Chinas automobile industry has been in rapid development since the early 1990s. Chinas annual automobile production capacity first exceeded one million in 1992. By 2000, China was producing over two million vehicles. After Chinas entry into the World Trade Organization (WTO) in 2001, the development of the automobile market further accelerated. Between 2002 and 2007, Chinas national automobile market grew by an average 21 percent, or one million vehicles year-on-year. In 2006, China’s vehicle production capacity successively exceeded six, then seven million, and in 2007, China produced over eight million automobiles.^[5] In 2009, China surpassed the United States as the worlds largest automobile producer by volume. In 2010, both sales and production topped 18 million units, with 13.76 million passenger cars delivered, in each case the largest by any nation in history.^[6]

The number of registered cars, buses, vans, and trucks on the road in China reached 62 million in 2009, and is expected to exceed 200 million by 2020.^[7] The consultancy McKinsey & Company estimates that Chinas car market will grow tenfold between 2005 and 2030.^[8]

The main industry group for the Chinese automotive industry is the China Association of Automobile Manufacturers (中国汽车工业协会).

History

1928 to 1949

• Zhang Xueliang founded his arsenal to make one truck called Ming Sheng in 1931
• Another general, Yang Hucheng, patronized the inventor Tang Zhongming to make a new type of mobile energized by charcoal.

1949 to 1980

• 1956: First Automobile Works The first car Jiefang CA-30 began production of a modern automobile plant.^[9]
• March 10, 1958: The first 2½ ton light duty truck (NJ130), which was based on Russian GAZ-51, was produced in Nanjing. The truck was named Yuejin (meaning "leap forward") by Chinas First Ministry of Industrial Machinery.
• June 1958: Nanjing Automobile Works, previously a vehicle servicing unit of the Army, was established. The truck production continued until the last truck (NJ134) rolled off the assembly line on July 9, 1987. Cumulative production was 161,988 units (including models NJ130, NJ230, NJ135 and NJ134).
• late 1950s to 1960s: Several automobile factories were set up in Nanjing (today is Nanjing Automobile (Group) Corporation), Shanghai (today is Shanghai Automotive Industry Corporation), Jinan (evolving into China National Heavy Duty Truck Group), and Beijing (today is Beijing Automotive Industry Holding Corporation).
• 1968: The Second Automobile Works (later Dongfeng Motor Corporation) was founded.

1980 to 1990

The passenger car industry was a minor part of vehicle production during the first three decades of China’s socialist economy. As late as 1985, the country produced a total of only 5,200 cars. To announce that the desire for consumer goods was no longer politically suspect and stimulate personal spending, while also advertising the opening of the Chinese market to foreign producers, a fabricated news story about Chinas first peasant to own a car was distributed across the world.^[10] Sun Guiying, a chicken farmer from near Beijing was touted has having purchased a silver Toyota Publica with her earnings.^[11] While the article was largely fraudulent (Mrs. Guiying did not know how to drive, and her husband was a senior official rather than a peasant),^[12] the message came across loud and clear. Car sales shot through the roof, although they were almost entirely purchased by danweis (work units - private car ownership was virtually unknown at the time, in spite of the Sun Guiying story).^[13]

As domestic production was very limited, import totals rose dramatically, despite a 260 per cent import duty on foreign vehicles. Before 1984, the dominant exporter of cars to China had been the Soviet Union. In 1984, Japans vehicle exports to China increased sevenfold (from 10,800 to 85,000) and by mid-1985 China had become Japans second biggest export market after the US.^[14] The country spent some $3 billion to import more than 350,000 vehicles (including 106,000 cars and 111,000 trucks) in 1985 alone. Three taxi companies in particular thirsted for Japanese cars, such as Toyota Crowns and Nissan Bluebirds.^[15]

As this spending binge began to lead to a severe trade deficit, the Chinese leadership put on the brakes, both through propaganda efforts and by making foreign exchange much less accessible.^[16] Customs duties on imported goods were raised in March 1985 and a new "regulatory tax" was added a little later. In September 1985 a two-year moratorium on nearly all vehicle imports was imposed.^[16]

While limiting imports, China also tried to increase local production by boosting the various existing joint-venture passenger car production agreements, as well as adding new ones. In 1983, American Motors Corporation (AMC, later acquired by Chrysler Corporation) signed a 20-year contract to produce their Jeep-model vehicles in Beijing. The following year, Germany’s Volkswagen signed a 25-year contract to make passenger cars in Shanghai, and France’s Peugeot agreed to another passenger car project to make vehicles in the prosperous southern city of Guangzhou.^[15] These early joint ventures did not allow the Chinese to borrowing much foreign technology, as knock-down kit assembly made up the majority of manufacturing activities;^[17] tooling may not have been allowed to slip past borders.

Three big joint-ventures and three small joint-ventures:

• Shanghai Automotive Industry Corporation - Volkswagen: Santana mid-size/compact car.
• First Automobile Works - Volkswagen: Volkswagen Jetta compact car.
• Dongfeng Motor Corporation - Citroën: Citroën Fukang compact car.

• Beijing Automotive Industry - Hyundai Motor - DaimlerChrysler: Jeep Cherokee (XJ).
• Guangzhou Automobile Industry Group - Peugeot : Peugeot 504 (subsequently defunct). However, in the nineties, Honda replaced Peugeot as the partner of Guangzhou Auto, and began producing the Accord and later the Fit with huge success. In 2006, it started to manufacture Toyota Camry, also with considerable success. Guangdong province is now the center of the manufacturing of Japanese makes in China.
• Tianjin Automotive Industry - Daihatsu : Daihatsu Charade (since merged with FAW/Toyota joint-venture).

1990 to present

Several enterprises entered the automobile industry since 1994. Some of them are originated from defense industry, such as Changan Motors, Changhe, and Hafei Motor; some were developed from old state-owned companies, such as BYD Auto, Brilliance China Auto, Chery Automobile, and Changfeng Automobile. Others are private-owned companies, such as Geely Automobile and Great Wall Motors.

Sectors

China had a total of 6,322 automotive enterprises as of the end of November 2006.^{[citation needed]} The total output value of the automotive sector for the first three quarters of 2006 was US$143 billion^{[citation needed]}. As incomes increase the high annual growth rate of private ownership is expected to accelerate.

Automobile production

China surpassed Japan to become the worlds second-largest vehicle market in 2006, and passed the United States to become the largest in 2009.^{[citation needed]} This growth is spurring demand for automotive parts, services, and after-care products. China is presently capable of manufacturing a complete line of automobile products and large automotive enterprises. Major domestic firms include the China First Automobile Group Corp. (FAW), Dongfeng Motor Corp. (DMC) and Shanghai Automotive Industry (Group) Corp. (SAIC).

Alternate fuel vehicles

China encourages the development of clean and fuel efficient vehicles in an effort to sustain continued growth of the country’s automobile industry (see Fuel economy in automobiles). By the end of 2007, China plans to reduce the average fuel consumption per 100 km for all types of vehicles by 10%. The proportion of vehicles burning alternate fuel will be increased to help optimize the countrys energy consumption. Priority will be given to facilitating the research and development of electric and hybrid vehicles as well as alternate fuel vehicles, especially CNG/LNG. Major cities like Beijing and Shanghai already require Euro III emission standards.In 2009,Beijing will be the first city to require GUO IV emission standards(Euro IV emission standards).

Electric vehicles

The Chinese Automotive Industry Plan, announced on the main Web site of Chinas central government, said China aims to create capacity to produce 500,000 "new energy" vehicles, such as battery electric cars and plug-in hybrid vehicles. The plan aims to increase sales of such new-energy cars to account for about 5% of Chinas passenger vehicle sales.^[18] At the 2010 Beijing Motor Show, more than 20 electric vehicles were on display, most of which came from native automakers. As of May 2010, at least 10 all-electric models have been reported to be on track for volume-production.^[19] The first mass produced plug-in hybrid car (BYD F3DM), all-electric minivan (Luxgen 7 MPV EV) and all-electric long-range bus (500 km range Zonda Bus) are Chinese.

China subsidies oil^[20] and some Chinese automakers see opportunities in less mature electric vehicles because Western companies have yet to develop much of a lead in the technology.^[21][22]

Auto parts

Currently auto parts and accessories enjoy lower levels of tariffs than cars (the average tariff is 10-13% for parts/accessories and 25% for cars). China has agreed to lower tariffs on imported auto parts and accessories to 10%. Although this difference in duty rate was initially responsible for an increase in motorcycle and car kit imports, the loophole has been tightened. Now, only replacement parts and accessories enter China under the lower duty level.

Used motor vehicles and used/refurbished auto parts

Used cars can be imported to China although some restrictions apply. Refurbished heavy construction equipment can be imported with a special permit. Used and refurbished auto parts are not allowed to be imported into China.

Automotive after-sales products and services

Although improvements have been made in this field in the past decade, Chinas after-sales products and services still lag far behind those of developed countries. However, WTO commitments have brought about significant changes in the after-sale market. China’s aftercare market now faces the following challenges:

• Establishing an information feedback system with end-users in order to improve service;
• Modernizing outdated sales systems;
• Increasing the competitiveness of domestic auto parts, accessories and aftermarket kits;
• Clamping down on counterfeit products.

Car dealerships

In China, authorized car dealership are called 4S car shops. The 4S represents Sale, Sparepart, Service and Survey. 整车销售(Sale)、零配件(Sparepart)、售后服务(Service)、信息反馈(Survey).

In most cases, brand-name new cars can be purchased only from 4S shops. For new cars in high demand, a high premium is added for instant delivery or just placing an order.

The profit of car dealers in China is quite high comparing to the rest of the world, in most cases 10%. This is due to the non-transparent invoice price as announced by manufactures and to the premiums they charge for quick delivery. Due to the lack of knowledge for most customers, dealers can sell add-ons at much higher prices than the aftermarket.

There is no regulation by either the government or associations.

Production data

Domestic manufacturers

Foreign manufacturers

Parts of this article (those related to section) are outdated. Please update this article to reflect recent events or newly available information. Please see the talk page for more information. (November 2010)

In 2005, 5,707,688 motor vehicles were manufactured in China. The following 13 foreign makers have joint venture factories, with local partners, in China.

Toyota

Currently Toyota is the only company making hybrids in China. It sold 2,000 in 2006.

Nissan

Honda

Suzuki

Mazda

Daihatsu

Mitsubishi

FIAT

Isuzu

Ford

General Motors

PSA Peugeot-Citroën

Volkswagen

Controversies

Some of Chinese cars makers have been accused of copying designs of other companies.^[23]

BYD

A BYD coupé (left) an_d a Mercedes-Benz CLK (right).

Some BYD cars may look similar to those of other bran_ds including Lexus,^[24] Toyota,^[25] Honda,^[26] Mercedes Benz,^[27] an_d Porsche.^[28] For example, the BYD S8 bears similarity to the Mercedes CLK from the front, an_d the Renault Megane CC or third generation Chrysler Sebring convertible from the rear.^[29]

An anonymous staff member at Honda claimed that the BYD F3 was "a known copy" of the Toyota Corolla (with Honda Fit design cues).^[30] Another model too, the BYD F1, has been described by an industry observer as "a clear copy" - this one of the Toyota Aygo.^[31]

Domestic dealerships have been known to take advantage of this an_d replace the badging of BYD vehicles with those of other car manufacturers, including Toyota.^[30] Micheal Austin, vice president of BYD America, has acknowledged the issue saying that the practices done by dealers (which are franchised) has made BYD "uncomfortable".^[30] Even the US government has critiqued BYDs practices, with a WikiLeaked document from the US Consul-General to Guangzhou (Brian Goldbeck) referring to BYDs practice of copying in a document entitled "BYD seeks to Build Your Dreams -- based on Someone Elses Designs".^[30]

Chery

The Chery QQ (left) an_d Daewoo Matiz (right).

In June, 2003, General Motors, a U.S. company, sued Chery, accusing the Chinese manufacturer of copying the first generation Daewoo Matiz (developed by GM Korea) with the design for the Chery QQ.^[32] General Motors then went on to accuse Chery of using a Matiz in a crash test for the Chery QQ.^[32]

GM executives claimed design duplication,^[33] which may extend to interchangeable parts,^[34] an_d GM China Group stated the two vehicles, "shared remarkably identical body structure, exterior design, interior design an_d key components."^[33]

After mediation attempts failed, GM Daewoo brought a case against Chery in a Shanghai court, but by 2005 jurisdiction had been moved^[34] to the Beijing No.1 Intermediate Peoples Court.^[35]

Around that time Chinese state officials, including a vice-minister of commerce an_d a vice-director of the State Intellectual Property Office, publicly supported Chery.^[35] It was suggested that GM may have not patented its technology.^[35] In late 2005 the lawsuit was settled.^[32]

Great Wall Motor

The Great Wall Peri (left) an_d Fiat Pan_da (right).

Fiat company has claimed that a Great Wall A-segment car, the Peri (Jing Ling in China), is a copy of its 2nd-generation Fiat Pan_da.^[36]

A 2008 Italian Turin court ruling substantiated the claim stating that the Great Wall Peri, “doesn’t look lik_e a different car but is a [Fiat] Pan_da with a different front end.”^[37]

A copyright infringement case in China did not see a similar outcome.^{[clarification needed][citation needed]}

Other Great Wall models may resemble those of other automakers: The Great Wall Florid, may look similar to a Toyota ist an_d some older Great Wall Hover models may look lik_e Isuzu Axioms, etc.^{[citation needed]}

 Shuanghuan

The Shuanghuan Noble (left) an_d Smart ForTwo (right).

The Shuanghuan Noble has caused numerous controversies, with Mercedes-Benz even filing a lawsuit against Shuanghuan because of the alleged similarities with the Smart Fortwo.^[38] Mercedes-Benz also persuaded the Italian court to prohibit the car from being exhibited at the Bologna Motor Show,^{[citation needed]} but the Shuanghuan Noble car was put on display anyway.^[39]

In May 2009 a Greek judge ruled against Daimler an_d cleared the car allowing sales to begin in Greece. The judge answering to Daimlers deman_d to ban the Chinese vehicle from entering the Greek market said that “The impression the Noble makes on a third an_d informed party by its visual appearance is different to the one that is made to the same person by the Smart . . . It is commonly accepted that the decision over buying a new car cannot be based only on the exterior characteristics but many other technical specifications such as the power of the engine, fuel consumption, trim specification, retail price an_d dealers’ network.”^[40]

The ruling states that the latter party’s doings “cannot possibly misguide the public” as the German company claimed in its legal request. The judge noted the salient fact that “the plaintiff is no longer selling the specific generation of the Smart which claims to have been copied, but a different vehicle, with much different characteristics.”

Threats to disclose industry secrets

The Wall Street Journal reported that the government of China will be forcing foreign carmakers to disclose their electric vehicle technology secrets before the vehicles are allowed to be sold in China. The current Chinese automotive policy states that a foreign carmaker must form a joint-venture with a Chinese carmaker if the former plans to sell its electric vehicles there, with the latter holding 51% stakes while the former is only allowed to hold 49% stakes.

Due to the threat by the Chinese government, Toyota postponed the launch of the current-generation Prius until they have been confirmed about the plan.^[41]

See also

• Future car technologies
• Military vehicles of China
• Luxury goods in the Peoples Republic of China

[edit] References