollar, the official said.

Meanwhile, record-breaking oil prices would not hurt Hyundai's sales as the company's compact models would become more appealing to customers, he added.

Brilliance to set up factory in Russia

Brilliance China Auto, partner of German luxury carmaker BMW, said it will assemble its own-brand cars in Russia with a local partner, in the freshest move to expand overseas sales.

An official from the Hong Kong-listed carmaker said it plans to export US$1.18-billion kits to produce 107,589 units of the 1.6- and 1.8-liter Junjie compact sedan at an existing facility of Russian industrial group IRITO over the next five years.

Production will begin in January 2008 with a planned volume of 10,000 units that year, it said.

The Russian plant is Brilliance's fourth overseas manufacturing site following three in Egypt, Vietnam and the Democratic People's Republic of Korea, it said.

The company said it aims to sell more than one-third of its total vehicles abroad a year by 2010, up from 3.1 percent last year.

It expects to boost its annual sales to 500,000 vehicles from 210,000 units.

In the first three quarters of this year, Brilliance's overseas sales surged by 85 percent to 12,163 units from a year ago, it said.

Russia is a new target of Chinese carmakers as vehicle demand in that country has been growing rapidly thanks to its economic recovery in recent years.

Other Chinese brands, such as Chery Automobile and Great Wall Motor, are also planning factories in Russia.

New vehicle sales in Russia rose by 23 percent to 1.78 million units last year from 2005. The market is mainly controlled by global auto giants, including Ford, General Motors, Toyota and Hyundai.

IRITO is the biggest agent for Chinese-brand cars in Russia by sales volume. It also sells other Chinese nameplates, such as Great Wall, BYD and Hafei.

In another development, Brilliance said it is testing the Zunchi mid-range sedan according to the safety and exhaust emission standards in the United States in preparation to foray into the world's largest and most competitive vehicle market.

Sources from the company told China Daily that it would ship the Zunchi sedans to the US as early as December. Its US dealers have built more than 200 stores for the model.

Brilliance is making BMW 3 and 5 Series sedans at a joint venture in northeastern Chinese city of Shenyang, its home base. It is also producing own-brand mini buses and light-duty trucks in Shenyang.

It closed at HK$2.08 per share yesterday, up 0.48 percent.

Dongfeng Motor to invest RMB 10 bln in own-brand cars

Oct. 19, 2007 (China Knowledge) – Dongfeng Motor Corporation (DMC), China's third largest automobile manufacturer, plans to invest RMB10 billion through 2010 to develop its own brand of cars, according to a report in Shanghai Securities News yesterday.

DMF, in a alliance with Nissan Motor, Honda Motor and PSA Peugeot Citroen to make cars, is constructing facilities with designed annual capacity of 330,000 cars with its own brand, said the company's vice president Fan Zhong. The cars, carrying its own brand, are expected to contribute to 20% of the company's total car output by 2010, up from 4% in 2005.

The carmaker will develop own-branded vehicles at the parent company, rather than at the group's listed unit. It would transfer the production of Dongfeng-brand sedans to the list unit, Dongfeng Auto Group Stock Co. Ltd, only after the business becomes profitable.

Many of China's domestic manufacturers are making own-brand strategies to reduce their reliance on foreign technologies, after they tied up with overseas partners to make foreign-brand cars. FAW Group Corp, partner of Volkswagen AG and Toyota Motor Corp, will invest RMB13 billion in next 8 years to develop own-brand cars.

Guangzhou Honda, a joint venture set by Honda Motor and state-owned Guangzhou Automobile Group, plans to spend RMB2 billion to develop non-Honda branded cars, the first foreign car venture to develop cars carrying own brand.

SAIC Motor Corp, in ties with General Motors Corp and Volkswagen, announced massive bond issue plan earlier to fund the development of own-brand sedans, including building facilities capable to produce 270,000 cars and 320,000 engines annually, which is estimated to cost at least RMB21.4 billion.

Chrysler vows not to give up production of Jeep in China

Chrysler will not give up the local production of Jeep vehicles in China, possibly in partnership with another Chinese automaker, a senior Chrysler official said recently. "Though Chrysler has paused production of Jeep Grand Cherokee at our Beijing venture, we will continue to produce Jeep in China either with Beijing Auto or a new partner in future", said Simon Elliott, president and CEO of Chrysler Group (China) Sales Ltd.

Earlier reports say that Chrysler may stop production of Grand Cherokee permanently in China due to its high manufacturing cost as well as the new fuel tax to be implemented next year, but Elliott denied the reports. "As to the Jeep brand, Chrysler has already delivered imported Jeep Compass and Jeep Commander to the Chinese market within this year."

China: Slowdown on the Car Lot

Businessweek. Autos are selling, all right, but not at hoped-for rates—slowing assembly lines and shrinking margins

With China's car market up 24% so far this year, you'd think these would be fat times for auto manufacturers. But many of the mainland's carmakers are hurting. Sales are falling far short of lofty targets they had set for the year, driving prices down by as much as 15% and squeezing margins. The price wars "exert a lot of pressure on car companies," says Lawrence Ang, executive director of Geely Automotive, which has cut its production target for the year from 240,000 cars to 190,000. "Margins were not very high, and raw materials prices are up. So it's very difficult to make that all up by just cutting costs."

It's not only domestic brands that are feeling the pain. General Motors' Shanghai operation that turns out Buicks and Chevrolets is set to finish the year 5% below its production targets, while Guangzhou Honda (which makes Accord sedans and Fit compacts) is headed for an 18% shortfall, Citigroup analyst Charles Cheung estimates. A Peugeot joint venture is 21% below target; South Korea's Hyundai Motor is down 29%. "The 2007 car market has disappointed the majority of car assemblers in China," Cheung wrote in an Oct. 5 report.

The biggest problems are in small cars. A year ago, that segment seemed to offer the best prospects for growth as lower-income buyers started flocking to showrooms. But as it turns out, there are fewer customers at the bottom end of the market than automakers had anticipated. So sales of microcars—with engines smaller than 1 liter—increased just 7% through August. Subcompacts (a bit bigger than micros) are up by only 4%, says market researcher J.D. Power & Associates. And as more manufacturers cut prices, customers are holding off buying. "I want to wait and see how low the price goes," says Wang Jin, a 25-year-old Beijing native eyeballing a 1.6 liter Peugeot 307. It's now selling for $16,000, but he hopes to bag one for just over $14,000.

BIGGER IS BETTER

Competition is getting fierce, too. Nearly every automaker on earth has set up shop in China, and some 80 brands are now available in the country. That has helped push gross margins across the industry down from 15.1% last year to 8.8% in the first half of 2007, estimates Citigroup. "It is a confusing picture—there is very strong growth, and yet people are cutting prices and margins are falling," says Michael J. Dunne, Shanghai-based managing director for China at J.D. Power. "Everyone is clawing for what they can get."

Even as the market for the smallest cars has been a disappointment, bigger models are still moving. Sales of compacts are up by 46%, and midsize sedans have jumped 35%, J.D. Power reports. That has helped manufacturers of larger cars such as Volkswagen, which saw its sales in China and Hong Kong jump 30% in the first nine months. VW has boosted its share from 15% to 18%, widening its lead over No. 2 GM, with 9.8%. Toyota Motor is another big winner. Sales of its $43,000-plus Crown luxury sedan, its midsize Camry (priced from $26,373 to $35,973), and smaller autos were up 40% through August. With about 8% of the market, the company is in a dead heat with Chery and Honda for China's No. 3 spot. "High-end cars are much cheaper than before," says Hua Xue, CEO of auto industry Web site Cheshi.com.cn. "So buyers are more willing to buy better cars."

VW to boost China JVs' R&D, no own-brand car plans

SHANGHAI, Oct 19 (Reuters) - Top European auto maker Volkswagen AG said on Friday it will boost the research and development capability of its China ventures but has no plan to roll out cars under the ventures' own brands next year. Volkswagen, which has tied up with FAW Group and SAIC Motor Corp (600104.SS: Quote, Profile, Research) since the early 1990s, has invested roughly $400 million to build up the ventures' R&D facilities, the German auto maker's China spokesman said.

More investment will be made to shore up the R&D abilities of the ventures, which already play a major role in developing new models catering to the Chinese market, the spokesman said, without elaborating.

However, he added that a new car to be rolled out in 2008 by Shanghai Volkswagen, its tie-up with SAIC, would not carry the venture's own brand as stated by a local newspaper.

"The model is mainly designed in China by Shanghai Volkswagen, but it will still carry the Volkswagen brand," he said.

The Shanghai Securities News reported on Friday that the venture would produce a car under its own brand next year, becoming the second foreign auto venture to unveil a strategy for its own brand, following Guangzhou Honda, Honda Motor's (7267.T: Quote, Profile, Research) venture in south China.

Foreign auto ventures, such as Shanghai GM, General Motors Corp's flagship car venture in China, have traditionally produced cars with foreign badges.

The paper also said Shanghai Volkswagen's new model might replace its Santana 3000, but the Volkswagen spokesman said it would have no effect on the Santana.

Volkswagen is a major player in the world's second-largest auto market. It raised its 2007 China sales target by 12.5 percent last week to 900,000 vehicles after reporting 30.2 percent sales growth in the first nine months in China and Hong Kong.

Chery Auto Jan-Sept exports up 220 pct yr-on-yr at 77,000 units

BEIJING (XFN-ASIA) - Chery Automobile Co Ltd, China's fourth largest carmaker, said exports for the first nine months increased 220 pct year-on-year to 77,000 units.

Nine-month exports totaled 530 mln usd by value, the automaker said in a statement.

Chery's exports are expected to double to 100,000 units this year, with the value estimated at 700 mln usd, it added.

Chery Auto to build hybrid

Chery Automobile, a Chinese associate of Chrysler, will introduce as many as five new models next year, including its first hybrid, as competition with automakers like General Motors intensifies.

The new models include one sedan with the rest being compacts, Chery's president, Yin Tongyao, said Monday in Beijing. The hybrid car, named ISG, is equipped with a 1.3-liter engine and is based on the Chery A5 model.

Introducing new vehicles could help Chery retain its share in the world's second-largest vehicle market after other carmakers unveiled more than 30 models in the first half of this year. Rising personal incomes in China have helped raise sales at Chery, one of the five largest Chinese carmakers. Chery has a 7.2 percent market share.

"Our sales surged more than eightfold over the past five years," Yin said. "We are still tiny, and we still need time to improve ourselves."

The company is still considering a share sale to help finance its expansion, Yin said. Domestic and overseas listings cannot be ruled out, he said.

Chinese vehicle sales rose 25 percent in the first nine months of the year to about 6.46 million, according to the China Association of Automobile Manufacturers.

Closely held Chery, set up a decade ago, increased sales by 30 percent to 207,096 units in the first half and plans to sell 400,000 cars this year.

Volkswagen considers China expansion

BEIJING: Volkswagen, which said three years ago that it would not build any more plants in China, now says it could expand production in the country by 2010 because of rising sales in the world's second-largest auto market.

"By 2010, we'll need additional capacity and we are discussing this with our partners," Winfried Vahland, 50, the president of the company's China unit, said in an interview Friday in Beijing. The company, the biggest foreign automaker in China, will have production capacity of almost 1 million vehicles in China this year, he added.

Vahland took over Volkswagen's China operations in July 2005, months before the automaker announced its first loss in the country in more than two decades. The automaker expects a second straight annual profit in China as greater use of locally made parts and more efficient use of its factories allow it to cut prices to preserve market share.

"Volkswagen is winning customers in China again," said Yale Zhang, a director at CSM Asia in Shanghai, which advises automakers in China. "If Volkswagen maintains the current momentum, its position as the biggest overseas carmaker in China will be unchallenged."

The company will finish studying options for additional capacity next year, Vahland said. He declined to comment on the cost of the plan, or on where facilities might be built. The automaker is in discussions with its two venture partners, SAIC Motor and China FAW Group, he added.

In 2004, Volkswagen said it would not expand its capacity in China beyond 900,000 vehicles a year because of slower sales growth and uncertainty about market prospects.

Last week, the automaker raised its full-year sales target in China to 900,000 vehicles. The company sold a record 684,786 cars in the first nine months of the year, 30 percent more than a year earlier. Third-quarter profitability also improved from a year earlier, the statement said. Vahland declined to elaborate.

General Motors, Toyota Motor and domestic automakers have increased sales in China this year, as economic growth makes cars affordable to more people. Car sales in China rose 24 percent in the first nine months of the year to 4.58 million. The Volkswagen Jetta and Santana compacts were the two best-selling models in the period.

Volkswagen plans to begin selling its Cross Polo car in China next year and to add a new "volume" model at its China ventures, Vahland said.

"You will see a lot of launches in 2008 from the Volkswagen group," he added. The company will install two of its most advanced engines in its new models for China, he added.

Volkswagen, which once had more than half the Chinese car market, has stemmed a drop in market share by adding new models and cutting prices. The automaker has added six new or revamped models so far this year in China, including the Magotan sedan in July and the first Skoda model, the Octavia, in June.

The automaker had a first-half market share of 19 percent, compared with 18.6 percent for the whole of 2006. It aims to maintain a market share of about 17 percent, Vahland said.

F1 opens doors to China's auto market

People's Daily. When China hosts the Formula One race, it not only puts the country in the global spotlight but the grand prix also helps car makers and auto part suppliers sniff business opportunities in the booming domestic auto industry.

Werner Bruck, manager of the engine division of Pankl Racing Systems AG, was in Shanghai two weeks ago to attend the F1 Shanghai Grand Prix. The world's leading engine components supplier, which provides engine and drive systems and chassis components for almost all F1 teams, plans to set up a representative office in Shanghai to tap the market potential.

The potential involves cooperating with domestic motor sports manufacturers to improve engineering technologies, supplying Chinese high-tech motor sports events as well as selling parts in the after-market sector, Bruck said.

"I know I am a little bit too far ahead. What I dream today might be happening seven or 10 years later in the engineering sector. But the motor sports side and the after-market side will grow quicker," Bruck said.

Pankl has already started exporting its products, including pistons, connecting rods and crankshafts to China through third parties. But Bruck said the business now only generates little revenue.

Bruck's optimism about China's sports motor industry is a reflection of the popularity of motor sports events in China.

Geely Automobile Co Ltd, China's leading private car maker, set up its Asia Geely Formula series in 2005 with an initial investment of one billion yuan (133 million U.S. dollars) in developing racing cars, said Zhang Chao, director of Geely's AGF program.

The lower-speed formula races, which attracted international sponsors, including Michelin, are part of motor sports in China which also include off-road races and rally races at various levels with domestic car makers and joint ventures of Volkswagen and PSA Peugeot Citroen participating.

Compared with foreign car makers, including Mercedes-Benz, BMW and Toyota, which have participated in motor sports like the F1, World Rally Championships and GT Racing for a long time, Chinese motor sports events are still in their infancy.

"Chinese car makers would also need our help sooner or later," Bruck added with great confidence, playing down competition from the car makers' own R&D teams. He also does not think Pankl's "too sophisticated" products and higher prices are an issue here.

The F1 event has also become the best stepping stone for car makers to apply their technologies ranging from racing cars to mass produced passenger cars as they cash in on China's booming auto market, now the world's second largest.

Some F1 suppliers also take advantage of the grand prix to improve technology before mass application on other products.

An official from Henkel, the adhesive product supplier, said the company spent 2.7 percent of its total revenue to develop new technologies every year.

For BMW, returning to the F1 in 2000 helped it transfer its F1 technologies to the manufacture of its passenger cars. The German car maker applies its special technologies and components in its V8 engine-equipped F1 cars to the production of its M Series cars as well as new generation of models in the future.

BMW also uses the data collected from the F1 races to develop the Internet access and navigation systems found in its premier 7 Series sedans.

SAIC eyes 2m vehicle output by 2010

BEIJING: Shanghai Automotive Co plans to produce two million vehicles by 2010, up from expected production of more than 1.5 million this year, its chairman, Hu Maoyuan, told a Communist Party gathering on Oct 16.

The company has also targeted trade and export revenue of US$5 billion (RM17 billion) by 2010, Hu said.

"We want to use China's low costs to develop a global brand," Hu said, adding: "We need non-stop opening and participation in the international sector to be a top car-producing nation. China's auto sector hasn't reached that level yet."

By 2010, Hu said, Shanghai Auto's own-branded cars should exceed 600,000 units.

Shanghai Auto's ventures with General Motors and Volkswagen AG are China's biggest car sellers.

He said China's auto industry needs to resolve the problem of cars using too much energy.

"We will focus on hybrid car production," Hu said, adding the company would unveil more than 20 battery-powered prototypes for the Olympics next year. -- Reuters

BASF to Invest in China's Auto Market

SHANGHAI, Oct 16, 2007 (SinoCast via COMTEX) BASF AG, a Germany-headed global leading chemical company, has announced that it would set up a technological center for automotive products in Shanghai as a major source of its sales revenue.

The German company, which is now cooperating with Beijing on conducting technological restructuring of city buses in the Chinese capital, will probably carry out the restructuring of public transportation in Shanghai after its center in the city, its first global center of such kind, is established, revealed Wolfgang Hapke, president of the company's Asia Pacific Region branch.

The center includes display halls, labs, technological service unit, and the market, marketing and supply chain units of catalyzer and engineering plastics.

The company achieved 10% of its 2006 sales revenues of EUR 52.6 billion from automotive industry and EUR 3.6 billion of the revenues from Greater China Region.

China has become one of the major drives of the fast growing automotive industry in Asia with an annual 8% growth rate, offering business opportunities for related international enterprises.

FAW Group increases auto sales 23 percent for Jan.-Sept. period

BEIJING: China FAW Group Corp., a state-owned company that is one of China's largest vehicle makers, said its auto sales in the January to September period rose 23 percent from a year ago to 1.05 million units, according to a media report.

Auto production for the period rose 19.6 percent to 1.06 million units, Dow Jones Newswires reported, citing an executive at the Chinese carmaker who declined to be named.

The carmaker is based in Changchun in China's northeast and has joint ventures with Volkswagen AG and Toyota Motor Corp.

Its listed units include FAW Car Co., Changchun FAW-Sihuan Automobile Co. and Tianjin FAW Xiali Automobile Co.

Honda Motor Jan.-Sept. China auto sales rise 32%

BEIJING (MarketWatch) -- Honda Motor Co.said Wednesday its China sales rose 31.7% in the nine-month period ended September to 297,536 vehicles, from 225,965 in the year-earlier period.

The Japanese carmaker said in a statement Dongfeng Honda Automobile Co., a 50-50 joint venture with Dongfeng Motor Corp., sold 89,309 vehicles in the first three quarters, up from the 40,284 units sold in the year-earlier period.

Guangzhou Honda Automobile Co., a 50-50 venture with Guangzhou Automobile Group Co., sold 208,227 vehicles in the first three quarters, up 12.1% from 185,681 in the same period last year.

Skoda says sold over 14,000 Octavia cars in China since June

BEIJING (XFN-ASIA) - Skoda said it has sold over 14,000 locally-produced Octavia vehicles in China since June.

The auto maker launched its second-generation Octavia model in China earlier this year with local partner Shanghai Volkswagen. Skoda said the sales have surpassed expectations.

In the first nine months of the year, Skoda, the Czech unit of Volkswagen, said it sold 462,429 vehicles worldwide, representing a year-on-year increase of 12.6 pct.

Great Wall to double overseas facilities

Great Wall Motor Co, a small but ambitious Chinese carmaker, plans to more than double its number of overseas plants by the end of this decade to boost sales abroad.

Wang Fengying, chief executive officer of the Hong Kong-listed maker of sports utility vehicles (SUVs) and pick-ups, told China Daily that it would have a total of 20 overseas factories by 2010. Currently it has eight.

The company, based in the northern city of Baoding, will build new plants mainly in Southeast Asia and South America, which impose relatively high tariffs on vehicle imports but low duties on spare parts, Wang said. "These plants will help us propel our overseas sales considerably," she said.

She said Great Wall aims to sell more than 200,000 vehicles abroad a year by 2010, up from 27,500 units in 2006. Meanwhile, it expects to lift its overall annual sales to 500,000 units from 73,580 units.

The company operates in more than 100 countries and regions. Wang said the profit margins are bigger in overseas markets. "We are also looking at the EU and US markets to be an international brand in real terms. But we'll be very cautious as they have stricter standards," she said.

She said Great Wall will launch its three latest models as imports in the EU in the first half of next year. But she declined to reveal a timetable for the company's foray into the US, the world's biggest and most competitive auto market.

China is encouraging domestic carmakers to speed up exports through improved quality and design, though it is curbing overseas shipments of many resource-intensive commodities as part of a drive to rein in the trade surplus.

Baoding was named one of a second group of national auto and spare parts export bases last month, along with four other cities. Many other Chinese brands, such as Chery and Brilliance, are also building more plants in foreign countries to boost overseas sales.

January-to-August exports of cars and spare parts from China, the world's second-biggest vehicle producer and No 2 market, surged by 40.3 percent year-on-year to $25.2 billion, according to industry data.

Wang said Great Wall plans to spend 10 billion yuan in the years to 2010 to develop 20 new models and build new facilities to achieve its sales target. The company is awaiting government approval to produce sedans and multi-purpose vehicles. "SUVs and pick-ups are insufficient to fulfill our goal. We must extend our line-up," Wang said.

Earlier this year, Great Wall raised HK$1.61 billion by issuing 151 million shares. Wang said it might return to the booming A-share market to raise more capital if it needs to fund other major projects before 2010.

The company posted 439.7 million yuan in after-tax profit in the first half of this year, up 14.7 percent. It closed at HK$11.4 per share yesterday, up 2.52 percent.

Toyota to recall 21,000 Coaster vehicles in China

Gasgoo. FAW-Toyota said it will recall 21,685 Coaster passenger vehicles sold in China, Chinese media reported today. Starting October 15, FAW-Toyota will begin to recall Coaster passenger vehicles made between Febuary 1, 2001 through May 31, 2007.

The reason for this recall is related to the rear stabilizer bar, which may hurt a brake line when a driver tries to make a sharp turn while his car is running very fast. In the worst case, the hurt to the brake line may cause the leak of brake line, which is very dangerous on highway.

FAW-Toyota in Sichuan province offered to fasten the rear stablizer bar for its Coaster customers free of charge.

Chery expects record car export in 2007

China.org. Chinese auto maker Chery, the ambitious flag-bearer of Chinese indigenous brands, expects a record car export of more than 100,000 units after a 2.2-fold increase in export in the first three quarter of 2007.

The Anhui-based company exported 77,000 cars worth US$530 million in the first nine months. It would double that of 2006 to reach 100,000 with a sales volume of US$700 million, said the Bureau of Commerce of Anhui Province.

Chery is capable of producing 400,000 cars, 400,000 engines and 300,000 transmission cases a year and plans to raise its annual output to one million cars by 2010.

The firm, established in 1997, started production in 1999 and made its first million cars in seven years and nine months, said a statement from the company.

The company, which operates seven plants in six other countries, including Russia, Uruguay, Indonesia and Egypt, would build another 14 overseas plants by 2010.

It has established ties with Italy's Fiat to supply 100,000 engines a year for Fiat cars made in China and abroad.

Chery has also signed a deal with Chrysler to export Chinese-made cars to the United States and Europe. The two companies will jointly develop new products based on Chery's small-car platforms.

Earlier this month, the company launched its first franchise in Philippine located in Manila which sells automobiles branded with Qiyun, Eastar and QQ under the flag of Chery.

Fiat, Daimler launch plagiarism complaints vs Chinese carmakers

BERLIN Thomson Financial - Fiat and Daimler have lodged plagiarism complaints against Chinese carmakers before Chinese and European courts, according to a report in Automotive News Europe magazine.

German carmaker Daimler has launched legal proceedings to block the sale of the Noble, manufactured by the Shuanghuan group, according to the magazine.

The Nobel is very reminiscent of Daimler's Smart Fortwo. The Shuanghuan group decided not to show the car in September at the Frankfurt Motor Show, the world's biggest car show, because Daimler threatened to lodge a complaint.

Italian manufacturer Fiat has has lodged complaints in Italy and China to prevent the sale of Great Wall Motors group's Peri, which could be mistaken for its Panda, reported Automotive News Europe.

'We are waiting for the first announcements in China in December and in Turin for Europe towards the end of January,' Fiat legal advisor Monica Norgi told the magazine.

Great Wall Motor's Italian importer, Eurasia Motors, has delayed the introduction of the Peri until a decision has been made.

Passenger vehicle sales rise 23.84%

Xinhua. China's automobile manufacturers sold 4.58 million passenger vehicles in the first nine months of this year, up 23.84 percent over the same period of last year, according to the China Association of Automobile Manufacturers.

The total included 3.44 million cars, up 25.76 percent, 251,700 sports-utility vehicles, up 51.7 percent, and 165,300 multi-purpose vehicles, up 20.75 percent.

In September, passenger vehicle sales rose 16.54 percent from the previous month to 561,000 units.

The top 10 sedan brands, with sales totaling 1.12 million units and a 33-percent market share, included Jetta (FAW-Volkswagen), Santana (Shanghai Volkswagen), Buick Excelle (Shanghai General Motors), Camry (Guangzhou Honda), QQ (Anhui Chery), and Xiali (FAW Tianjin).

The three largest Sino-foreign carmakers continued to be the top three sellers. FAW Volkswagen was first with sales of 684,786 passenger vehicles, followed by Shanghai Volkswagen and Shanghai General Motors.

The indigenous carmaker Chery maintained its fourth place.

Chrysler Takes Aim At China's Small-Car Market

Wall Street Journal. BEIJING -- Chrysler LLC is looking to enter China's huge market for small and compact cars while also expanding sales of existing brands.

Simon Elliott, president and chief executive officer of Chrysler Group China Sales Ltd., in an interview forecast Chrysler's sales in China will more than double to about 20,000 vehicles this year from fewer than 8,000 last year, boosted by a few popular new models.

Meanwhile, he said, "We are looking at new opportunities in the segments we don't cover today." The company doesn't currently have a small car with a small engine, and it is looking for one that does. Mr. Elliot didn't name potential partners but said Chrysler "at the moment" has no plans to make such cars for China jointly with Chery Automobile Co. The two previously agreed to jointly make small cars for export.

Small cars are increasingly popular in China. According to Automotive Resources Asia Ltd., a division of J.D. Power & Associates, January-August sales of subcompacts were up 46% from a year earlier, accounting for a 35.3% market share in the entire local auto industry. Compact-car sales rose 35%, for an 18.2% share. Sales for the industry as a whole rose only 27%.

Chrysler's plan to explore China's small-car business may accelerate with the arrival of Phil Murtaugh, the former General Motors Corp. China CEO, recently hired as Chrysler Asia chief, said Mr. Elliott.

Mr. Murtaugh, a 32-year GM veteran, forged GM's China business by establishing a joint venture with Shanghai-based SAIC Motor Corp.

Mr. Elliott acknowledged Chrysler is coming a bit late to the world's No. 2 auto market, where vehicle sales likely will reach nearly nine million units this year. But he said Chrysler aims to expand aggressively by spending more on marketing, launching new models and improving its local sales network.

It plans by year-end to expand the number of Chrysler-Jeep dealerships to 116 from the current 81 and the number of Dodge dealerships to 60 from zero, he said.

BYD seems to change it's logo

BYD, famous for it's BMW-like logo, seems to listen to the world and introduced a new logo at a press conference about the new F6. On BYD's website however, everything is like it always was...

Mazda to Start Compact Car Production in China

Tokyo, Oct 10, 2007 (Jiji Press) - Japan's Mazda Motor Corp. <7261> will start producing the fully remodeled Mazda 2 compact car at a plant in Nanjing, China, on Oct. 30, company officials said Wednesday.

The plant, operated by Changan Ford Mazda Automobile Co., will be the first overseas plant to produce the new Mazda 2, known as the Demio in Japan.

In the first month after its launch in the Japanese market in July, orders for the fully remodeled Demio reached a level three times the target set by Mazda.

Expecting the model to draw popularity in China as well, Mazda officials said the compact car market in China has potential for growth. The Japanese automaker plans to release the new Mazda 2 in China early next year.

Changan Ford Mazda Automobile is a joint venture between U.S. auto giant Ford Motor Co. and Mazda. Mazda is affiliated with Ford.

In September, monthly sales of Mazda-brand cars in China surpassed 10,000 units for the first time this year, coming close to a record high thanks to the July launch of the Mazda 3 midsize sedan, known as the Axela in Japan, according to a Mazda unit in China.

FAW-Toyota Plans to Sell 400,000 Vehicles in China Next Year

SHANGHAI - October 11, 2007: FAW-Toyota plans to produce and sell 400,000 vehicles next year, an increase of 50 percent compared to this year, said a senior FAW-Toyota official.

"Starting October this year, FAW-Toyota began to implement double shifts on Toyota Corolla production, therefore FAW-Toyota's output capacity of Corolla has been greatly enhanced," said Wang Fachang, vice general manager of FAW-Toyota.

Under FAW-Toyota's latest plan, the company has raised its annual sales target to 270,000 this year, up 21 percent from one year earlier. "Next year, Corolla will become FAW-Toyota's most important car model and FAW-Toyota will not deliever new car models to Chinese market next year," Wang said.

Besides Corolla, Corolla EX, Crown, Prado, Land Cruiser are very popular among Chinese buyers and FAW-Toyota will further expand output capacity to produce these models, Wang said."

China Geely Auto Sept vehicle sales by volume up 16 pct vs Aug, up 24 pct on yr

Mainland automaker Geely Automobile Holdings Ltd said it sold 15,900 vehicles in September, up 16 pct from the previous month and up 24 pct from a year earlier.

The company's total sales by volume in the first nine months of this year amounted to 124,900 units, up 4 pct from a year earlier and representing 66 pct of the full-year sales target of 190,000 vehicles.

China's FAW Xiali Auto sees Jan.-Sept. net falling 50%-100%

EIJING (MarketWatch) -- Chinese compact-car maker Tianjin FAW Xiali Automobile Co.said Wednesday it expects its January-September net profit to plunge between 50% and 100% from a year earlier due to severe competition in the local economy car market. FAW Xiali's forecast follows the dismal performance so far this year of the economy car sector, as the country's growing wealthy classes eschew smaller cars in favor of mid-sized and luxury models.

Based on the forecast, FAW Xiali may have earned at most CNY0.097 a share, according to a Dow Jones Newswires calculation. At worst, its entire profit may have disappeared during the three quarters, compared with net earnings of CNY0.193 a share in the year-earlier period. Net profit in the January-September period last year was CNY307.5 million. The company has already seen its first half net profit slide 40% from a year earlier. FAW Xiali is scheduled to issue its third-quarter earnings Oct. 29. The company, along with its controlling shareholder China FAW Group Corp., has a joint venture with Japan's Toyota Motor Corp. (TM:

Sales in China's subcompact market, where FAW Xiali's main products - Xiali N3, Vizi, Vela, and Weizhi; priced at CNY32,000 to CNY68,000 - are positioned, only grew 3% during the seven months to end-July, according to data from Automotive Resources Asia Ltd., a division of J.D. Power and Associates. In comparison, sales of compact cars, the largest segment in the local auto market, surged 48% in the same period, the ARA data showed.

Zhao Xuegui, an auto analyst with Guosen Securities Co., said local companies operating in the subcompact sector, such as Zhejiang Geely Holding Group Co. Ltd. and Chery Automobile Co., have been expanding production aggressively, but now face slowing demand. Beijing has been calling on auto makers to produce more smaller cars to cut pollution and traffic congestion, but the policies so far launched aimed at boosting sales are limited, she said.

However, Zhao added that despite the unfavorable conditions, some of FAW Xiali's competitors have still managed to launch popular products, including Chery's QQ and Changan Auto Group's mini car Benben. In its statement, FAW Xiali said it has stepped up efforts to develop new products and is aiming to increase the production of the Weizhi model, the relatively higher-end model among the company's portfolio. In addition, the company also plans to expand its overseas presence, it said , without elaborating.

Volkswagen raises China target after sales surge

Beijing - German auto giant Volkswagen said Thursday that it had raised it 2007 sales target to 900,000 vehicles in China and Hong Kong after 30-per-cent growth in the first nine months of this year. Sales through Volkswagen and its Shanghai Volkswagen and FAW-Volkswagen joint ventures increased to 684,786 vehicles in China and Hong Kong from January to September, compared with 525,941 vehicles in the same period of 2006.

The unexpectedly high sales growth, adding to momentum from last year, had allowed the group to raise its sales target from 700,000 units to 900,000 for the full year, Volkswagen said.

"Volkswagen in China is ahead of its restructuring plan and in best condition for the challenges in the worldwide most competitive market," Volkswagen chairman Martin Winterkorn said in a statement.

Sales of Volkswagen-brand vehicles reached 594,270 in the first three quarters, up 27.9 per cent, and sales of Audi cars rose 25.9 per cent to hit 76,168.

Winfried Vahland, the head of Volkswagen's China operations, told the German business magazine Wirtschaftswoche last month that the firm was considering China as one possible production site for its new Golf model due out next year.

Thursday's report followed a rise of 24.3 per cent in Volkswagen sales to 711,298 units in China and Hong Kong last year, rebounding from a slump of 11.7 per cent in 2005.

The company's market share for personal cars in China was 22.8 per cent last year.

BYD launches cheap electric cars

China’s BYD Automobile Co Ltd said yesterday it will start mass production of rechargeable electric cars next year after conquering cost difficulties by using cheaper raw materials.

The first model, powered by both hybrid and electric technologies, will be launched in the second half of next year after nearly four years of research and development, the Shenzhen-based car maker said yesterday.

Started as a battery maker for cell phones, BYD said its new electric cars take both gasoline and can be recharged with batteries.

The environmentally friendly car could not only reduce fuel consumption but also improve driving dynamics.

BYD uses an iron-based battery instead of a lithium battery to reduce high production costs, which has prevented car makers from starting commercial manufacturing worldwide.

"The iron battery proves to have better safety performance and larger capacity. The cost could also be lowered by using abundant resources and affordable raw materials," BYD said in an e-mail statement.

Last year, the Hong Kong-listed company showed off an electric concept car, powered by the same iron-based battery, that can be 70 percent recharged in just 10 minutes.

Most car makers from home and abroad are making efforts to develop new-energy vehicles for lower pollution.

The Chinese government is encouraging domestic car makers to work hard on rolling out vehicles using alternative fuels or applying fuel-cell and hybrid technology to lead the global automotive industry.

Shanghai Automotive Industry Corp showed a concept car earlier this year using a hydrogen cell to generate electricity and power the vehicle at speeds up to 120 kilometers per hour.

Commercial production could begin as early as 2010, when SAIC aims to be making 50,000 clean-energy vehicles.

BYD started making cars in 2005 with its first model, the F3 sedan. Its sales jumped to 51,000 in the first half of this year, and its range includes a new hatchback F3.

The company aims to sell 100,000 cars this year, an increase of 67 percent from last year's 60,000 units.

More Audi Cars Sold in China than United States

When most people talk about China these days, it typically has something to do with lead-based paint. While it is true that China has become one of the world's largest manufacturers of random trinkets -- electronics, toys, etc. -- the nation is also becoming one of the world's largest consumers.

Case in point, some numbers have just come in from Audi and it turns out that the German automaker sells more cars in China than they do in the United States. For the period covering January to September of this year, there were 76,168 Audi cars sold in China compared to 68,479 sold in the US. This is a net difference of 7,689 cars.

Sure, China has a much larger population than the United States, but you also have to realize that most of these people can't afford cars, let alone luxury cars like an Audi. Sign of the times and that's why so many folks are so interested in the Shanghai Auto Show.

Ford Jan-Sept China retail vehicle sales up 30 pct

SHANGHAI, Oct 9 (Reuters) - Ford Motor Co.said on Tuesday that its retail sales of vehicles in China rose 30 percent in the first three quarters from a year earlier to 149,455 units.

Sales of Ford brand vehicles, both locally produced and imported, came to 135,073 units during the period, up 27 percent, it said in a statement.

Changan Ford Mazda, a three-way tie-up among Ford, Japan's Mazda Motor Corp and Changan Automobile Co Ltd, sold 150,365 vehicles from January to September, up 59 percent from a year earlier.

Sales of the hot-selling mid-sized Focus sedan, popular among young professionals, rose 69 percent to 90,249 units, while sales premium brands such as Volvo, Jaguar and Land Rover were up 72 percent at 14,063 units.

Ford, the number-two U.S. automaker, is a relative latecomer to the world's second-largest auto market, currently dominated by General Motors Corp and Volkswagen AG (VOWG.DE: Quote, Profile, Research).

But it is catching up fast as it ramps up capacity. Last month, Ford unveiled a $510 million vehicle manufacturing plant in the eastern city of Nanjing, near Shanghai, along with its China partners, boosting its car production capacity in the country to more than 410,000 units.

For the full year, it is expected to ship 300,000 to 350,000 vehicles to dealers in China this year, up from 260,000 to 270,000 units in 2006, an industry source told Reuters in July.

Other foreign automakers operating in the country, including GM, Volkswagen and Toyota Motor Corp, have yet to release China sales figures for the first three quarters.

China's Chery buys shipyard to boost auto exports

SHANGHAI (XFN-ASIA) - Chery Automobile has bought a Chinese shipyard as part of its latest effort to meet an ambitious export target, state press reported.

Chery, based in Wuhu city in eastern Anhui province, has bought the local Wuhu Shipyard and is restructuring it, the China Securities Journal reported, citing unnamed sources at Chery.

'Chery expands its business scope by foraying into the very promising shipbuilding industry,' a company official was quoted as saying.

'Moreover, the shipyard operations will support the prompt delivery of our auto exports, increasing exports and lowering inventory. Chery expects to double its exports in 2007 from last year to 100,000 cars.'

The company has previously told Agence-France Presse that it is building a new port in Wuhu, which sits along the Yangtze river, to facilitate auto exports.

It said a new plant that starts operations this month will add another 250,000-300,000 units to its annual capacity of 400,000 units.

China becomes world´s 2nd largest auto market

At the end of September, the number of motor vehicles in China grew by 7.4 percent from the end of last year, to nearly 156 million. This includes 55 million automobiles and 85 million motorcycles. The statistics also cover tractors, trailers and other motor vehicles.

Close to 34 million, or up to 61 percent of automobiles were privately owned, with 2.9 million imported motor-driven vehicles in use at the end of September. The number of licensed drivers increased by seven percent from the end of 2006 to 160 million by the end of last month, about 78 percent of whom are aged between 26 to 50.

China, once known as the kingdom of bicycles, has overtaken Japan to become the world's second largest auto market after the United States.

Renault seen to drive more imported models into China

Shanghai Daily. Renault Corp will continue to introduce more cars in China as complete-built imported units in the following years rather than localizing production in a bid to double its profitability worldwide by 2009.

The French car maker unveiled a sporty version of Megane Coupe-Cabriolet in Shanghai on Friday that will cost 381,650 yuan (US$50,887). It will also start selling its latest generation of the Laguna model in China in the summer of next year to compete with rivals like Audi A4 and BMW 3 Series.

Being a latecomer to the Chinese market, Renault still is cautious towards localizing production as it is the only car maker among the top nine global auto giants which has not set up any plant in China to make passenger cars. Rather, it depends on expanding its lineup through imports.

"There is no precise plan today to make Renault's cars locally in China. We are thinking about the opportunity but we have not got any precise date (for a plant)," said Thierry Koskas, vice president of Renault Asia-Africa.

Renault plans to sell 3.3 million cars and increase its profitability to six percent by 2009 worldwide, fueled by emerging markets like India and Iran, where Renault has already invested heavily since last year.

However, China, the world's second largest auto market, seems not to be a top priority in the car maker's ambitious plan although Koskas admitted local production would be helpful to realize the target for the Asian and African regions.

This is because Renault is not price competitive in China as its imported models sell for more due to higher production costs in Europe and foreign currency fluctuations against rivals like General Motors, Volkswagen and Japanese car makers.

In the Asian and African regions, Renault sold 150,000 units for the first nine months this year, including 2,000 units delivered on China's mainland.

"Every car we sell we make is profitable and the Asia and Africa regions contribute to the profitability target," Koskas said. "But we can't do everything at the same time. After 2009, future growth perhaps will not be from Iran and India, but another country."

Renault and China's Dongfeng Motors had signed a preliminary agreement in 2004 to build 300,000 cars a year in southern China. But the plan was postponed as the two partners could not agree on a site for the plant.

The six percent profitability target by 2009 was part of Renault's global revival plan after it posted a sales decline, blaming it on a lack of new models over the past few years.

China has 156 million motor vehicles

Xinhua. China had nearly 156 million motor vehicles by the end of September, up 7.4 percent compared with the end of last year, according to the Ministry of Public Security.

This included 55 million automobiles and 85 million motorcycles. The statistics also cover tractors, trailers and other sorts of motor vehicles, statistics from the traffic administration of the ministry show.

Up to 61 percent of automobiles were privately owned, with the number close to 34 million, the ministry said.

There were 2.9 million imported motor-driven vehicles in use at the end of September, with 67 percent automobiles, up nearly 6.9 percent.

The number of drivers increased seven percent from the end of 2006 to 160.6 million by the end of last month, about 78.6 percent of whom are in the 26 to 50 age bracket.

China, once known as the kingdom of bicycles, has overtaken Japan to become the world's second largest auto market after the United States.

Ferrari 430 Scuderia Heads to China

Edmunds. SHANGHAI, China — Ferrari SpA will start selling the 430 Scuderia in China next year, hoping to cash in on exuberant demand there for luxury sports cars.

The 430 Scuderia is expected to go on sale in the China market in February or March, following its official Asian launch at the Guangzhou Auto Show in November, said Ferrari CEO Jean Todt.

Senior Ferrari officials are in Shanghai for the 2007 Formula 1 Grand Prix this weekend.

The 430 Scuderia, powered by a DOHC 4.3-liter V8, captured the media spotlight at its world debut last month at the 2007 Frankfurt Auto Show. It has already received several customer orders from China, with its booming economy that has spawned a growing number of millionaires.

"China is one of our new markets with fastest growth over the past two years," said Todt. "With the new model, we are more confident of achieving our sales target for next year."

The 430 Scuderia will join the 599 GTB, F430 and F430 Spider in the company's Chinese product portfolio.

Ferrari expects to sell 160 units in China this year, an increase of 33 percent from 2006. For the first nine months, it has already delivered 130 cars and targets 180 sales in 2008.

Fiat CEO sees good chance of SAIC China bus deal

CASSINO, Italy, Oct 5 (Reuters) - Fiat Chief Executive Sergio Marchionne said on Friday he saw a good chance of clinching a deal with Chinese carmaker SAIC on the production of buses in China. The CEO of the Italian auto maker said Fiat's truck division Iveco, which already has a joint venture with SAIC producing heavy vehicles, said it was studying extending their cooperation to produce buses. "I believe there is a good chance to clinch the accord," Marchionne said. Shares in Fiat gained on the back of his comments, traders said, closing up 2.07 percent at 21.14 euros. Iveco CEO Paolo Monferino told Italian newspaper Il Giornale in its Friday issue Iveco was discussing a joint venture with SAIC. "(It is) a good partner. We are discussing a joint venture with our Irisbus," he said when asked about SAIC. Iveco is one of the market leaders for light- and medium-sized trucks in Europe, but it trails behind Volvo and other manufacturers in the heavy segment.

Micro vehicles still not welcomed by motorists in China

China Daily. MICRO cars should be a good option for oil-hungry China and its 1.3 billion people.

Many local authorities have lifted bans on the car’s use after a central government order last year. But micro vehicles have still not been welcomed by Chinese motorists as their demand slides amid blistering growth in the overall auto market, the world’s second-biggest after the United States.

According to data from the China Association of Automobile Manufacturers, sales of domestically made vehicles with an engine capacity of 1 litre and less tumbled by 15% year-on-year to 493,800 units in the first eight months of this year.

Meanwhile, sales of sedans with such an engine capacity dove 26.6% to 165,100 units. In contrast, overall vehicle sales in China surged by a quarter to 5.69 million units in the period.

Analysts attribute the decline of micro vehicle sales to insufficient policy incentives and Chinese buyers’ fondness for larger cars. In April last year, China lowered consumption taxes on vehicles with an engine capacity between 1.0 and 1.5 litres to 3% from 5%, while raising charges on above-2 litre automobiles to 9-20% from 8%.

Taxes on less-than-1.0-litre vehicles were kept at 3%. The move, according to Yale Zhang, director of Greater China Vehicle Forecasts for US industry consultancy CSM Worldwide (Shanghai) Ltd, is not enough to get customers back to micro cars. Zhang says extra substantial stimuli are badly needed for a micro car “take-off” in China.

“People naturally love larger cars for comfort and status symbols. They will not choose micro vehicles without special incentives,” he says. He suggests the government remove the consumption tax on vehicles with an engine capacity of 1.0 litre and less and that the 10% purchase tax on such cars should be slashed or cancelled. Otherwise micro vehicles’ market share will continue to shrink, he says.

Echoing Zhang, Zhu Yiping, from the auto association, says: “Chinese buyers will continue to favour larger cars as it is a matter of face, unless there are special incentives.” They also won’t pick micro cars only to save money on oil because fuel prices in China have not reached so high levels that they can’t afford due to the lack of a fuel tax, Zhu stresses.

Li Hanchen, a sales representative from an engineering equipment maker in Beijing, has decided to buy a compact sedan like the Volkswagen Sagitar and Ford Focus, instead of a micro car. “It will really cost me more, but I can afford it. I would lose face if I drove a micro vehicle,” the 32-year old Li said.

Compacts with an engine capacity of 1.6 and 2 litres is the biggest and fast-growing segment in China’s car market. Analysts say micro car producers in China are mainly indigenous brands, which haven’t rolled out many of new models with improved quality and design in the last two years.

There are only a small number of micro sedan models in China, such as the Chery QQ, FAW Xiali, Geely Haoqing, Chang’an Alto and Hafei Lubo.

CSM’s Zhang says micro car producers should increase spending in the development of new products if they want to see a sales rebound in the segment. However, they don’t appear to be doing so. An executive from a major micro vehicle maker says: “This segment has a razor-thin margin and has been unworthy of heavy investment.”

Instead, domestic micro car companies are shifting to subcompact, compact and even mid-sized segments, which are much more lucrative than micro cars.

As a result, Zhang says, many micro vehicles will have to pull out of the market as they fail to meet increasingly strict standards in China. The Shanghai municipal government is expected to implement a new technical regulation on small cars on Dec 1, which is reportedly to force 60% of small cars in the city off the streets.

Zhang also says the subcompact segment in China has been experiencing hot price battles this year, eating up the bulk of sales in the micro sector. Prices of the 1.4- and1.6-litre Chevrolet Lova, made at General Motors Corp’s tie-up with SAIC Motor Co, dropped by as much as 10,000 yuan recently to lure buyers, according to intelligence from cheshi.com.cn, a Beijing-based portal tracking nationwide car prices.

Boosted by brisk vehicle sales and a booming economy, China’s oil imports have been growing rapidly in recent years. The country, the world’s second biggest oil consumer, imported 110.4 million tons of crude oil from January to August, up 15.3% from a year ago, according to customs data.

The China Strategy

Forbes. The car boom in China just does not stop.

Note that in the first table below, the truck figure is just for commercial trucks. Sport utility vehicles are included in the sales figure for cars, but sales of these vehicles in China are relatively low.

The roads in China are chaotic, as they typically are in any emerging economy. An architect friend who travels to China monthly says they drive cars as if they were bicycles, with a lot of weaving in and out. Traffic deaths are horrendous, more than 100,000 a year, according to some accounts.

How big is the Chinese home market? Japan, which has a population and land mass only a fraction of that of China, has domestic seven-month sales of 3.3 million vehicles. So far this year (through August), Europe, with 28 countries excluding Russia, has 10.8 million. In the U.S., eight-month sales are just over the 11 million mark, twice the Chinese number, but the Chinese market is growing fast.



China's market has dozens of small, independent, local manufacturers. Competition is tough--there is price cutting, and, reportedly, profits have slipped. Yet we have seen few signs of a shakeout or consolidation. Every tiny Chinese carmaker resists giving up a potential piece of this vast and growing market. Of course, over the past century, more than 2,000 companies vied for business in America, and that has been winnowed down to three U.S.-based competitors.



Understand that all foreign sellers have Chinese partners, and some have several different Chinese partners. While exports are currently only a tiny part of China's auto industry, some observers--not all, mind you--expect this to change drastically in the coming years.

All three U.S. auto companies are trying to work China to their advantage, and there is some thought that China could also be a low-cost source of vehicles for export. Chrysler has said things along this line. General Motors showed a sleek Buick, created for a Chinese auto show, that looked so good some thought it could succeed here in the U.S., even if they built it there and sent it here.

All this is just talk now. No one is now importing Chinese cars into the U.S. Detroit could expect to get a lot of flak from the United Auto Workers and Congress if it brought in Chinese-made cars while shutting down plants at home.

Ford Motor came in late into the Chinese market but is growing, with 105,000 eight-month sales. Cars like the Focus and the Fiesta helped Ford post a 33% increase. The company has just opened a second assembly plant there too, which will spur its effort. Chrysler came in early and has faded away, with eight-month sales--mainly the 300 sedan and a few Jeeps--of just 6,350 units.

Among the foreign auto companies not showing large volume in China are Korean Hyundai and Kia, both down 17% from the previous year. Daimler (Mercedes) has only 4,220 eight-month sales, for a lowly 4% increase. BMW has a 47% gain for the first eight months, and its sales volume in China dwarfs Mercedes.

The first foreign carmaker in Communist China was American Motors, with Beijing Jeep, its 1983 joint venture co-owned by the city. Then Chrysler bought American Motors, and later German Daimler took over Chrysler in that infamous and now-dissolved partnership. Beijing Jeep peaked at 26,000 sales back in 1995 but lost traction as the Chinese market emerged. Chrysler no longer builds Jeeps in China.

Today Chrysler is a virtual nonentity in China, but that could change, perhaps significantly. In late September, it hired Philip Murtaugh to run its China operation. Murtaugh can make things happen: He started from scratch, and in a few years built GM into a powerhouse in China. Why did he leave GM? Apparently, he clashed with GM management in Asia. Most successful companies think the idea is to get rid of their executive failures and not their successes, but it does not always work that way at GM.

Murtaugh then joined China's largest automaker, Shanghai Automotive Group, which is working to develop its own line of cars as well as building vehicles for GM and VW. Now Murtaugh is with the new Chrysler, which just became a private company. Prior to his coming aboard, third-place Chery Automobile, an independent Chinese carmaker, made an agreement with Chrysler to manufacture cars for the American company for export. One cannot help wondering whether Murtaugh will be happy working with Chery, which is still quite small by world standards.

Chery had an earlier deal--that collapsed--with Malcolm Bricklin, to build cars for the U.S. market. A Korean carmaker has accused Chery of swiping some of its plans, and there is a video of a crash test showing a Chery car crumpling terribly. I would not be too surprised to see Murtaugh try to build up a relationship with Shanghai Automotive, Chery's rival.

One thing for sure: Detroit is in the game in China.

China Invades Detroit

Five Chinese companies will have displays at the 2008 Detroit auto show, the show’s organizers said.

The list is:

Changfeng Motor Group: Changfeng’s main automaking unit is Hunan Changfeng Motor Co., which builds a previous-generation Mitsubishi Montero SUV (known as the Pajero outside the United States) under license for sale as the Liebao. It is making a return visit to the Detroit show.

BYD Auto Co.: BYD is a rarity among Chinese automakers: a privately owned company with no government parent. BYD began as a battery maker, expanded with the rapid spread of cell phones using its batteries, then bought a maker of SUVs to enter the auto industry. Its 2006 sales in China totaled 60,116 cars, led by its Flyer and F3 models, according to Automotive Resources Asia Ltd. This will be its first appearance at the Detroit show.

Geely International Corp.: A part of Zhejiang Geely Automobile Holdings Group, Geely has enjoyed explosive growth in China despite having no foreign partners. Its 2006 sales in China jumped 55 percent to 149,869, says Automotive Resources Asia. Models in its lineup include the Merrie, Beauty Leopard, Haoqing and Hysoon. It is making a return visit to Detroit.

China America Cooperative Automotive Inc./ZXNA (Chamco): Chamco is the Parsippany, N.J., distributor of cars built by Hebei Zhongxing Automobile Co. The latter is a small automaker, with 2006 sales of 31,342. This will be its first time at the Detroit show.

Li Shi Guang Ming Auto Design Co.: Founded in 2002, the Beijing company claims to be China’s first independent automotive design studio in China. Its first product is the Tanghua electric car, which already is on sale. This will be its first time at the Detroit show.

The Detroit show opens to the public Jan. 19-27, 2008. Industry preview days are Jan. 16 and 17.

Chinese auto producer Yutong exports more buses to Cuba

Xinhua. Chinese auto maker Yutong Group Co. Ltd. has delivered 200 mass transit buses to Cuba, the first such China-made vehicles ever exported, a company spokesman said.

In accordance with a Sino-Cuban export agreement, Cuba will import 5,348 buses or coaches from Yutong, based Zhengzhou, capital of central China's Henan Province, from 2007 to 2009.

The buses, with a value of 300 million yuan (37.5 million US dollars), will first be transported to Lianyungang, east China, from where they will be shipped to Cuba.

Yutong is a large enterprise group with bus making as the core business. It is also involved in auto parts and engineering machinery manufacturing, and property development. The group chalked up more than 10.14 billion yuan (1.27 billion US dollars) in total sales last year.

The company started to export coaches to Cuba in 2005 and by late 2006, it exported more than 1,200 coaches to the Caribbean nation. Yutong also exports coaches to other countries and regions in the Middle East, Africa and South Asia.

Chery to invest in southeastern Iran

China's biggest independent automaker, Chery, is keen on investing in Iran's southeastern port city of Chabahar in Sistan-Baluchestan province.

Managing director of the Chabahar Free Zone Organization, Mohammad Taher Baqerizadeh, said talks had been held on the idea with company directors handling business with East European and Asian countries.

A number of Chinese auto manufacturing managers as well as officials from the Chinese Embassy in Tehran will visit the Iranian port city in the near future, he explained.

The Chinese company is initially interested in storing its vehicles in Chabahar, wherefrom they will be transported to their final destinations, the official noted.

In the second phase, the automaker will launch an auto manufacturing factory in Chabahar with the cooperation of Iranian partners to assemble vehicles from complete knocked down (CDK) kits.

Custom-made cars drive sales in China

GAVIN Hartley says he's surprised to see that the golden Spirit of Ecstasy, the statuette on the hood of every Rolls-Royce model, is so popular among Chinese customers.

As the bespoke general manager at Rolls-Royce Motor Cars, Hartley is used to helping his Chinese customers indulge their wildest fantasies to make their dream cars.

And the custom-design market is thriving in China, as the expanding economy sees a demand for better craftsmanship, sleek design and a dynamic driving experience.

More and more customers want their cars to be unique, and Rolls-Royce is one car maker willing to embrace the trend.

"About 90 percent of the company's mainland sales are tailor-made," said Jenny Zheng, general manager of Rolls-Royce China in an earlier interview.

The Rolls-Royce Phantom offers 15 standard and five contrast color combinations while providing 23 mono and contrast interiors available as standard for the line-up.

But customers can also order their own treadplates, embroidery, wood inlays and specific color schemes that are non-standard on the exterior and interior. Additional features such as dividing walls with intercoms, and TV and DVD entertainment can also be fitted.

The customized service has also been extended to redesign the interior equipment - everything from the glovebox to a refrigerator.

"We have noticed that Chinese customers have begun to have a stronger preference for the customized models. Some even go quite beyond our imagination," said Hartley.

He said that generally speaking, an extended wheel-base version was more popular on the Chinese mainland, as customers prefer to have a more spacious footrest area.

And red is one of the most popular colors - one that traditionally symbolizes happiness.

In particular, customers also want new designs that are personal. For example, one customer wanted his name embroidered on the headboard while another auto buyer ordered wheel covers in seven different colors - one for every day of the week.

Rolls-Royce's bespoke business in the Asia-Pacific region increased 40 percent last year from 2005, beating the 25-percent growth worldwide during the same period.

Key markets for bespoke cars in Asia-Pacific include China, Japan and Australia.

The trend for customization is also filtering down to the compact car segment, which is drawing auto parts makers to work with vehicle manufacturers to meet their needs.

A study conducted by Visteon, a leading automotive supplier of custom-made lights and accessories, showed that China will play a leading role in several key automotive areas in the coming years.

Chinese consumers are increasingly demanding more compact cars equipped with state-of-the-art components at competitive prices.

"The trends show enormous opportunity for companies that can drive their development by responding to the market changes," said Asaf Farashuddin, Visteon's vice president of strategy.

Buick Prospers -- in China

Edmunds. DETROIT — Buick may be a dying brand in North America, but Chinese consumers are keeping the torch burning for the storied 103-year-old brand.

Buick's parent General Motors on Monday inked a deal to ship the new Enclave to China — some 25,000 units in all, beginning in the second half of 2008.

GM noted that these will be the first U.S.-built Buicks to wend their way across the Pacific in nearly a century. It also helpfully observed that Sun Yat-sen, one of the founders of modern China, and Pu Yi, the last emperor, both owned Buicks in the early part of the 20th century.

What GM declined to share is that Buick continues to fade away in its home market, where sales dropped nearly 15 percent last year and have plunged another 26 percent in 2007.

Curiously, the brand is showing renewed vigor in China, where the Buick badge is used on a variety of products designed and engineered originally by such GM affiliates as Daewoo in Korea and Holden in Australia. The Buick range in China includes the GL8/FirstLand minivan, the Excelle compact, the midsize Regal and LaCrosse, and the premium Park Avenue.

Last year, Buick sold more than 300,000 vehicles in China versus 240,000 in the U.S.

The imported Enclave will be marketed next year in China through Shanghai GM's network of more than 400 dealers.

General Motors signs 800 million dollar China export deal

SHANGHAI (AFP) — US auto giant General Motors (GM) said Tuesday it will boost its exports of US-made vehicles and auto parts to China by more than 800 million dollars from 2008.

The deal includes the Buick branded sports utility vehicle, known as the Enclave in the US, which will be imported by Shanghai GM, GM's joint venture with China's largest auto maker SAIC Group and sold through its network of nearly 400 Buick dealerships across China, GM said in a statement.

"These new Buick sport utility vehicles will strengthen our line-up and enable us to continue to meet the changing needs of our growing base of customers," Shanghai GM President Ding Lei said in the statement.

The Buick agreement is the second of two China export agreements signed by GM this year. In May, GM signed a deal to export 700 million dollars' worth of luxury sedan Cadillacs and auto components to China from the US.

GM and its joint ventures in China sold a record 876,747 units in 2006, up 31.8 percent from the previous year and it has an estimated 11.8 percent share in the fast-growing market, GM said in January.

Chery Ramping Up Export Plans

Edmunds. WUHU, China — Chery Automobile, the fourth-largest and fastest-growing automaker in China, expects to sell 400,000 vehicles overseas by 2010, representing 40 percent of its projected production.

A substantial number of those cars are headed to North America, where they will be sold by Chrysler, probably with Dodge badges.

Chery recently has inked major partnership deals with Chrysler, Fiat and Iran Khodro.

The Chinese automaker is on a fast track. Its production this year is expected to jump to 400,000 units, compared with 300,000 in 2006. About 25 percent of production — roughly 100,000 vehicles — are headed for export markets.

Chery has embarked on a major expansion program and expects to be building 1 million vehicles a year by 2010, reinforcing its position as one of China's top auto manufacturers.

Electric-Car Maker Zap Joins Forces With the Chinese

Edmunds. JINHUA CITY, China and SANTA ROSA, Calif. — It's a major partnership that may have implications for the global market: California electric-car maker Zap and China's Youngman Automotive Group on Friday announced that they had struck a deal to develop, produce and sell electric and hybrid vehicles. The deal also includes creating battery- and energy-recharging infrastructure components and technology.

The wide-ranging deal includes the manufacture of buses, trucks and passenger vehicles, including the Zap-X crossover SUV.

The move effectively gives Zap a mammoth test bed for developing electric vehicles, and the critical infrastructure needed to support it before it can become a mainstream alternative in developed automotive markets like the United States and Europe.

Youngman, a private holding company that is currently working with Lotus Engineering on several vehicle development projects, will manufacture the vehicles and components under the agreement with Zap. Zap will handle the sales, marketing and distribution of the joint-venture products.

Youngman controls 70 percent of the luxury-motorcoach market in China and has seven factories under development, with a capacity to build 200,000 vehicles a year.

"This is the most significant relationship that Zap has ever entered into," said Zap CEO Steve Schneider. "Using renewable energy to provide a cost-effective recharging infrastructure to customers, we can change the world, one vehicle at a time."

California Governor Arnold Schwarzenegger said the move "is another example of bringing high-quality, high-paying jobs to California."

Shanghai Auto says parent to buy 10% of 8 bln yuan CB

SHANGHAI, Sept 24 (Reuters) - Shanghai Automotive Co., China's largest carmaker, said on Monday its state parent will take up at least one-tenth of an 8 billion yuan ($1.06 billion) convertible bond it plans to offer.

The parent, SMIC Motor Corp, has officially notified the listed firm that it will pay 800 million yuan to subscribe for at least 800 million units, or a tenth of the total planned offer, it said in a statement.

Shanghai Auto, a local partner of General Motors and Volkswagen AG, said in July it planned to issue the bonds with detachable warrants to fund the development of cars bearing its own brand.

The company rolled out in March its first own-brand sedan, the Roewe 750, based on acquired technology. It plans 30 or so own-brand models over the next several years.

If the warrants are fully exercised, the company is expected to raise up to 16 billion yuan, state media have said.

Ford: China Car JV's New Nanjing Plant Begins Operating

BEIJING -(Dow Jones)- Ford Motor Co. said Monday that its joint venture in China, Changan Ford Mazda Automobile Co., has begun operations at a new assembly plant to make small cars under the Ford and Mazda brands.

The US$510 million facility, based in Nanjing, eastern Jiangsu province, has an initial production capacity of 160,000 vehicles a year, the statement said.

Ford's passenger car-manufacturing capacity in China jumps to more than 410,000 units a year with the launch of the new plant, the statement said.

Changan Ford Mazda Automobile is 35%-owned by Ford, 50%-owned by China's Changan Automotive Group, and 15%-owned by Mazda Motor Corp. (7261.TO), which is an affiliate of Ford.

The venture already operates a vehicle-assembly plant in Chongqing in China's southwest, which has an annual capacity of 250,000 vehicles. The Chongqing plant produces the Ford Focus, Ford Mondeo, Ford S-MAX, Volvo S40 and Mazda3.

Ford didn't say in its statement what models are being produced at the Nanjing plant.

Mei-Wei Cheng, chairman and chief executive of Ford Motor (China) Ltd., said in April the factory would produce a Ford-branded small car in 2008. Kiyoshi Ozaki, Mazda's director and senior managing executive officer in charge of China business, also said in April the Mazda2 compact car would be produced at the Nanjing factory later this year.

"Integrating, leveraging and growing Ford worldwide is one of our top priorities, and our China strategy is certainly a key component to making this happen," the statement said, citing Ford President and Chief Executive Officer Alan Mulally.

The opening of the Nanjing plant will help Ford tap burgeoning demand in the Chinese passenger-car market.

Last year, China sales of Ford's affiliated brands, including Ford, Lincoln, Jaguar, Land Rover and Volvo Car, soared 86.6% to a record 166,722 vehicles.

In the first eight months of this year, sales of Ford brand vehicles in China rose 29% from the same period last year to 114,702 vehicles, the statement said. That increase outpaced the 24% jump in sales for China's overall passenger- vehicle industry during the same period.

Ford said in its statement the Nanjing plant uses the latest auto- manufacturing technologies and automation equipment. A maximum of eight models with different chassis can be simultaneously produced on the plant's production lines, it said.

Low-priced Chinese cars quietly gain a foothold in Europe

New York Times. PALAZZOLO SULL'OGLIO, Italy - They have names like the Brilliance BS6, the Landwind Fashion, or the improbable Hover Wingle, and though these sedans, vans, and sport utility vehicles are hardly as familiar to Europeans as, say, a Volkswagen Golf, they are beginning to show up on European roads.

"I've got air conditioning, ABS brakes, and air bags," said Carlo Scalvini, describing his Hover, a big and boxy sport utility vehicle built by the Great Wall Motor Co., with headquarters in Baoding in eastern China. "And the price is competitive: You pay 10,000 euros less in the end," more than $13,000.

The enthusiasm of people like Scalvini could influence the global auto industry and China's place in it. China's quiet inroads into Europe are the first test of rich markets by Chinese automakers as they build dealer networks and deliver small shipments of cars to test the reaction of drivers and auto industry experts.

Many of the dealers who have signed on with the Chinese previously worked with the Japanese and the South Koreans, and so have experience in coaxing Europeans to purchase cars with unfamiliar names and unusual looks, but sweet prices.

If business is starting fitfully, they foresee healthy profits down the road, aided by the weak dollar. European car dealers pay in dollars for the Chinese cars, yet are paid in strong euros when they resell them, pocketing nifty profits from exchange rates.

"The game the Japanese mastered in 15 years, and the Koreans in 10," said Nigel Griffiths, director of European light vehicle forecasting at Global Insight, "they will do in 18 months to five years."

Paradoxically, the Chinese have been helped in Europe by their alliances with Western automakers in China. Some of the Chinese cars being imported into European countries use electrical components from Bosch, the big German parts supplier, or have been designed by Italian firms like Giugiaro. Now, the Europeans are seeing their ideas and components flow back into their own markets.

That the European market is essentially open is also helping the Chinese. Because so many European cars are now being built elsewhere, a quota on imports is politically almost impossible.

There have been setbacks, like abysmal results on a crash test done on a Chinese car two years ago. Some specialists are skeptical that the Chinese can become major competitors in Europe and the United States. After all, car buying remains an emotional business. "There is a general lack of brand awareness, and distribution is a hurdle," said Michael K. McKenzie, a China expert at PricewaterhouseCoopers' automotive institute in Detroit.

But the Japanese and South Koreans overcame similar hurdles. Moreover, the Chinese are moving in several stages. "They are coming through the back door: first Russia, then working their way west," Griffiths of Global Insight said. He estimates that China will sell 54,000 cars in Russia this year, out of a total market of 2 million, compared with 31,000 last year.

The Chinese are arriving even as European carmakers struggle with flat prices and diminishing profit, and the Chinese presence is expected to ratchet up the pressure. That will force some European companies that stayed in the mass market for small cars, like Fiat, either to move up to larger, more expensive models, or to perish, McKenzie predicted. "They will undercut these companies, and the market will be more contested," he said.

It began when a Dutch Nissan dealer, Peter Bijvelds, visited China with a friend in 2004 to inspect the Landwind factory in Nanchang, a gritty city south of the Yangtze River in Jiangxi Province. The trip ended with Bijvelds' introducing a big and boxy Chinese-made SUV, the Landwind New Vision, a twin of GM's Opel Frontera, at the 2005 Frankfurt auto show. It did not handle like a European car and its engine had little excess power, but for Europeans tired of station wagons or wanting to tow a trailer, this car cost 25 percent less than a Kia or a Hyundai model. It had air conditioning, air bags, and aluminum wheels. In the first two weeks, Bijvelds said, he sold 500 of them.

Then, at about the time of the Frankfurt show, the German automobile club, known as ADAC, put the New Vision to a crash test. The driver's survival chances were about nil, the club's testers said.

Bijvelds' Chinese partners were dismayed. The New Vision was put on hold, while Landwind ironed out the kinks. A successor model, the Landwind Expedition, has a comely design by an Italian design studio, a German-built engine and all European safety features.

Bijvelds suggested that the automobile club might have been prompted by German automakers to undermine his project. A club spokesman, Maximilian Maurer, denied that. "I am sure that in time the Chinese will succeed here," he said, "and the ADAC doesn't want to keep them away. We simply want to inform consumers about the quality of these cars."

Bijvelds, 28, receiving a visitor at the headquarters of his Landwind Motor Corp. near Antwerp, Belgium, said, "We get so many products from China with Western brands, why not cars?" Europeans, he says, are after value for money, citing Renault's recent bonanza with the Logan, a car built in Romania that has a six-month waiting time for delivery in Belgium. "They want a lot of car for a little money," he said.

The German crash test, a colleague told him recently, may have been a blessing in disguise. "Now everybody knows you," the friend said, "For good or bad, they know you."

In Germany, Hans-Ulrich Sachs, a former Volkswagen executive who is chairman of HSO Motors Europe, is signing on dealers to sell the Brilliance BS6, a comfortable sedan with a vague resemblance to a midsize BMW. Indeed, Brilliance assembles BMW's 3 and 5 series cars for the domestic Chinese market.

By the end of this year, Sachs, 54, wants 150 showrooms in Germany, and by next year, 1,100 throughout Europe. This year, he hopes to sell 6,000 to 7,000 cars. The first 500 arrived in mid-March.

Why would a German buy a Chinese car? he asked rhetorically. "Value for the money."

For Europe's carmakers, alliances with Chinese companies could become two-edged affairs, providing models that one day may well compete against their own cars. Volkswagen, for instance, has joint ventures with Shanghai Automotive and First Auto Works. Yet Kai Grueber, spokesman for the Volkswagen Group China, played down the potential for competition, saying that VW was focused for now on the domestic Chinese market. "Future exports into the Southeast Asian area are conceivable in markets where we can expand our offering with new models," he said.

At Eurasia Motor here in Palazzolo, about 35 miles northeast of Milan, where Scalvini bought his SUV, a shipment of 360 arrived in November, and have all been sold through a network of 95 Italian dealers. "We're now expecting 800 more, in lots of 200 each, of the same model," said Federico Daffi, Eurasia's chief financial officer. Eurasia pays Great Wall $14,000 for the SUVs, and sells them for as little as 19,600 euros (about $27,000), still one-fourth below the South Korean competition. Eurasia then uses the lower price to market to middle-class families who until now could not afford an SUV.

Scalvini, 44, would buy more Hovers now, if they were available. He is the owner of Consorzio Vela, a company that employs about 800 people and maintains a large fleet of vehicles supplying services like delivery and catering to other Italian companies.

The Hover's Mitsubishi-built engine is fuel-efficient and will offer the option of shifting from gasoline to liquid propane gas in future models.

"I'm convinced it will be a winner," he said.

China's Chery group matures into global auto player

WUHU, China (AFP) — China's Chery Auto sales vice president Jin Yibo remembers when the roof in the president's office had a leak so big that they had to put out buckets to collect the water.

"Those were tough times," said Jin, shaking his head in disbelief as he recalled Chery's humble beginnings 10 years ago.

It was March 1997, and the firm based in Anhui, one of China's poorest rural provinces, had been established with 1.7 billion yuan (225 million dollars) of government money but had never turned out a car.

"There was nothing here, this was just fields," said Lucas Biagini, chief executive of Italian parts supplier Magneti Marelli that now earns about 30 percent of its China sales from the upstart Chinese group.

The plant's spectacular expansion reflects how Chery has successfully grown from "young boys into mature people," Biagini said.

With little industrialisation to speak of, the provincial government quixotically cast its fortunes in with the auto industry, betting that China's 1.3 billion people would soon have enough money to buy their own set of wheels.

"The decision was correct," Chery vice president Zhou Biren told Western journalists invited to tour its ultra-modern headquarters in eastern China for the first time.

Chery's home in the Yangtze river port city of Wuhu is today a massive industrial park, housing not only the company's vast high-tech plants, but major American, European and Japanese auto engineering firms.

The proximity of its overseas suppliers such as Visteon, Bosch and Siemens has been critical to the rapid growth of a firm that recognised from the start its ambitions had to be built on the back of foreign technology.

"We have received a lot of help from foreign companies, said Lei Gu, a Ford trained engineer, who is one of 70 key engineers that has worked overseas for global manufacturers.

Inside the plant hums with the best German, American and Italian machinery money can buy as busy workers set about the complex assembly and testing that allow Chery to produce 400,000 independent-branded cars and engines a year.

"We spent a lot of money to bring in the best technology," said Zhao Baoming, vice general manager of Chery's engine group.

Chery saw its millionth car roll off the assembly line last month, a milestone in its rapid expansion that the firm said took six years to make the first half million cars and only one and a half for the second.

It expects to add another 250,000-300,000 units after a new plant starts operation in October and aims to double exports in 2007 from last year to 100,000 cars, as the firm races towards its target of selling one million cars annually by 2010.

"Independence, Strength, Innovation, Pioneering," reads a banner hanging at the plant that serves as a reminder of Chery president Ying Tongyao's lofty goals, which include building luxury cars under a new brand name by 2009.

Ying, who has piloted the firm through its ups and downs, including a nasty intellectual property rights dispute which was settled out of court after General Motors accused the firm of copying one of its sub-compact models, pulled off a major coup with Chrysler in July.

The firms inked a 25-year deal for Chery to build its inexpensive A-1, a 1.3-litre engine hatchback, for the iconic but troubled American firm under its Dodge brand.

Chery had previously planned to exports its brand-name cars to the United States, but the deal with auto retailing entrepreneur Malcolm Bricklin was aborted in late 2006.

Vice president Zhou refused to go into details behind the collapsed agreement, but said that Bricklin's Visionary Vehicles group has not been the "appropriate" firm for Chery.

Nevertheless he acknowledged that Chery was not ready to enter the cutthroat American or European markets under its own brand, where rigorous safety and quality standards continue to pose challenges for China's young car firms.

"We have to prepare our products, our distribution network, when all these things are ready then we will go to these markets," said Zhou, declining to provide an entry date.

Chinese cars have failed Western safety tests in the past and in June it was Chery that found itself at the centre of global scrutiny when one of its sedans failed a crash test conducted by a Russian auto magazine.

Chery executives reportedly said that the test had been biased and that the car performed much better in later tests in China, but by then filmed footage posted on YouTube was the latest hit on the Internet video site.

Chery executives here insisted that they are employing cutting edge systems to ensure safety and quality of their cars, and say that the days of shoddy Chinese goods are over.

"The quality of Chinese car is exaggerated by some foreign media. We're confident about our future," Zhou said.

China's Vehicle Exports to Rise 46%, Official Says

Sept. 23 (Bloomberg) -- Vehicle exports from China, the world's third-biggest producer, may increase at least 46 percent this year as carmakers manufacture more sedans and trucks.

Auto shipments will exceed 500,000 units in 2007, the Ministry of Commerce said in a statement on its Web site yesterday, citing the minister, Bo Xilai, at a meeting with the nation's car exporters. Last year, overseas sales doubled to 342,400 units, customs data showed.

China has more than tripled automobile output and sales since joining the World Trade Organization in 2001. Last year, it surpassed Germany as the world's third-largest vehicle maker. The nation has designated eight port cities, including Shanghai, Tianjin and Xiamen, to serve as the country's main automobile and component export centers.

"China has to expand its overseas markets as production capacities for vehicles are rising much faster than we had expected," said Zhang Xin, a Beijing-based analyst with Guotai Junan Securities Co. "Many Chinese exports are currently sold to the low-end markets, including Africa and South America, with low margins."

The government will increase the threshold for exporters to improve the quality of vehicle shipments, the statement said. It will also encourage Chinese auto companies to invest overseas and merge with rivals, the statement said, without elaborating.

China's vehicle production will reach 8.5 million units this year, the statement said. Output may catch up with domestic demand by 2012, earlier than a previous estimate of 2020, Guotai's Zhang said.

Auto exports rose 70 percent to 294,000 units in the first seven months from a year earlier, while the value of component shipments increased 32 percent to $8.85 billion, it said.

Exports of engine parts, wheels, tires, brakes and other components, helped by low labor costs, will rise to $40 billion by the end of 2010, the China Association of Automobile Manufacturers has said.

China observes 'Car Free Day' with the usual gridlock

BEIJING (AFP) — More than 100 Chinese cities including Beijing staged a "Car Free Day" Saturday to fight congestion and pollution, but the streets of the capital remained defiantly clogged with traffic jams. Beijing's middle class climbed into their cars to go shopping and touring as usual, apparently disregarding an injunction to leave the vehicles at home -- a pattern that seemed to be repeated in the other 107 participating cities.

"It's the same as always," said taxi driver Dong Yongjun, as he navigated up the capital's congested Third Ring Road. "I don't see any difference." The situation was similar in other major cities, such as Shanghai and Wuhan, a vast industrial city in the centre of the country.

In Beijing and the other cities across China, some areas were open only to pedestrians, cyclists, taxis and buses from 7:00 am (2300 GMT Friday) to 7:00 pm Saturday. While most major Chinese cities were part of the "Car Free Day" and "Public Transport Week," there was one glaring exception -- South China's Guangzhou, home to more than ten million people and one million cars.

Guangzhou officials argued that the city's public transport system was not ready to take the extra pressure, the Southern Metropolitan Daily reported. Many residents of Guangzhou seemed to agree with the decision not to take part in the "Car Free Day," dismissing it as merely symbolic and with no real impact on the environment, according to the pcauto.com.cn website.

"You refrain from driving your car for just one day, but the other 364 days of the year you do drive your car. How's that going to help the Earth?" one asked. Beijing had significantly more success in August, when it banned more than one million cars each day from its roads for a four-day period to test what it could do to clear the air during next year's Olympics.

The difference could be that in August it was a real ban, with more than 6,500 traffic police on duty to penalise offenders, while Saturday's "Car Free Day" was a voluntary measure. Every September 22 is "Car Free Day" in many countries around the world, but it is the first time China has tried to join in in a substantial way.

Primetime TV news attempted to give the activities of the day a positive spin, showing newly wed couples from Liaocheng in east China's Shandong province riding bikes in tuxedos and bridal gowns. "You save money and help the environment," one of the brides told the TV reporters. "It's romantic."

Environmental awareness is growing in China but rapid economic growth remains a top government priority, creating difficult choices for policy makers. China's auto industry has been a key component of the nation's booming economy. Vehicle production in July was up 32.7 percent compared to the same month last year.

That is good for the economy but bad for the environment. A report from the State Environmental Protection Administration said that on bad days, 79 percent of air pollution in Chinese cities is caused by car fumes. Many ordinary Chinese view the growing number of cars with concern not so much because of fears for the environment, but because of the epic traffic jams that result during rush hours, or at any time of the day.

"Cars certainly offer motorists plenty of freedom to move around, especially those living in remote areas," the China Daily said in an opinion piece Saturday. "But in many Chinese cities, this convenience has quickly turned into a nightmare, as roads become increasingly gridlocked by the rising number of cars."

China's Great Wall May Export Compact Sedans Before Selling Them at Home

China pickup and SUV maker Great Wall Motor Co. Ltd will roll out its first sedan and a new MPV in one month and a half, Beijing-based Jinghua News reported today.

The 1.3 liter compact hatchback, named as "Jingling" in Chinese which means smart, will be priced between 40,000 yuan and 60,000 yuan (US$5,300 - $8,000). The new "Jiayu" MPV will be sold between 100,000 yuan and 130,000 yuan (US$13,300 - $17,300).

"Great Wall has yet to get approval from National Development and Reform Commission (NDRC) to sell the sedan in China, and in this case we plan to sell the car overseas first before we can sell it at home," Great Wall president Wang Fengying said.

Great Wall's other sedan models, like i7, Xuanli and Kuxiong, will hit Chinese market in the middle of next year; all these models are installed with manual transmissions and 1.3-1.5 L engines, added Wang.

The Hong Kong-listed firm plans to add a new assembly plant to produce sedans based on its existing facilities. When it starts to operate at full capacity by 2010, Great Wall will be able to produce 300,000 sedans annually.

About Great Wall

Great Wall Motor Company Limited is the largest privately-owned automobile manufacturer in China. It is the first privately-owned auto company of China listed in the Hong Kong Stock Market.

Great Wall owns 20 subsidiaries and it currently has about 10,000 employees. At present, products of Great Wall cover Pickups series, SUV series, CUV Series, motor-homes and special vehicles. Company products are sold in more than 50 countries and regions world wide, including Africa, the Middle East, South America and Russia. The company exported 32,000 vehicles in 2006.

'Kingdom of bicycles' under 'Tyranny of cars'

Column by Wan lixin from Shanghai Daily. Some of China's major cities are going to honor "car-free day" tomorrow. In the minds of many, setting aside a car-free day marks another step in the much-vaunted "international alignment" as this practice originated in France and 1,322 cities around the world have joined the effort.

But it would be more worthwhile for policy-makers to spend the day pondering why, while such Western cities as Paris are aspiring to the title of "City of bikes," China is shedding its former image as "Kingdom of bicycles."

Until we get clear on this score, we should be prepared to receive more contradictory policy signals and accept that real improvement is hopeless.

What prompted our policy makers to adopt a pro-auto attitude at the expense of cyclists and pedestrians is, of course, an unqualified admiration for cars as an efficient, dignified mode of transport.

Car mania

In 20 years they succeeded in turning most big Chinese cities into "Kingdoms of motor vehicles". It is predicted that China will surpass the US as the world's No 1 auto market by 2010.

Bicycles are already prohibited on many major streets in many large cities in China. It was not that the policy makers lacked enlightened guidance when making their choice. Professor Zheng Yefu made a scathing attack on motor vehicles in an article in the Guangming Daily on August 9, 1994.

He observed that in 1907, a horse-drawn carriage in New York could trot at a speed of 6 km/hour. In 1994, motor vehicles in New York could manage roughly the same speed.

Today in Beijing, cars can achieve an average of 12 kilometers per hour on 11 main roads, a speed roughly comparable to that of bicycles.

But, as is apparent to all, the wisdom of Zheng and such plain facts have failed to enlighten the solid bastion of self-interest. For one thing, car-making is big business. China is already the battle ground for leading auto manufacturers, who see huge potential both as a manufacturing base and a market.

For example, the number of car per thousand persons in China is about 24, against 300 in Europe, and 765 in the US.

Some interprets this as an incipient crisis, for notwithstanding the modest number, the traffic situation in Beijing and Shanghai suggests that the only cure for the traffic woes is to drastically improve public transport and discourage use of cars.

But GDP-thirsty officials and GM and VW have clearly seen gold in these statistics.

The outcome of the battle between these conflicting visions will be decided by how officials choose to be transported themselves. Unless we stop allowing our public servants to move about in government-provided cars, there is every reason to be pessimistic.

Officials may continue to extol the virtues of public transport, but what can we expect if private or government-provided cars are the preferred means of transport?

According to statistics, in 2004 government procurement of motor vehicles amount to 50 billion yuan (US$6.7 billion). It is expected to hit 70 billion yuan this year.

Official car use is not only a serious source of waste, pollution and corruption, but is also responsible for fostering a snobbish admiration for car-ownership, as symbols of status, dignity, power, privilege and the good life.

This explains why public transport is continually prioritized in policies, while in fact it steadily degenerates.

If teenagers, pregnant women, and senile citizens can survive the ordeal of using public transport in China, why should we spare our public servants who should be held responsible for this horrible predicament?

If they are really eager to learn from the practices in the West, they can learn from mayors of New York and London, who use public transport to get to work.

Otherwise we will continue to see more confusing signals and equivocations, such as the scheduled construction of a parking lot for 7,000 cars in a Metro station in Shanghai's Jiading District. Why not a parking lot for 7,000 bicycles?

Other doable measures include: Imposing huge levies on car use; restoring (recreating) cycle lanes and pedestrian lanes to their past glory.

The situation is in essence a conflict between two forces and only when individual car-riding becomes expensive, snail-like, and stigmatized, can public transport, bicycles and pedestrians hope to win.

Chinese threat to Indian dominance in Lanka vehicle market

Hindustan Times. Chinese models are minnows in the Sri Lankan vehicles market, but they have the potential to demolish Indian dominance over this sector in the near future, says auto industry analyst Viraj Manatunga.

"1996-99 was the Indian era, when Indian makes edged out established Japanese makes in the commercial vehicle and motorbike segments. But two to three years from now, we will see the dawn of the Chinese era," Manatuga told Hindustan Times.

Indeed, history tells us that it does not take very long for vehicle sales to catch up or decline, and that there is no room for complacency.

"The Bajaj motorbike had only 10% of the market here in 1999. But today it is number one, with 64% of the market, selling 8,000 units per month. In 1999, Isuzu had 30% share of the commercial vehicle market. But now it has just 19%. TATA, which had only 1.5% in 1991, has 23% of the market share now," Manatunga pointed.

Chinese commercial vehicles, JAC and FAW, are emerging "very strongly, he said. The Loncin is doing well in the motorbike market, selling 1,300 per month. Chery QQ, which is a Maruti-Suzuki Alto like vehicle, is also doing well, selling 100 to 150 units a month, according to the local agent, David Peiris Motor Co.

Chery QQ is going to be assembled in Sri Lanka. Although it cannot be compared to the Maruti 800, which is only semi option and is cheaper by about SLRs 200,000, Chery QQ's buyers belong to the same socio-economic class as the buyers of Maruti 800, and these could gone in for it.

China's strengths

Besides being highly sophisticated, the Chinese auto industry is very much bigger than India's. China can, therefore, supply quality products at low prices to satisfy the quality conscious but price sensitive Sri Lankan market. "A vehicle from the Chinese firm,Geely, which is modeled after Toyota Corola, is priced at SLRs.1.9 million (approximately $17,000), while the Toyota Corola is priced at SLRs.3.5 million ($ 31,000). Geely, a new comer now, is bound to do catch up soon given the price differential," Manatunga predicted.

And there is a political dimension which needs to be taken into account. Good political relations between trading countries help push goods and services without hassles, while bad or lukewarm relations will hamper the flow. Relations between Sri Lanka and China have traditionally been trouble free, and Sri Lanka has never felt threatened by China, but Indo-Lankan relations have tended to go through ups and downs and India is seen as a threat in one way or another. The present Sri Lankan regime is friendly with India but is eager to build very strong economic ties with China.

Hurdles

But the Chinese vehicle manufacturers have formidable hurdles to cross in Sri Lanka. Firstly, Chinese makes are still to enter the consciousness of the Sri Lankan buyer. This is because Chinese vehicles are not yet publicly visible on a large scale, said Yasantha Abeykoon of David Peiris Motor Company.

Secondly, of the three companies which have taken up the agency for Chinese brands, two are strangers to the automobile business and are still to set up an island-wide infrastructure for sales and after sales service. "Only David Peiris and Associated Motorways (agents for Maruti) are in the automobile trade and have an all-island infrastructure," Manatunga pointed out.

Indians unfazed

Indian vehicles makers dismiss the prophets of doom, deriving confidence from India's manifest dominance in the heavy vehicle and the two and three wheeler sectors. "Sales are related to the models' visibility on the roads, and Indian vehicles are very visible," remarked a representative of an Indian company. Indians also contend that the Chinese models are technically inferior to their Indian counterparts.

Indians think that Sri Lanka is not an exciting market to enter now. "It is small and it is declining too. In 2006, only 26,500 cars were sold, and there is already a 35% decline in 2007 because of the worsening economic conditions," a representative of an Indian company said.

However, the Indians believe that tax concessions from the Sri Lankan government under the India-Sri Lanka Free Trade Agreement will help revive the market and improve sales. But in the past three years, their efforts in this direction have been in vain.

Peugeot Has Big Plans for China

Edmunds. HANGHAI, China — PSA Peugeot Citroën, the French auto giant, is on the muscle in China. The automaker is expanding production capacity, broadening its ties with local automakers and rolling out new models, as part of a broader strategy to boost annual sales volume over the next decade.

PSA wants to sell a million cars a year in China by 2015, according to Shanghai Daily, up from 210,000 last year. Toward that end, it is pumping more money into its longstanding joint venture with Dongfeng Motor and has formed a second partnership with Hafei Automobile.

The joint venture with Dongfeng in Wuhan is in the process of doubling production capacity to 400,000 by 2009, with another expansion to 600,000 planned by 2012. The partners also are discussing construction of another facility. The venture, called Dongfeng Peugeot Citroën Automobiles, builds and markets such models as the Peugeot 307 and the Citroën C-Triomphe.

As part of PSA's long-range strategy in China, the company plans to introduce at least 12 new models by 2010, in an effort to attract first-time Chinese buyers to the Peugeot and Citroën brands.

The deal with Hafei, announced in June and expected to win final approval by early next year, will focus on passenger vans. The partners plan to invest $266 million in the joint venture, which will be based in Shenzhen and is expected to begin production in 2008.

Hyundai in drive for the luxury market end

SOUTH Korea's Hyundai Motor Corp said yesterday it will introduce its first luxury sedan to China next year to compete with Mercedes-Benz and BMW models. The move is part of a strategy to boost falling sales.

The new luxury sedan, under the developing code name of BH, will be launched in April in China through imports, said Young-Hwan Cho, marketing director of Hyundai Motor Company's China regional headquarters in a Beijing telephone interview. "The official name and pricing strategy hasn't been decided yet," said Cho. "But it will compete with BMW 5 Series and Mercedes-Benz E Class sedans in China's high-end luxury-car segment." The BH models are expected to hit Hyundai's home market soon.

Seoul-based Hyundai will also import a revamped coupe next year to China to further entice the growing number of affluent Chinese auto buyers. Both Mercedes-Benz and BMW saw sales rise more than 30 percent for the first half, beating the 25 percent for the overall vehicle sector. Hyundai has been losing customers in China because of a lack of new models and intensified competition.

A month earlier, Hyundai's annual sales on the world's second-biggest auto market fell by about 16 percent to 260,000 units after its half-year sales dropped 23 percent to 91,864 vehicles. The flat sales forced the car maker to cut prices by seven to 13 percent from this month for the Accent compacts and the Elantra and Sonata sedans, made by Beijing Hyundai Motor Co. Hyundai is building a second plant in China with a production capacity of 300,000 units annually.

To Fight Pollution, China Orders Cars Off Road on September 22

Forbes, HONG KONG -The government is trying to turn back the clock on China’s auto boom this week. It is asking people in 108 cities to walk, bike and ride on public transport instead of driving cars. Then on Saturday, the government won’t be asking – it will be an order.

On "No Car Day," one or more special zones in the 108 cities – including Beijing, Shanghai and Tianjin – will be open only to pedestrians, bicycles, taxis and buses from 7 a.m. to 7 p.m. The environmental campaign, initiated by the Ministry of Construction, aims at saving 33 million liters of gas, cutting 3,000 tons of emissions a day and, above all, raising environmental awareness, state-run China Daily reported Monday.

The weeklong campaign will be repeated every year around the same time, Qiu Baoxing, vice minister of the construction authority, told China Daily.

Once a rarity, there are currently about 50 million vehicles galloping across . They accounts for a third of the country's fuel consumption and the proportion is estimated to hit 57% by 2020, making auto emissions the main source of air pollution in China, followed by coal.

In the first eight months of this year, 5.69 million motor vehicles were sold nationwide, 25% more than the same period last year. In August alone, passenger vehicle sales were up 27% from the same period last year to 481,300 units.

Big cities such as Beijing and Shanghai are the biggest polluters. There are 100,000 new vehicles hitting the streets a year in the capital, and about 30% of commuters there now drive every day.

The four-day citywide partial vehicle ban trialed by Beijing’s government last month reduced air pollution levels by 20%.

The central government is drafting a timetable to impose taxes on gasoline, diesel and kerosene, China Business News reported earlier this month, citing an unnamed official at the Ministry of Finance.

China's Chery Auto eyes rapid growth in exports

WUHU, China, Sept 19 (Reuters) - Chery Automobile Co, China's fourth-largest car maker, plans to sharply boost production and exports over the next three years, a company executive said on Wednesday, as Chinese automakers gear up for overseas expansion.

The firm aims to generate 40 percent of its total sales from overseas by 2010, compared with 25 percent expected for this year, said Zhou Biren, a vice president for Chery.

The company is expected to move more than 400,000 vehicles this year, with exports likely to hit 100,000, he said, adding that the company expected to achieve total sales of 1 million vehicles in 2010, of which 40 percent would be exported.

"Exports are highly important to our growth," Zhou told reporters at the company's headquarters in the eastern Chinese city of Wuhu.

China is emerging as a major exporter of small to mid-sized cars. The country's auto exports hit a record high of 340,000 units in 2006, more than double the previous year when it became a net vehicle exporter for the first time.

Chery uses production equipment imported from countries such as Germany and Italy, and invests about 10 percent of annual revenue in research and development, said Jin Yibo, vice president of the sales arm of the state-run company.

Its total revenue will likely grow to 22 billion yuan ($2.93 billion) this year from 15.6 billion yuan in 2006, Jin told Reuters during a media tour of the company's automated factories.

Founded 10 years ago, Chery churned out its 1 millionth car in August, with half a million made over the past one and a half years. Its cars are priced between 39,800 and 200,000 yuan, targeting the low- and medium-priced segments of the market.

Unlike other state-run peers such as top Chinese car maker SAIC Motor Corp, which have been counting on locally manufactured foreign-brand cars to drive sales, Chery is focusing on developing its own series, including Eastar, A5, A1 and Cowin.

Chery exports its Chery-brand cars to 56 countries, including Russia, Latin America and the Middle East. It has assembly plants in Russia, Ukraine, Iran, Egypt, Indonesia and Uruguay.

In July, Chery finalised a deal with Chrysler LLC to make compact cars under the Chrysler badge for sale in the United States and elsewhere.

Chery also has an initial agreement with Fiat to set up a vehicle manufacturing venture, scheduled to start production in China in 2009.

Zhou said Chery currently had no plans, however, to bring in strategic investors.

There had been market talk that Chery was considering bringing in an overseas investor to jointly tap the overseas market and China, the world's second-largest vehicle market.

BMW Sues Shuanghuan's Importer in Germany, But Not the Company

Gasgoo. BMW AG has filed suit against Shuanghuan's importer in Munich last week to prevent the importer from selling a Shuanghua SUV model that BMW said is a copy of its X5, BMW AG's spokerperson told reporters last week.

"BMW AG's lawsuit targets Shuanghuan's importer in Germany, not Shuanghuan itself," said Ma Qingsheng, BMW AG's spokesperson in Beijing. "BMW AG so far has no plan to sue Shuanghuan itself."

Shuanghuan has so far not released any official response to BMW AG's legal actions in Germany.

However, the Munich-based importer was undaunted by BWM AG's legal threat. Karl Schloss, chief executive of China Automobile, which plans to import Shuanghua-made SUV model indicated that his company would not back off from importing the controversial Shuanghua-made SUV model, according to an Associated Press report.

GM drives up its ambitions

Shanghai Daily. GENERAL Motors Corp may build a wholly owned research center in China and it is also tying up with China FAW Group for the first time to make commercial vehicles, according to China Business News yesterday.

Analysts said the move may mark GM's more aggressive development in China but it was also taken as a sign that its relationship with SAIC, its sole Chinese partner, could be under strain after SAIC rolled out its self-branded models.

The new wholly owned engineering center would be the sixth of its kind globally, and GM will benefit from lower research and development costs, the Shanghai-based newspaper said, without elaboration.

The report also said a new venture would be formed with FAW Group, China's leading commercial vehicle maker, citing a supplier from the working panel.

"Along these lines a number of different options are being explored, but at this stage we are not ready to make any announcement," GM said in an e-mailed reply yesterday. Gao Yuan, a communications official from FAW Group, however, said he has not heard of that.

"GM is not competitive in the commercial vehicle segment worldwide," said an industrial analyst who used to work for GM. "A strategic alliance would help to speed up the development. But it is still hard to form one in a short period."

Regarding the R&D center, the analyst also said it could meet GM's ambition in China amid growing sales volume.

"But it is also a defensive move by GM regarding its Chinese partner as China's self-branded models are growing stronger," the analyst claimed.

SAIC, which has two ventures with GM, is now spending heavily on developing models under its own name plate. Its first model hit the market at the end of last year after it bought over designs from the former British Rover Corp in 2005.

Shanghai Automotive Co. Ltd renamed

Shanghai Daily. SHANGHAI Automotive Co Ltd, the listed unit of China's biggest car maker, has been renamed Shanghai Automotive Group Co Ltd, marking the completion of an assets restructure of its parent, the company said in a statement yesterday.

Shanghai Auto, 83.83 percent owned by Shanghai Automotive Industry Corp, sold additional shares to the parent for taking its stake in two venture with General Motors Corp and Volkswagen AG.

The move helped Shanghai Auto increase competitiveness by focusing more on car manufacturing instead of auto parts. Shanghai Auto is now responsible for making SAIC's self-owned car models including Roewe 750 and other upcoming new products.

Nanjing Automobile Names New Executives for Nanjing Fiat

NANJING, Sep 18, 2007 (SinoCast China Transportation Watch via COMTEX) Nanjing Automobile (Group) Corp. is trying to change the struggling operations of Nanjing Fiat Automobile Co., Ltd. in a bid to benefit more from the cooperation with Shanghai Automotive Industry Corp. (Group) (SAIC).

Yu Jiufeng (transliterated) acted as CEO and general manager of Nanjing Fiat on August 17 and Jing Boqing later succeeded Duan Jianjun as business director.

Nanjing Automobile promised that it would offer supports for the ailing venture, which has little expense on marketing in the period from January to April 2007. Nanjing Fiat, Jing stressed, can obtain support for car models from its parent companies only after driving up its sales.

Earlier, SAIC signed a cooperation letter of intent with Yuejin Motor Group, the parent of Nanjing Automobile. The letter is targeted at the comprehensive cooperation between SAIC and Nangjing Automobile, two auto heavyweights in the Yangtze River Delta.

The two signers will jointly set up a team to work on the feasibility and scheme for the overall cooperation in fields like complete vehicle, auto parts, auto service and trading, as well as the assets regrouping. However, both sides gave no response to how they would join hands in their proprietary brands in the future, a question attracting the most attention currently, although they stressed that they would not give up their independent brands.

Talks between SAIC and Nanjing Automobile has almost finished and some related proposals have been submitted to top executives, disclosed a source. Although the mode for their tie- up has not been decided, the two parties are both striving for more interests.

Nanjing Fiat was established in April 1999 as a joint venture between Italian automotive giant Fiat Automobiles SpA and Nanjing Automobile. The venture incurred a big loss of CNY 300 million in 2004, and its annual turnout has been hovering between 30,000 and 40,000 units in recent years.

Fiat would be likely to end its cooperation with Nanjing Automobile but it delayed to do it because of the negotiation with independent-branded automaker Chery Automobile Co., Ltd., analysts guessed.

Currently, Nanjing Fiat, with a capacity of 100,000 units, has sold only about 2,000 units a month. It needs to upgrade its production lines and produce more new models to make full use of its capacity. The venture will probably become a production base of the MG car model or SAIC's self-developed car models, guessed insiders from Nanjing Automobile when it achieves a turnaround.

Luxury cars hit China's west

Shanghai Daily. The world's luxury car makers are increasing their interest in China's west - a region they view as their next big cash cow.

That interest will be much in evidence at the Chengdu Motor Show 2007, which runs from September 22 to 28 in the Sichuan Province capital. The expo is expected to attract 160 car makers from home and abroad, compared with 115 last year, according to an official with Hannover Fairs China Ltd, the organizer.

The biggest auto show in China's west will feature an independent exhibition hall for luxury cars for the first time this year. Its 11,000 square meters of display space will be double of the amount set aside for the pricey nameplates last year.

Upscale Infinitis and super-luxury Maybachs and Laborghinis will make their debut at the Chengdu auto gala this year, accompanied by returning brands such as Bentley, Rolls-Royce, Ferrari, Porshe, Land Rover and Jaguar.

Luxury brands will increase their presence 30 percent from last year.

"Luxury cars will be highlighted this year because manufacturers cannot neglect the growing demand," said Fu Yu, general manager of Hannover Fair. "Last year, many deals for luxury cars were signed, which helped boost market prospects."

Almost all the major international car makers, including Volkswagen, General Motors and Toyota, and Chinese companies such as Chery, Jianghuai Auto and BYD Auto plan to expand their exhibition platforms. Audi, Mercedes-Benz and Chrysler have booked the biggest showrooms, 10,000 square meters, to be able to display their complete line of products.

China's west is a growing market as a rapidly expanding economy and rising incomes boost consumer demand for cars.

Chengdu has become China's fourth-biggest auto market and is influencing the entire region.

China's luxury car segment is growing by around 30 percent a year, surpassing the average 25-percent growth for the overall vehicle market.

Sales of luxury brands totaled 180,000 units last year, accounting for 3.3 percent of China's passenger car market.

Sales are expected to reach 300,000 units by 2010, lifting market share to 10 percent.

Chinese Cars Find Easy Road in Russian Market

SHANGHAI - September 18, 2007, Russia may import 120,000 Chinese-made cars this year, a Russian official predicted.

Andrei Novikov, head of the international department of the Center for Strategic Research (CSR) in Russia made this prediction during his recent visit to China. The mission of Novikov's visit is to work with Chinese automobile experts to prepare for the First Sino-Russia Automobile Forum which is to be held on October 25-26.

"In 2004, there were no Chinese cars in Russia; in 2005, 5000 Chinese vehicles were sold here and the figure jumped to 20,000 in 2006. During the first half of this year, Chinese cars rose to 40,000 units," said Andrei Novikov.

During the first eight months, Chery Automobile, China's leading home-grown carmaker has witnessed the biggest increase in sale in Russia, according to an Interfax report. Chery's sales rose 580% to 24,000 units during this period while the foreign brand cars in Russia rose 66% on average.

At the Moscow International Auto Show in late August, 22 Chinese brands covering more than 60 different models were on display. Russian audiences surprisingly found that the show highlighted Chinese cars with the absence of European automakers--the European Automobile Manufacturers Association decided to attend the show every second year.

Novikov said Chinese-made automobiles has a great potential in Russia; however he's also concerned with problems as quality and brand awareness. "They have a lot of work to do on exporting channels and price-setting," he added.

He also considered the first Russia-China Automobile Forum next month in Beijing as a good chance to boost bilateral auto trade.

Brilliance is making progress in Europe

While controversy reigned at the China Automobile stand, Brilliance, the other Chinese auto maker at Frankfurt, continues to tick all the right boxes. Following a well-received launch at Geneva in March, Brilliance has now started selling cars in Europe and launched a fourth new model, the BS2, at Frankfurt.

The company has also overcome its first setback – a poor showing in crash testing for its first model, the BS6 sedan. This gained only one EuroNCAP star – but Brilliance has rectified the situation by ordering a rapid redesign. Independent tests suggest the car will now gain three stars, something that pleases Hans-Ulrich Sachs, head of Brilliance’s European distributor HSO Motors Europe.

Sachs knows the car business – he launched Hyundai in Germany in 1991, he’s been a senior brand manager for Volkswagen, and he’s been CEO of Germany’s largest Ford dealer. Brilliance is BMW’s assembler in China, and signed a deal with HSO Motors to distribute its cars in 17 European markets in September 2006.

Currently only the BS6 is on sale in Germany, but the smaller BS4 saloon will come by the end of 2007 and the SC3 coupe will follow in early 2008. The BS2 hatch will arrive by October/November 2008, and more models will follow, including a Pininfarina-styled estate car at next year’s Geneva show.

Unfortunately, the UK will have to wait for Brilliance – the company currently has no plans to build RHD versions. “I don’t know when this will happen, “ says Sachs, who has the UK rights and would like to sell the cars here.

Brilliance is ambitious – its production capacity of 220,000 at moment – but by 2010, will have almost trebled this to 600,000. It is building a new factory for the BS2 beside the existing factory, and has a big plot of land for further growth.

China Encouraging Automakers To Be Actively Involved In Setting International Standards

Shanghai Daily. China's Ministry of Commerce (MOC) said the government encourages Chinese auto enterprises to be actively involved in meeting and establishing international auto test standards.

"Though China's auto exports have been surging rapidly in recent years, the Chinese auto industry is still a labor-intensive and high energy-consuming industry and China-made automobiles are still perceived as low-quality products overseas," Wang Qinhua, director of the MOCs Department of Electromechanical Products said in automotive industry conference in Tianjin.

Most overseas markets require international certification as parts of pre-requisites for market access and this process has cost a huge amount of money for Chinese automakers, Wang told the conference. In fact, this has become a barrier for Chinese automakers to go to overseas markets, Wang added.

Wang said MOC will make policies helping Chinese auto makers better understand international trading and technical rules.

The Ministry of Commerce reportedly encourages Chinas automotive industry associations and competitive enterprises to get involved in international technical alliances or international technological standards forums, which will give them better chances in laying down impartial international standards.

The Ministry of Commerce will also support individual enterprises to conduct independent or cooperative studies on some common technologies and critical technologies. MOC also encourages Chinas domestic certification organizations to cooperate with their counterparts in other countries.

China to hold first-ever 'no car day' on Saturday

BEIJING, (AFP) — China will initiate its first-ever nationwide "no car day" this weekend in an effort to promote environmental health and alleviate increasingly gridlocked urban roads, state press said Monday.

Residents in 108 cities will be urged to take public transport, ride bikes or walk on the nation's first "no car day" on Saturday, the China Daily reported.

"The move is an attempt to raise residents' awareness on energy saving and environmental protection because the country's cities are plagued by traffic congestion and pollution," the paper said.

It did not say why the Ministry of Construction, the sponsor of the activity, chose a Saturday to hold the event.

Government officials and state-run enterprise employees in some cities would be encouraged not to drive, while other urban centres would ban government-owned cars from taking to the roads altogether, it added.

A week-long campaign to publicise the government's goal of getting 50 percent of the nation's urban residents to use public transport instead of private cars would also be initiated, it said.

China's auto industry has been a key component of the nation's booming economy with vehicle production rising by 32.7 percent in July compared to the same period last year.

China's Car-Price Wars Dent Profits

Wall Street Journal.

Discounting Takes Toll on Auto Makers,Puts Brake on Stock Gains

CHENGDU, China -- At the sprawling E-Kingo automobile dealership here, which stretches for about a quarter of a mile along an expressway, prices are falling.

General Motors Corp. is knocking $1,800, or 27%, off the price of its small Chevrolet Sail station wagon. China's Chery Automobile Co. has marked down the price of its new crossover by 16%. Nearly every brand is on sale.

"The discounting is getting more and more fierce," said Lou Li, a manager at the E-Kingo in Chengdu, capital of the southwest province of Sichuan. "And we expect prices to keep going lower."

Competition in China's auto market has intensified in recent months, calling into question its image as potential supplier of steady profits for the global industry. Cost controls and lower prices for locally produced components cushion some but not all of the blow from the discounting.

China, the world's second-largest passenger-car market behind the U.S., is an increasingly important growth source for auto makers. Car sales last year rose 35%.

GM, which makes Buicks, Chevrolets and Cadillacs with a local partner, is offering interest-free financing on some models after watching its market share in China slide in the first half of the year. South Korea's Hyundai Motor Co. has cut prices by as much as 13%, while Germany's Volkswagen AG lowered the price tag on some Passats by 7%.

The price cuts, by both domestic and international auto makers, are pinching industry profits, said John Bonnell of market researcher J.D. Power & Associates' Automotive Resources Asia unit in Bangkok. He said things will get worse before they get better. "People aren't willing to give up. As long as they have the resources to stay in the game, they will keep cutting," predicts Mr. Bonnell. "But it's not leading to a healthy industry."

The toll is beginning to show in the results of China's domestic industry, in which a host of new players in recent years has ratcheted up competition. Geely Automobile Holdings Ltd., the Hong Kong-listed arm of China's Geely Group, this month said its first-half net income fell 32% in part because of intensified domestic competition. Shares of Geely, one of the country's fastest expanding auto makers, are up 36% this year but have fallen 28% from their 52-week high in July.

Charles Cheung, an auto-industry analyst with Citigroup Inc. in Hong Kong, said discounting and weaker-than-expected sales volumes are holding back Chinese car companies' shares. "Most companies, including the listed ones, are not meeting their sales targets," he said. "It's been across the board."

For Chinese companies, "cost advantages are obvious," said Dong Jianhua, an analyst at Southwest Securities in Beijing. "Foreign companies will be pushed to the upscale end of the market, and some may be driven out eventually." In the short term, he said, international car makers are able to make sacrifices in China while earning profits elsewhere.

Twin forces are driving the trend. First, cars are no longer the preserve of the very wealthy, and the newly middle-class Chinese buyers have more-modest means. They are much more price-sensitive and far less concerned about brand names.

Second, manufacturers are racing to expand production and gain the economies of scale and critical mass they need to survive. Companies are basically betting that slim margins and even losses are a worthwhile price of admission to the China market of the future.

Complicating the situation is that many local players are owned, at least in part, and subsidized by provincial and municipal governments that see the automobile as critical to local economic success. Central-government planners would like to see fewer, stronger firms. But, said Mr. Bonnell, "it seems like they've lost the power to force a consolidation."

In the meantime, these state-controlled companies, propped up by subsidies, keep pressure on other manufacturers to continue lowering prices.

This month, BYD Automobile, a subsidiary of Hong Kong-listed BYD Co., introduced a new version of its flagship sedan, a four-door compact known as the F3, which comes with leather seats, wood paneling and power everything. The list price: about $7,953 -- down more than $1,000 from the start of the year.

Liu Zhangyong, a 32-year-old salesman for a paint company, bought a silver F3 after looking at a Chevrolet Lova and a Geely sedan. "It's roomy and it looks great. It just seems like a nicer car" than the Chevrolet, Mr. Liu said. The Lova has cloth seats and is more expensive, Mr. Liu said. But not as expensive as it was: the Lova's price was cut to about $8,250 from $9,960.

Five years ago, BYD Automobile didn't exist. It was created after its parent, a manufacturer of cellphone batteries, bought an old state-run car factory in northwestern China. The company sold nearly 58,000 vehicles in the first seven months of the year, up nearly 70% from a year earlier but still a very small number by modern auto-manufacturing standards.

"The local car makers need to grow" to benefit from economies of scale, and they need to "move up" to bigger, more-expensive cars, if they hope to survive, said Yale Zhang, an analyst at auto-industry consultancy CSM. "At the very low end, the profit margins are just so slim."

The combined market share of China's own car makers is rising. It was 30.6% in the first seven months of the year, according to Automotive Resources Asia, up from 26.4% in 2006.

"Chinese brands have done very well. They are gaining popularity very rapidly," said E-Kingo's Mr. Lou. "They are well-equipped, more fashionable and have very low prices compared to foreign brands."

Those attributes give Chinese-brand autos an edge with the latest wave of car buyers: middle-class people with an annual household income of about 100,000 yuan, or about $13,000. "For this group, price is the No. 1 consideration," said Mr. Lou. "They want a car that looks good and is still inexpensive."

Price was a critical concern for Song Xiaoguo when he shopped for a sport-utility vehicle in April. After looking at a Hyundai Santa Fe, he opted for an SUV from Chinese company Great Wall Motor Co., the Hover. Priced at about $14,500, the Hover was about $4,000 less than a comparable Hyundai, Mr. Song said.

The 35-year-old Mr. Song, a drug-company sales representative who drove his Hover in the mountains on Sichuan's border with Tibet, said he is pleased with his purchase. "I like the design," he said. "It's got everything I need."

Brilliance BS6 crash test pictures

As you could read in an earlier article, the BS6 got 3 stars in a NCAP test in Spain, only 80 days after they failed a similar test in Germany, that's quick development. Now we have some pictures:

Spyshots: Chery QQ5

This car debuted as a prototype called 'S16 WoW'. Chery seems to be in the final stages of testing it, the badges are already on the car. S16 is gone, now it's QQ5.

China ready to introduce fuel tax

China is looking for an appropriate time to impose a tax on gasoline, diesel and kerosene to encourage energy conservation and reduce emission, the China Business News reported today, citing an official at the Ministry of Finance.

The government is worried about soaring fuel consumption and worsening air pollution in already smoggy cities with an increasing number of vehicles on the road, said Shi Yaobin, director of the Ministry of Finance's tax policy department, at a forum on China's auto industry development held in Tianjin over the weekend.

Shi said the ministry is considering rolling out a series of tax policies encouraging manufacturers to develop cars that are more fuel-efficient and environmentally friendly.

A fuel tax is an important tool, according to him. Being a popular practice in developed nations, it is widely regarded as the most efficient way to curb oil consumption.

Under the reform scheme, consumers will buy fuel at tax-added prices, while the current road toll system requires drivers to pay a fixed road maintenance fee to transportation departments no matter how much fuel they consume.

With the imposition of a fuel tax, drivers will have to think again before turning the ignition key. Manufacturers will also be encouraged to develop more fuel-efficient cars as fuel consumption becomes a key index for buyers when selecting a car.

The authority is also studying the feasibility of an environment tax to curb the development of high-emission cars and reduce greenhouse gas.

The ministry will promote research on preferential tax policies to encourage manufacturers to produce fuel-efficient cars. It may also impose a punitive surtax on those whose vehicles do not meet the national standard on limits of fuel consumption.

Currently, China has about 50 million vehicles on the roads. Fuel consumption of vehicles accounted for one-third of the total, and the number is estimated to rise to 57 percent by 2020. Vehicle emission has replaced coal to become the main source of air pollution in some big cities including Beijing.

Chinese car makers face road blocks on exporting to EU

Shanghai Daily on the troubles for Chinese car makers that want to export to Europe

CHINESE car makers seem to be driving into road blocks in trying to exhibit their models at international auto shows, and industry watchers have said this could be due to a perceived gap in standards and quality between the domestic auto industry and their global peers.

For example, China's Brilliance Auto is the only car maker to display a complete product line-up at the 62nd Frankfurt Motor Show, which opens tomorrow - one of the top five international auto exhibitions.

What a contrast compared to two years ago when four Chinese car makers, including Geely automobile Co Ltd and Jiangling Automobile Co Ltd, appeared at the same show.

Then Geely provided an eye-catching performance with models dressed in costumes of traditional Chinese characters from the Four Beauties and Monkey King classics to announce in a big bang the arrival of price-competitive Chinese-made models in the European market.

This time around, officials from Geely, China's leading private car maker, said they dropped an earlier plan to take part in this year's motor show because the exhibition hall is not ideal.

"We were disappointed when we were arranged to share the exhibition area with some unknown auto part makers," the official, who preferred not to be named, complained.

"We paid a lot of attention to the display hall, especially for an A-class auto show, as a way to help build brand image before we launch a marketing campaign to enter the European market."

Brilliance, the car making partner of BMW AG in China, was allowed to set up their platform in the same exhibition hall with Toyota and PSA Peugeot Citroen for this year's show.

It booked the area through its European dealer HSO and would display its mainstream Zunchi and Junjie sedans, M3 coupe and a brand-new small-engine cars.

A senior official at a Chinese car maker, who did not want to be named, said he believed various hurdles are in the way of their participation.

These road blocks include domestic models failing crash tests and also perceived impression of poor quality of Chinese-made cars which are then exploited by the foreign media.

In addition, the huge investment needed to take part in such shows also prompted Chinese car makers to be more cautious in their participation, he added.

Another shadow that has cast a dark cloud on possible participation by Chinese car makers revolve around Shuanghuan Auto. The firm had planned to exhibit its two controversial models at the Frankfurt show but withdrew after strong opposition and threats of a lawsuit from German rivals for alleged patent infringement.

Both DaimlerChrysler and BMW threatened to take legal action against Shuanghuan's Noble subcompact and CEO sport utility vehicles for allegedly copying the design of Mercedes-Benz's Smart Fortwo and BMW's previous generation of X5 SUV.

Some industry analysts also said there could be a move by overseas car makers to bar Chinese models out of their markets as they fear the low-pricing strategy would harm their market domination.

Media reports said the Noble is expected to cost about 7,000 euros - the lowest price for a small car on the German market.

Shuanghuan exports the CEO to eastern European markets as well as African countries.

It also signed contracts with dealers in Italy to export 2,000 CEOs in addition to 1,000 Nobles in the near future if the controversial models could pass relevant tests.

But the dispute with global counterparts is casting a shadow on the car maker's sales strategy and may even prompt Shuanghuan to promise to sell the CEO only in Asia and Africa while the Noble will be sold only in China.

"They (the CEO and Noble) really share similarities in body design with its overseas counterparts. The weakness (in design) is used by overseas parties to block Chinese cars while Chinese producers have been long criticized for lacking intellectual property rights protection," said an industry analyst.

"To build up an up-scale car brand on the international markets rather than just make a copycat, Chinese car makers need more efforts to improve research and development capability," he said.

Beiqi-Cummins tie up

Shanghai Daily. BEIQI Foton Motor Co, China's biggest commercial-vehicle maker, won approval to form an engine venture with Cummins Inc to tap rising truck sales in the world's second-largest auto market, Bloomberg News said.

The 2.7-billion-yuan (US$359 million) venture was endorsed by the National Development and Reform Commission, China's top economic planner, Foton said in a Shanghai Stock Exchange statement yesterday. The equally-owned venture will have a capacity of 400,000 engines a year, the Beijing-based company added.

China's economy grew 11.5 percent in the first half, boosting demand for trucks to haul goods across the country. The nation's overall commercial vehicle sales rose 26 percent in the period, the China Association of Automobile Manufacturers said.

The Beijing-based venture will make 2.8-liter and 3.8-liter engines. It may help Cummins achieve its goal of doubling China sales to US$3.3 billion by 2010. The engine maker, based in Columbus, Indiana, already has a venture in the country with Dongfeng Automobile Co, a truck maker backed by Nissan Motor Co.

DaimlerChrysler AG is set to buy a 24 percent stake in Foton, the maker of Auman heavy-duty trucks.

Jaguar launches XJL8 in China (and about the luxury car market)

Shanghai Daily. JAGUAR announced today it will start selling its new XJL sedans in China, joining the competition in the country's rapidly expanding luxury car market.

The British car maker will sell the Jaguar XJ8L, a four-door sedan equipped with an eight-cylinder engine, for 1.28 million yuan (US$170,666), according to statement from Jaguar China, the luxury car unit owned by Ford Motor Co. The Jaguar XJ6L is priced at 868,000 yuan.

The flagship model Jaguar XJ8L can reach a maximum speed of 250 kilometer per hour and accelerates from zero to 100 km/h in 6.6 seconds.

Jaguar sold 458 units in the first half of this year in China through imports including the XJL sedan, S-type mid-size luxury executive car as well as the XK coupe. In June, sales jumped 84 percent to 90 units.

Overseas car makers have been adding models and shortening delivery to boost sales in the Chinese market amid growing demand for luxury cars.

Sales of Mercedes-Benz cars in China rose 30 percent to 15,830 units in the first seven months of this year. The buoyant sales were mainly fueled by imported high-end S-class luxury sedans, which saw sales increase 53 percent to 5,800 units from a year earlier.

U.S., China Reach Auto Safety Agreement

WASHINGTON (AP) — The government on Wednesday signed an agreement with China that will improve information sharing on auto safety following last summer's recall of thousands of defective Chinese-made tires.

The "memorandum of understanding" signed by the National Highway Traffic Safety Administration and China's National Reform and Development Commission will "strengthen cooperation and communication" on several motor vehicle regulation and safety issues.

In June, NHTSA ordered a U.S. importer, Foreign Tire Sales Inc., to recall as many as 450,000 tires it had bought from Hangzhou Zhongce Rubber Co.

The Union, N.J.-based importer initially said it did not have the financial resources to conduct a full recall, but then announced in August that it would recall 255,000 tires.

The recall involved steel-belted radial replacement tires for pickups, vans and sport utility vehicles that consumers bought from early 2004 through mid-2006. The tires were recalled because they lacked a safety feature that prevents tread separation.

NHTSA Administrator Nicole Nason said "if we see a situation in the future where we need information from a Chinese manufacturer like we had with FTS ... we can go straight to the Chinese government and ask them to reach out to the manufacturer."

Nason said given the interest expressed by Chinese automakers to sell vehicles in the U.S. in the future, "we think it's valuable to have this agreement in place now."

The agreement outlines cooperation between the two countries on developing technical regulations, issuing consumer information, enforcing safety-related defects and reviewing the safety attributes of new vehicles.

Chinese auto safety officials were meeting with NHTSA staff this week to share information on regulations involving fuel economy, crash testing and the regulation of tires and vehicles.

The agreement comes amid questions about the quality of Chinese toys, food and other products after a string of product recalls and import bans in recent months.

Chery enters new stage of global expansion

On August 22nd, 2007, the millionth car of Chery Automobile, Chery A3, formally rolled off the production line of the Third Assembly Plant in Wuhu Chery Auto of Anhui Province. The date was a day that deserves Chery men to remember forever, and that's also the date for independent auto brands of China to feel proud.

Seen from the development track in countries with developed auto industry, the scale economy characteristic of passenger car makes "the millionth car" become "one hurdle" for auto enterprises. Now all the world-famous auto enterprises have spanned the threshold. "The millionth car" has turned to be the foundation for marching toward an international-famous brand.

The rule is not an exception for Chinese auto industry and enterprises. Only under the with scale effect, can rational and effective allocation of resources be achieved and more perfect product system and price system be built. Enterprises can not lower the cost of a single vehicle in small scale production, thus profit-making would become "castle in the air", and then enterprises will be out at the elbows in respect of R&D input, talents recruitment, equipment updating, and sales network expansion. After the millionth car rolled off the production line, Chery's anti-risk ability and comprehensive competitiveness will be further improved; consequently it will gain much more competitive advantage.

Just like the slogan of Chery writes for the celebration for the millionth car, "10 Years' innovation, a Million Chinese Cars", 10 years has gone since Chery was established in 1997. This 10-year was the 10 years that Chery built its independent brand; what's more important, it was the 10 years that Chery adhered to independent innovation.

On the celebration of the millionth car, Chery, Futwin, Amulet, QQ, Tiggo, A5, Cross???? etc, from the first car to the 900,000 car, each of the 100,000 cars were presented to people one by one. It looks like concentrating Chery's every step in the past 10 years on a small arena.

The road of producing 1 million cars is the process from unknown to public to world famous. On December 18th 1999, the first Chery car rolled off the production line. At that time, Chery obtained the qualification of car production relying on SAIC Group. Many people didn't feel optimistic about Chery, and considered that it could only stand for a short time. However, the fact went out of people's expectation. On April 15th of 2004, the 200,000 car of Chery rolled of line; on March 28th 2006, Chery greeted its 500.000 millionth car; On August 22nd 2007, the millionth car rolled off production line. From the first car to the 0.2 millionth cars, Chery had spent 53 months. From 0.2 millionth to 0.5 millionth, Chery used 23 months. From 0.5 millionth to millionth, it only took Chery 17 months. Yin Tongyao, Chairman of the Board of Chery Automobile Corporation, anticipated that Chery would greet the 2 millionth car in the year of 2009.

Chery has entered a fast developing period in such a few years. It is not only one of the top 10 automobile manufacturers of China, but is also the main force of China's car export. Such a speed can be said to be rare in China's auto industry.

According to statistics of China Association of Automobile Manufacturers, during January and July this year, Chery sold 232785 vehicles, ranking 7th and 4th respectively among domestic auto manufacturers and car manufacturers. In March of 2007, Chery even won the sales champion of the month with sales volume reaching 44568; it was the first time that China's independent brand won sales champion of a single month. From January to July, independent brands sold an aggregate of 745,800 cars, accounting for 28 percent of the total car sales. Among the top 10 independent brands, three brands are from Chery, including QQ, Amulet and A520. Chery has stood on its own feet the first camp of Chinese car manufacturers, and become a representative of domestic independent auto brands.

All the above-mentioned achievements could not come true without the development strategy-independent innovation. As far as product development is concerned, Chery selected independent innovation strategy that combines independent innovation and international cooperation. It grasped development technology and procedures, lowered R&D cost, and strengthened the construction of independent innovation system by adopting a kind of self-focus and joint development method, up to now Chery has built a R&D system with the headquarter of Automobile Engineering Academy as the core, domestic branches and overseas branches as well as holding design companies as the supporting points, relevant parts enterprises and supplies as the co-designers, and domestic colleges and scientific research institutions as cooperators. Chery has its own core technology and independent IPRs on vehicles, engines and key parts. The independent R&D ability of the company is continuously increasing.

It is exciting news that Chery has produced 1 million cars, but more people are concerning that how will Chery, after crossing the threshold, move on in the future? Chery is disclosing their planning through acts one after another.

In June, Chery Automobile set up a joint venture with an US company, Quantum LLC. On July 4th, Chery signed strategic cooperation agreement with Chrysler Group, which is one of the three auto giants in the USA. The two companies will cultivate international markets such as North America and Europe relying on Chery's advantages on the development of medium and small auto products, manufacturing and cost control, as well as Chrysler's brand influence and marketing advantages. On August 6th, Chery and Fiat Group signed a memorandum of understanding (MOU) to set up a joint auto manufacturing company to produce passenger cars in China. Such a series of influential actions are important components of Chery's brand globalization.

After crossing the first stage of building independent brand through independent innovation, Chery is stepping on the way of globalization; in other words, it keeps insisting on open, innovation and building of well-known international brands.

Peugeot, Hafei mull $266 mln-plus China JV -source

HANGHAI, Sept 12 (Reuters) - French car maker PSA Peugeot Citroen and Harbin Hafei Automobile Industry Group Co are considering investing at least 2 billion yuan ($266 million) in a planned vehicle manufacturing venture, a source close to the situation said on Wednesday.

Peugeot and Hafei in June signed a memorandum of understanding to explore the possibility of jointly making commercial vehicles for fewer than 10 passengers.

"The final agreement for the venture could be signed at the end of this year or in early 2008," the source told Reuters.

He added that the two sides would put a combined total of at least 2 billion yuan into the 50-50 venture, the minimum investment mandated for foreign-funded vehicle ventures in China.

Peugeot already has a car manufacturing tie-up in China with Dongfeng Motor, the country's third-largest auto maker, making the Peugeot 307, Peugeot 206 and C-triomphe sedans, which are popular among young professionals.

The deal with Hafei, if it goes ahead as planned, would give the French firm a foothold in the commercial vehicle market, where Ford Motor and General Motors already have a head start.

In addition to car ventures, the two U.S. auto giants operate commercial vehicle joint ventures in the country that make light trucks, light buses and minivans.

Peugeot plans to roll out 12 new models in China by 2010 to promote sales in the world's second-largest auto market.

In the first half of this year, Peugeot sold 103,000 cars through its venture with Dongfeng, up 2 percent from a year earlier. That lagged 22.26 percent sales growth in the country's overall passenger car market. ($1=7.522 Yuan)

SAIC-GM-Wuling Auto's Liuzhou Engine Plant Begins Production

LIUZHOU, China -(Dow Jones)- General Motor Corp.'s (GM) mini-vehicle joint venture in China, SAIC-GM-Wuling Automobile Co., said Wednesday its new engine plant has started production. The CNY2 billion plant, located in Liuzhou, Guangxi Zhuang Autonomous Region in southern China, will have an annual production capacity of 300,000 engines, the company said in a statement. It will make engines for SAIC-GM-Wuling's vehicles.

The plant will enable SAIC-GM-Wuling "to keep up with rising demand for our existing lineup of products," the statement said, citing SAIC-GM-Wuling Vice President and Chief Financial Officer Thomas Drumgoole. "At the same time, it will shorten the development time for new models." In the first half of this year, SAIC-GM-Wuling sold 279,719 vehicles, up 23.1% from the 227,195 vehicles it sold in the same period last year. SAIC-GM-Wuling is a three-way commercial vehicle joint venture between General Motors, SAIC Motor Corp., and Guangxi province-based Wuling Automobile Co.

GM China president's confident automaker can meet 2007 tales target of 1 million

LIUZHOU, China (MarketWatch) -- Kevin Wale, president and managing director of General Motors Corp.'s China Group, said Wednesday he is confident GM will meet its target of 1 million auto sales in China this year.

Wale, speaking at the launch of a new engine plant operated by GM's mini-vehicle joint venture, SAIC-GM-Wuling Automobile Co., said he sees total China industry sales of around 8.5 million autos in 2007.

China's Brilliance Auto to boost export effort after car passes Spain crash test

BEIJING (XFN-ASIA) - Brilliance China Automotive Holdings, the Chinese partner of BMW AG, said it will 'take the chance' to step up efforts tapping into the EU and US markets following a positive result from crash tests performed in Europe.

Brilliance China announced that it's Zhonghua Zunchi car, or the BS6 model, has won three stars in a crash test conducted last week by Spain's Idiada Automotive Technologies SA.

'This is the best performance made by a Chinese home-grown car brand in crash tests carried out in accordance with Euro NCAP regulations,' the auto maker said in a statement.

Brilliance China signed a contract in November last year with HSO Motors Europe, a German importer, for 158,000 BS6 sedans over five years. However, the car failed to pass the German ADAC automobile club crash test earlier this year, winning only one out of a possible five stars.

Brilliance is the only Chinese auto maker to display its own brand of cars at the International Motor Show (IAA) starting this week in Frankfurt.

Shuanghuan IS in Frankfurt

Ladies and gentleman, Karl Schlössl of China Automobile Deutschland with the CEO on their stand in Frankfurt.

At Frankfurt Motor Show, weeding out Chinese knockoffs

International Herald Tribune. FRANKFURT: It is hardly surprising that a car billed as the "ultimate driving machine" would spawn imitators. But for BMW, the Shuanghuan CEO is less a respectful homage than a brazen knockoff.

BMW is going after Shuanghuan, a Chinese carmaker that hopes to break into Europe, on charges that its sport utility vehicle, the CEO, is a copy of BMW's popular SUV, the X5. The German carmaker has filed a lawsuit in Munich to prohibit the sale of the CEO in Germany.

Shuanghuan's European importer defied BMW by exhibiting the car on the first day of the Frankfurt International Motor Show on Tuesday, providing a vivid glimpse of the low-grade war over intellectual property rights between China and the West on goods ranging from designer handbags to computer chips.

"We did not like it," the chief executive of Bayerische Moteren Werke, Norbert Reithofer, said during an interview here.

Neither did DaimlerChrysler, which is taking legal action against Shuanghuan to prevent it from selling the Noble, a little car that bears an uncanny resemblance to the Smart mini-car made by Daimler. The Noble did not turn up at this show, though the importer, China Automobile Deutschland, insists that it has decided on its own not to distribute the car in Germany.

"Naturally, our cars are inspired by European carmakers," said Karl Schlössl, a German who is the chief executive of China Automobile. "But we reject the charge that these are copies."

Schlössl seemed to be reveling in the dispute, which catapulted his Chinese brand from obscurity to center stage at this auto show traditionally dominated by the titans of German auto-making.

At a circus-like news conference, Schlössl refused to speak the name BMW, instead humming it. He spoke of having a southern German accent that would make him at home in the hallways of BMW, based in Munich, and he introduced a tall blonde woman as his companion.

Still, there are serious issues behind the theatrics. Few European executives doubt the Chinese will be genuine competitors here in a few years - perhaps learning faster than the Japanese or the Koreans - despite a bumpy start in the market because of safety concerns with their first cars.

And with the web of alliances between Chinese and Western automakers, there are plenty of opportunities for European innovations to turn up in Chinese cars that are then peddled to Europeans.

General Motors and Honda have accused Chinese carmakers of copying their designs - often slavishly - but have gotten little relief from Chinese courts. Some analysts said the European manufacturers needed to accept copying as the price of doing business in China.

"There are three copies of the Smart," said Graeme Maxton, an independent auto analyst in Hong Kong. "When it comes to body panels, I almost sympathize with the Chinese; it's not that big a deal."

Maxton said Chinese carmakers sometimes copied the exterior of a car from one model, and the interior from another. In the case of the CEO, it is not even clear that the BMW X5 was the only source for the outside. Automobile critics have said that while the rear end of the vehicle is a dead ringer for the X5, the front end is reminiscent of a Toyota Land Cruiser.

BMW emphasized that under the hood, the CEO was no X5. Small wonder: The X5 starts at €59,000, or $86,830, in Europe; the twin turbo diesel model on display here goes for €92,000. Schlössl said the CEO would sell for a base price of €25,900.

"Someone who buys a BMW for €100,000 is not the same person who will look at a CEO," he said.

Still, the Germans are zealous about protecting their image, particularly at a car show held on their home turf.

"I think it's confusing to our customer base," said DaimlerChrysler's chairman, Dieter Zetsche. "Showing a vehicle that looks very similar to a car on our stand raises unnecessary questions." Zetsche said he would consider more litigation against the Noble, the Smart look alike.

DaimlerChrysler and BMW have manufacturing operations in China as well as thriving export franchises, and neither seemed keen on turning the dispute into a broader offensive against China. Zetsche and Reithofer said they believed the Chinese government would protect intellectual property more zealously as their own engineers begin turning out original technology.

But Zetsche acknowledged there were likely to be further such flare-ups, as China develops its industry. "In Asia, in general, the culture does not define copying as something bad or unethical," he said.

For now, the Chinese are struggling with even more basic issues, like designing a car safe enough for European roads. Two other carmakers, Brilliance JinBei Automobile and Landwind, suffered when their cars performed abysmally in crash tests conducted by the German automobile club ADAC.

Landwind stopped selling here temporarily while it retools its cars to improve safety, said Peter Bijvelds, a Dutch car dealer who holds the European distribution license for the brand.

Brilliance, which collaborates with BMW in assembling cars in China, insisted Tuesday that it had improved its safety, though it still received only a middling score in another crash test. It introduced a compact car, the BS2, which could be a low-cost alternative to the Volkswagen Golf.

The vice chairman of Brilliance, He Guohua, said he, too, believed China would regulate intellectual property more strictly in coming years. In any event, he said, his company's cars, which were styled with the help of an Italian design studio, did not rip off any European rivals. "We do our own design work," He said.

China's Brilliance Auto Jan-Aug unit sales up 50.8 pct yr-on-yr

BEIJING (XFN-ASIA) - Brilliance China Automotive Holdings, the Chinese partner of Bayerische Motoren Werke AG (BMW), said it sold 194,000 vehicles in the first eight months to August, up 50.8 pct from a year earlier.

Sales revenue for the eight months period increased 41.9 pct year-on-year to 28.66 bln yuan, with exports surging 64.6 pct to 88.19 mln usd, said Brilliance Auto in a statement.

The company added that it will be the only Chinese automaker to display its own brand of cars at the International Motor Show (IAA) starting this week in Frankfurt, in a move to further expand its overseas market presence.

Brilliance China signed a contract in November last year with HSO Motors Europe, a German importer, for 158,000 Zhonghua-branded sedans over five years.

It also signed a deal with a Russian trade company in March to export 80,000 units of its Jinbei Haice minibus there over the next five years.

The Chinese automaker is currently making efforts to export its Zhonghua Zunchi model, also named the BS6 sedan in Europe, to the US market.

Chinese Lessons: What GM Has Learned in China

Edmunds. SHANGHAI, China — General Motors in China would make a great case study for an MBA student. While GM tries to turn things around in the U.S., its sales are soaring in China, where the automaker surpassed Volkswagen to become No. 1 in passenger car sales.

The contrast between GM China and GM North America is stark — and not lost on top GM executives. Indeed, they smartly are making a case study of their own of GM China to see what valuable lessons translate to other markets.

Here's an outsider's view of what that case study should consider.

A little bit of luck: No question, GM has lucked out. Wise GM executives should recognize some of their good Chinese fortune, indeed, has been luck. Everyone knew China eventually had huge potential; no one knew when it would be realized. Absolutely no one — including GM's analysts — predicted how high vehicle sales would soar in such a short period of time. GM executives in China joke how every single forecast for industry sales and GM's volume and share have been way off the mark. In contrast to its North American forecasts, which have been equally wrong as GM has underperformed in both sales and market share, GM China has enjoyed higher sales and share than predicted.

GM China has ridden the crest of the wave. In 1998, China's total vehicles sales were under 2 million units a year. Last year, they were just shy of 6 million vehicles, and 2006 is expected to be just north of 7 million. No one now doubts that China will be the world's largest market for vehicles in the next decade or so. China currently is GM's second largest market behind the U.S.

Timing is everything: While lucky, GM, at the same time, deserves credit for its timing. In particular, now retired GM Chairman Jack Smith deserves — and receives from current GM management — credit for moving early and fast in China. Smith chose to take the China risk with no guarantee there would be any wave to ride in short order.

Arriving early allowed GM to partner with the best players (see below), grab up sales and market share for a dominant position and earn hefty profits. China has represented a license to print money for early arrivals as profit margins have been hefty due to demand for vehicles far outstripping supply. Those margins now are being squeezed as competition intensifies.

Solid partnerships: Latecomers have been forced to partner with also-rans, and they have not enjoyed GM's success. Chinese law requires that a foreign automobile manufacturer operate in China under a joint venture agreement with a local manufacturer. GM gained a solid partner with Shanghai Automotive Industries Corp. (SAIC), China's largest auto manufacturer, which also partners with others, including Volkswagen.

GM has had the luck of a crap shoot with many global partners. Failures include the costly Fiat fiasco and largely unfruitful Subaru affiliation. But partnerships related to China have operated well. In part, success appears to be due to the fact that the partnerships have been allowed to flourish and develop a life of their own rather than either partner gaining the upper hand.

In addition to SAIC, GM formed a three-way venture with SAIC China's Wuling that has been awesomely beneficial. The venture is No. 1 in the mini truck market with sales soaring by double-digit annual increases; they are now at more than 400,000 vehicles a year. The big seller is the Wuling Sunshine, a boxy, vanlike vehicle that starts at under $5,000 U.S.

Further, GM China has capitalized on its non-China ventures, including GMDAT, the new entity formed from the ashes of South Korea's Daewoo. The venture has provided critically needed small cars in China as well as other markets.

Fast and furious: With the foundation laid, GM, notoriously slow-moving, has traveled at light speed in China.

In 1998, GM had a single assembly facility to build a single model, the Buick Regal. GM sales that year were about 61,000 Regals.

Today, GM China sells five brands — Buick, Cadillac, Chevrolet, Opel, Saab and Wuling — more than 30 models with sales forecasted at nearly 864,000 vehicles this year. In China GM has eight vehicle assembly plants, three powertrain facilities, an engineering and design center, an automotive financing arm and some of its supplier operations, like AC Delco and Allison transmission. GM employs more than 20,000 people in China.

Part of the success for its lightning speed in China has been support without meddling from corporate headquarters. Further, China's Wild West environment has forced new business methods. Troy Clarke, now president of GM North America who previously headed GM's Asia-Pacific region, said decision-making there is fast and different compared with GM North America. Here, decision-making relies on the meeting calendar. Everyone gets together, they discuss (likely endlessly) and then decisions are made. Clarke noted such meetings are impossible in the far-flung Asia-Pacific region. So they are made in series through phone calls, which result in quicker decisions.

Thinking global, acting local: GM has capitalized on its global capabilities, but applied them locally. The Cadillac SLS, introduced at the recent Beijing auto show, addresses the needs of the Chinese market for a roomy, luxurious backseat for chauffeur-driven riders. The SLS is a stretched version of the STS. Same, too, for the Buick LaCrosse. Both were designed and engineered largely in China (the LaCrosse) or with heavy influence from China (the SLS). In the same vein, GM China has been able to take vehicles from other markets and create new niches, addressing a specific need in China.

GM China appears to be doing a better job of truly listening to customers and partnering with dealers as well as doing more with less than GM North America has.

WARNING: But dangers are arising on GM's Chinese horizon. Indeed, GM executives acknowledge that major challenges confront them: increased competition with virtually every automaker in the world doing business in China; additional vehicle price reductions that further squeeze profit margins; government changing regulations on short notice and seemingly at whim; and managing its own size and complexity of its China operations.

In addition, here's what an outsider sees as dangers. It's brilliant that GM is bringing executives from other global operations to China, presumably to learn. What GM China needs to guard against is executives bringing in their cronies who may not be best suited for the job or execs who are not open-minded to learning from the Chinese and smother the Chinese with their way of doing things.

Clarke relates the tale of his first visit to GMDAT in Korea. With a background in the metal part of the auto business, Clarke immediately recognized how the Koreans' body-in-white process represented a best practice standard that should be spread throughout GM. He told headquarters, which sent a half-dozen people. They must have been of the notoriously GM "not invented here" variety since Clarke noted: "They apparently forgot everything they'd seen on the flight home, because nothing happened." Clarke was persistent. Six more came and then the top dogs. Finally, the new practice was adopted.

Too much of many things could be a downfall for GM China: too much attention, i.e. meddling, dictates, etc. from headquarters; too much production capacity; too many brands; too many dealers. All have been downfalls for GM North America.

So the lessons go both ways. GM China needs to learn from the lessons of GM North America and steer clear of them. And, so far, that seems to be the case as GM China appears to be moving carefully and wisely. Indeed, if GM China suffers the same pitfalls as GM North America did, it'll see its Chinese fortune cookie crumble.

Auto sales up 25% in 1st eight months

Xinhua. BEIJING - China's motor vehicle industry continues to grow rapidly, with both production and sales rising by around 25 percent in the first eight months of this year.

Sources with the China Association of Automobile Manufacturers said on Tuesday that between January and August, 5.69 million motor vehicles were sold nationwide, a growth of 24.95 percent year-on-year. Production was up 23.57 percent to 5.75 million for the period.

In August alone, 481,300 passenger vehicles were sold nationwide, up 5.29 percent on the previous month, or 26.77 percent on the same month of last year. The total included 357,400 cars, up 7.3 percent month-on-month, or 28.4 percent year-on-year.

Meanwhile, 190,300 vehicles for commercial purposes were sold nationwide, up 26.75 percent over the year-earlier level.

In terms of car sales, Shanghai Volkswagen ranked first for the second consecutive month in August, with a sales volume of 42,518 cars, up 65.72 percent.

It was followed by FAW Volkswagen with a sales volume of 42,460 cars, up 46.62 percent.

Shanghai General Motors came the third, with a sales volume of 39,662 cars, up 51.58 percent.

Market observers attributed the higher-than-expected growth in car sales to increasing demand and credit purchases as inflation rises.

Of course we'll be at Frankfurt - Shuanghuan sais

Frankfurt, Germany - Chinese automaker Shuanghuan's all-wheel-drive CEO will be on display at the Frankfurt auto show despite a complaint from BMW that it is a copy of its X5 SUV.

Shuanghuan importer China Automobile Deutschland chief executive Karl Schloessl said in a TV interview: "Of course we are coming to the show. We will display the CEO and will not let ourselves be intimidated."

Today is the first of the media preview days. The show will open to the public on Thursday.

BMW said on Friday it had launched legal proceedings against the importer; it claims the CEO is a copy of the previous-generation BMW X5.

Another disputed Shuanghuan model, the Noble, which DaimlerChrysler has said is a copy of its Smart city car, was not to be shown, however.

Schloessl said Shuanghuan had not yet applied for a patent in Europe and the car was therefore not protected.

DaimlerBenz has also threatened legal proceedings if the car is shown at the Frankfurt auto show.

If the German carmakers shut down China Automobile Deutschland's stand in Frankfurt it would be the first such incident in the history of the show. - AFP

Toyota Considering China Plant Expansion

Toyota Motor Corp says it might need to expand its manufacturing facilities in China to meet higher demand. Toyota Executive Vice President Mitsuo Kinoshita hinted at the expansion plans during a New York investor conference. “We would like to increase our production capacity in China,” he said, including the “possibility of a new plant.”

In June, Toyota began building its seventh factory in China. The new facility would support Toyota's hope of reaching 10 percent of China's auto market. Auto demand in China has been rising about nine times faster than that in the United States.

The role of international managers (China Daily on Murtaugh)

Everybody, including me, expected China Daily (=Chinese government) to be furious about Murtaugh's departure from SAIC. Instead, they are more critical about the failure of Chinese companies to hire and keep foreign managers. Sense of reality? Read on...

The London Financial Times is right in describing the departure of Phil Murtaugh, former vice-president of Shanghai Automative Industrial Corporation (SAIC), as a "blow" to the Chinese company.

Murtaugh is joining Chrysler, taken over by Cerberus Capital management last month, to be the new head of its Asian operations. The announcement came only one day after Chrysler enlisted Toyota's former North American head to join its senior management team.

But what about SAIC, China's largest carmaker? What will happen, in particular, to its ambitious international plans? Business observers are eager to learn from SAIC's executive team about the necessary adjustments it is going to make.

Rarely does one person's change of job arouse so much interest. It shows how rules in the world of business have changed.

A successful regional operation, especially in a rapidly growing area of global business, can be more important for an international company than many of its other operations.

Extensive regional expertise, which Murtaugh gained from heading GM's China operations in the 1990s and from facilitating SAIC's buying of some of the assets of the British company, Rover, two years ago, and managing its investment interests in the South Korea carmaker Ssangyong, will be strategically important for a company that is considerably weak in its Asian operations.

But what can SAIC learn from this development? It has nothing to regret, of course. It did the right thing. By hiring a professional it made much progress in building up its business. As reported widely in the Chinese language press, it may be close to a merger deal with Nanjing Automotive by relying on the strength it has gained from its acquisition of Rover's assets.

If the company had one team of international executives, instead of just one, it would perhaps be doing even better in international expansion.

This year has been an auspicious one, due to capital market fluctuations and the cheap dollar, for foreign companies, including those from developing countries, to buy assets in the United States. The Indians and Arabs are doing it.

However, few Chinese companies, especially the private ones, are seen to be as active as their counterparts in other parts of Asia.

One reason is that Chinese companies do not usually have a team of international managers. Few of them have high-profile foreign executives as SAIC, a State-owned enterprise, once had.

Indeed, except for Lenovo, China's largest computer manufacturer, very little has been heard from the companies that are operating overseas about their international management teams.

The most incomprehensible case may be TCL, one of China's largest television and home appliance makers with its headquarters in South China's Pearl River Delta.

Ever since its acquisition of some French corporate assets (supposedly useful for expanding into the EU market), the company has yet to report any progress in building up its international team. The information that it has given to the public so far, other than discouraging financial figures, is about frequent changes to its Chinese executive team.

To compete in the global market, Chinese companies need to learn to keep not just one or two, but hundreds or thousands of international managers.

China says auto overcapacity getting more serious

Reuters. Overcapacity in China's automobile industry is getting more serious and investment is growing excessively, state media reported on Sunday.

China's auto parts industry was a laggard, however, and unable to compete in the global supply chain due to its small scale, Xinhua News Agency said, quoting Zhang Guobao, vice chairman of the National Development & Reform Commission.

China, the world's second-largest vehicle market, now has capacity to produce more than 10-million units a year and the overcapacity problem has been accumulating, Zhang said.

In 2007, China's vehicle sales and output were expected to surpass nine million, up a quarter from 2006, Chinese media reported on Saturday, reaching a goal originally set by the government for 2010.

China's vehicle output jumped an average of 26 percent each year from 2001 and 2006, official data showed.

Global giants including General Motors Corp and Toyota Motor Corp are among the main investors in the industry boom.

China's auto output, sales both to hit record 9m units in 2007

China's auto output and sales are both expected to hit a record 9 million units this year, said Zhang Xiaoyu, vice president of the China Machinery Industry Federation.

The figure, compared with a previous prediction of 8.5 million, would enable China to reach its auto production and sales targets for the 2006-2010 period three years in advance, said Zhang.

China's muscle-flexing and exhaust-emitting auto industry maintained strong momentum in the past five years, with output soaring an annual average of 26 percent.

Last year China surpassed Japan to become the world's No. 2 auto market, with total sales of 7.2 million vehicles and output of 7.3 million.

The country produced 4.5 million vehicles in the first half of 2007, up 22.4 percent on the same period of last year, while sales rose 23.3 percent to 4.4 million, according to the China Association of Automobile Manufacturers.

Iran-China joint auto confab opens

Iran Press TV. The 2nd Iran-China Automobile Industry Cooperation Forum has opened in Tianjin, China to introduce the possibilities of Iran's auto industry.

The two-day forum opened on Monday with an inaugural message by Iran's Ambassador to Beijing, Javad Mansouri.

A number of representatives from Iranian and Chinese auto industries are expected to exchange views on ways to expand bilateral cooperation.

On the sidelines of the conference, an exhibition of the auto industries of several countries, including Iran, opened in Tianjin Saturday.

Iran Khodro, Iran's leading vehicle maker, is participating at the show in Tianjin located 120 kilometers from China's capital, Beijing.

The company is displaying various models, including Samand Sarir, Samand LX and Peugeot 206 SD in the exhibition.

Bajaj Auto still scouting for 'right partner' for China

Dalian, Sept. 9 (PTI): Bajaj Auto has not yet decided on its car venture in India and is still scouting for a "right partner" to enter the Chinese market for two and three-wheelers, a senior company executive has said.

"We have talked to a few players over the last couple of years," Executive Director of Bajaj Auto Limited, Sanjiv Bajaj said here on the sidelines of the Inaugural Annual Meeting of the New Champions held here in the northeast Chinese port city.

"We know it is important to find a good local partner in China, one who can think long-term and as the same way as us," Bajaj said, indicating that the Pune-based company would be choosy in finding the right match in China.

"We are looking to build a high-quality business in China. We have not yet found someone," he said. "We will enter China at the right time when we find a right partner," he added. Bajaj said that they are sourcing alloy wheel for the motorcycles in China.

"On the other hand, some Chinese companies have copied some of our motorcycles infringing our design rights in Sri Lanka," he said, stressing that the company has filed a case in a Sri Lankan court and won the case.

The Chinese company, Taian Chiran Machinery Co had copied the design of one of Bajaj's most popular motorcycle models, Pulsar.

"We have seen copies of that in Sri Lanka. We took legal action in Sri Lanka and won the case," he said. Bajaj said the company is the two-wheeler segment and also the three-wheeler market in China.

"We look at both. In many markets, we are selling two-wheelers and three wheelers. It depends on the market if the products can sell well," he said.

The two-wheeler segment is the company's prime focus as the range is new, it is modern and competitive. "That is what we first look at," he added.

In recent years, Bajaj Auto has entered a number of other large foreign markets like Indonesia, Nigeria and Iran. The company has also further enhanced its presence in Sri Lanka, Egypt, Columbia and Mexico, Bajaj said.

Asked about the proposed four-wheeler auto venture in India, he said "nothing right now." "We are looking at alternatives. But nothing fixed right now," Bajaj added.

Road rage in the West as copycat cars from China start to make their marque overseas

The Independent. They're inspired by the big brands and now, amid legal threats, cheap models from the likes of Shuanghuan are taking on the originals

When the Frankfurt Motor Show opens on Thursday, it will not be the glittering new cars from Europe, Japan and the US that attract the most attention; hogging the headlights will be the motor manufacturers of China.

Their latest models are accused of copying the world's finest. Shuanghuan's Ufo off-roader does bear some resemblance to Toyota's Rav4, its lar-ger Ceo has a distinct whiff of the BMW X5, and its Noble makes the Smart Fortwo seem not quite so unique.

"If a car suddenly appears that looks like a Smart, yet is not one but a copy which was produced not quite legally, then that is not great," observed German Chancellor Angela Merkel, noting that Chinese product piracy "is a relatively big issue".

The world's car companies – particularly in Germany – are less diplomatic. A BMW spokesman said: "We are looking at taking legal measures. This is the first time that this has happened."

Mark Binder, a Smart spokesman, said: "We saw the Shuanghuan vehicle at Auto Shanghai ... It is a blatant attempt to copy the design of the Smart Fortwo. We reserve the right to pursue legal action – also with regard to a possible exhibition of the car at the Frankfurt motor show."

Meanwhile, DaimlerChrysler, Smart's parent company, is outraged the Noble is to be distributed in Europe.

"Some car distributors wanted to take our cars to the show but we have not allowed that," a Shuanghuan spokesman said. "The Noble and Ceo cars, approved by the Chinese government, are legal products."

Shuanghuan insists there is no case to answer and that the car industry depends on copying technology to make progress. Perhaps that explains the similarity of its Laibao SR-V to the Honda CR-V, which did lead to successful court action in China. Honda has fought dozens of similar legal battles to protect its designs and patents.

Shuanghuan is not alone in finding inspiration elsewhere. The Hongqi HQD bears the stature of the Rolls-Royce Phantom, while the Geely's Merry seems to imitate the Mercedes-Benz C-Class.

GM, the largest car maker in China through two joint ventures, claims its Spark has been very precisely copied by Chery's QQ. Their doors are said to be interchangeable. Yet GM has still to find help from China's courts. Meanwhile, the QQ is undercutting and outselling the Spark.

In truth, none of the world's largest motor companies can take too hard a line on China.

Rick Wagoner, chief executive of GM, said: "We've gone in China from almost no sales, 10 or 12 years ago, to this year [when] ... we'll sell more than a million units. And it's been a good, profitable business too."

China is the world's second- largest and fastest-growing car market, its production of 5.2 million vehicles in 2006 exceeding that of the US, having increased 16-fold in a decade. Billions of pounds are being invested by overseas groups and some 140 new cars are to be launched this year. All the leading car makers now have one or more local joint ventures. You can even buy a Chinese-built Series 5 BMW.

Eric Thun of Said Business School, Oxford, an expert on the Chinese motor industry, identifies two key weaknesses: "Process skills they learn from working with foreign groups; design skills will take a long time. Right now, there is no Chinese company able to develop its own vehicles. Copying is a short-term solution which works in the domestic market."

China already insists on a high level of local content, so ensuring the creation of a thriving, indeed crowded, indigenous industry. The market share of domestic brands has risen to 25 per cent from 10 per cent within a year.

Yet because of fierce domestic competition and small margins, these companies are being forced to export to make money. As a result, cheap, robust and simple Chinese cars are already successfully finding customers in Russia, the Far East and Africa.

Nevertheless, the car majors clearly fear China will soon create a great national champion and export seriously, using technological expertise gained from joint ventures, licensing agreements or inspired guesswork.

Small wonder that the car majors react strongly when Chinese companies enter their domestic markets with copies.

Karl Schlössel who imports Chinese cars into Germany, including the Ceo, is surprised: "My God, I can understand the anger but it had to happen one day. [The attacks from] BMW astounded us. The Ceo is on the road for three years – it is available in Portugal, Spain and Russia – and then BMW wakes up and says we face competition and product confusion.

"From a car that costs one third of their price?" Mr Schlössel admits it will soon be possible to export Chinese small cars and offer them extremely cheaply, considerably undercutting European manufacturers.

The British car industry is more than just an onlooker. Our last domestic mass-car pro-ducer, Rover, was broken up and acquired by Shanghai Automotive Industry Corporation and Nanjing Auto. The Chinese versions of the MG sports car and the Rover 75 (now called the "Roewe 750") are already in production and on the streets of China. Yet SAIC also retained Rover's British design centre.

Mr Thun pointed out: "They are using British engineers, along with engineers in Shanghai and Korea, to create an independent design capability."

Tiny Chinese electric car plugs into a wall outlet

The Saginav News. The FlyBo has landed.

Great Lakes Auto Sales in Saginaw will begin selling the miniature Chinese electric "neighborhood vehicle" in the next couple weeks.

Owner Dave LaTarte Sr. said licensing negotiations with the distributor of the car held up its arrival.

We hoped to have them on the lot this summer, but it didn't work out," he said.

"It's a great little car for running errands, making quick trips around town," or for college campus ground crews and similar occupations.

The FlyBo starts at $10,000 and runs for up to 70 miles before needing a recharge. Plug it into any ordinary household electrical outlet for two hours, and it's ready again to cruise along at 25 mph.

The Jinan FlyBo Motor Co. of China produces the two-passenger car, but LaTarte is the only dealer in Michigan carrying the fuel-savers, he said. A drawback to the car -- which uses dashboard forward and reverse push buttons -- is it is rear-wheel drive only.

"I wouldn't drive it in the winter when the snow's on the ground," LaTarte said, "but it's not made for that, anyway."

Another electric car on sales lots in Saginaw County is the GEM, sold at Schaefer & Bierlein Chrysler Dodge Jeep, 1015 Weiss, in Frankenmuth.

A typical two-seater costs $8,000, travels up to 25 mph and needs recharging every 30 miles or so. The front-wheel drive auto is about the same size as the FlyBo.

A 48-volt electric motor powers FlyBo, which has a 71-inch wheelbase and is about the size of a golf cart.

With regular gasoline prices topping $3 a gallon several times this summer, staff at Great Lakes Auto said they've had dozens of budget-conscious motorists inquire about the FlyBo.

The LaTartes plan to have at least 14 of the cars in stock at their lot at 2205 N. Michigan in the days ahead.

"With the way gas prices are," said salesman Daniel LaTarte, "these cars make sense."

Fiat's unit Magneti Marelli in gearbox component jv deal with China's Chery

MILAN (Thomson Financial) - Fiat SpA said its component unit Magneti Marelli has reached an agreement with China's Chery Automobile Co Ltd to set up a joint venture to produce hydraulic gearbox components in China.

Under the agreement, Magneti Marelli will hold a majority stake in the joint venture, which will supply Chery with components for automated manual transmission (AMT) systems, it said.

'The deal has a particular strategic relevance because automatic gearboxes, using different technologies, start to be requested by the public,' said Magneti Marelli CEO Eugenio Razelli.

'Magneti Marelli's AMT technology is a competitive technology, thanks to its price/performance advantage for the Chinese market and its capacity to reduce consumption and emissions,' he said.

The venture is seen operational in the Spring of 2008, the company said.

AMT is an electric/hydraulic mechanism that automates a manual gearbox with lower costs compared to traditional automatic gearboxes, it said.

Murtaugh quits China's SAIC to join Chrysler

SHANGHAI, Sept 7 (Reuters) - Phil Murtaugh, an American veteran of China's auto industry, has left the biggest Chinese car maker to join U.S. auto giant Chrysler LLC as chief executive of its Asian operations, the companies said on Friday.

Murtaugh will be responsible for Chrysler's operations throughout the region, including China and India, Chrysler said in a statement, describing Asia as "critical" for its growth.

DaimlerChrysler sold off a majority stake in the U.S company to Cerberus Capital Management in May.

In July, Chrysler signed a deal with Chery Automobile Co, China's fourth largest auto maker, to build small cars under the Chrysler brand for sale in the United States and elsewhere.

Murtaugh resigned from the post of executive vice president at SAIC Motor, where he had worked since June 2006.

SAIC Motor, previously known as Shanghai Automotive Co, said it appreciated Murtaugh's contribution to the company, which has two major joint ventures making cars in China with General Motors (GM.N: Quote, Profile, Research) and Volkswagen (VOWG.DE: Quote, Profile, Research).

Murtaugh joined SAIC after unexpectedly quitting his previous position as General Motors' China chief.

Ford executive: Company considering third plant in China

NEW YORK (Dow Jones)--A top Ford Motor Co.executive said Thursday that the U.S. auto maker is considering a third plant for China as it aims to harness continued growth in Asia. Phil Horlock, Ford's Controller in Corporate Finance, told the Credit Suisse automotive conference that the company is on target to open a new plant in Nanjing later this year and is already turning its attention to a third site. Ford has a seperate assembly plant in Chongqing, which began production in 2003.

Horlock's speech was broadcast on the Internet. He did not give details of the China expansion during his speech. During his presentation, Horlock noted Ford's sales in China grew 90% in 2006 and rose 22% in the first half. The company produces several products in China aimed at meeting growing vehicle demand there, including the Focus and Mondeo sedans.

FAW Group Aug auto sales up 19.4 pct yr-on-yr at 117,000 vehicles

BEIJING (XFN-ASIA) - FAW Group Corp, one of China's largest automakers, said it sold 117,000 vehicles in August, up 19.4 pct year-on-year.

In a statement, the company said sedan sales for the month stood at 94,000 units, up 23.9 pct from a year earlier, while sales of medium and heavy-duty trucks rose 24.7 pct to 11,000. It did not provide details for the balance of the vehicles sold.

FAW VW, its 50-50 sedan joint venture with Volkswagen AG, sold 42,460 cars in August, according to the FAW Group although it did not provide year-on-year comparative figures. In the first eight months of the year, the venture's sales surged 42.3 pct to 303,000.

In the eight months to August, FAW Group had total auto sales growth of 23.6 pct year-on-year at 926,000 units, with sedan sales up 25.3 pct at 723,000. Sales of medium and heavy-duty trucks grew 48.4 pct at 112,000.

The group is projecting total auto sales in 2007 of over 1.4 mln units.

Hino Motors to set up new auto project in China

Hindustan Times. China has approved a joint venture between Japan's Hino Motors and Guangzhou Automobile Group for setting up the country's one of the largest production bases for commercial vehicles.

The joint venture, which will be launched in October, will target medium- and high-end business automobile market, media reports said.

The National Development and Reform Commission, the country's top planning body, has approved the establishment of the joint venture in August, with a cooperating term of 30 years, Shanghai Securities News reported.

According to the joint venture plan, gross investment in the project will exceed 3.1 billion yuan (USD408 million), with a registered capital of 1.5 billion yuan.

The joint venture will build a new factory in Aotou Township of Conghua city. The factory will also include a research and development centre.

Hino Motors is a member of the Toyota Group, which holds a controlling stake in the company. The new project is the second major cooperation between Guangzhou Automobile and Toyota since the two companies started to build an engine joint venture in 2004.

Several popular models of Hino Motors will be introduced. The annual output capacity of the new project will be 20,000 heavy trucks, 25,000 engines and 30,000 light trucks.

An official with the Guangzhou government said that auto industry has become the south China city's pillar industry, ranking the second in terms of revenue. Between 2000 and 2006, the output value of Guangzhou's motor industry has risen from 12.43 billion Yuan to 116.82 billion Yuan.Send FeedbackNumber of votes cast: 1 Current Rating| Current Rating|

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