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May 2005 © 2005 Crain Communications. All rights reserved. • Global automakers’ joint ventures • Domestic Chinese automakers • Vehicle production and sales data • Global OE suppliers in China Guide to China’s Auto Market Guide to China’s Auto Market SUPPLEMENT TO
Transcript
Page 1: Guide To China - Automotive News

May 2005 © 2005 Crain Communications. All rights reserved.

• Global automakers’ joint ventures

• Domestic Chinese automakers

• Vehicle production and sales data

• Global OE suppliers in China

Guide to China’s AutoMarket

Guide to China’s AutoMarket

S U P P L E M E N T T O

Page 2: Guide To China - Automotive News

China passenger vehicle production and sales ...................4

Global automakers/joint ventures............................7

Map of production facilities in China .....................17

Domestic automakers ..................19Global suppliers in China..............25

Contents

Publisher and Editor-in-ChiefKeith E. Crain

Associate Publisher and Editorial DirectorPeter Brown

Editor, Automotive News David Sedgwick

Crain Communications Inc.Keith E. Crain Rance Crain

Chairman PresidentM.K. Crain M.P. CrainTreasurer Secretary

Robert C. Adams WIlliam A. MorrowGroup Vice President/ Executive Vice

Technology, Manufacturing, President, OperationsCirculation

G.D. Crain Jr. Mrs. G.D. Crain Jr.Founder (1885-1973) Chairman (1911-1996)

2005 Guide to China’s Auto Market

Data in this publication was provided by Automotive Resources Asia. Ltd., Suite 619, Chang An Building, 7 Jianguomennei Ave., Beijing 100005 P.R. China. www.auto-resources-asia.com. E-mail [email protected]. (86) 10-6510-1686.

May 9, 2005 Go to www.autonews.com/chinaguide to download this guide in pdf format.

2005 Guide to China’s Auto Market Automotive News • Automotive News Europe • Automotive Resources Asia 3

Even the most blinkered optimist understood that China'ssizzling new-car market had to cool off sometime, but fewobservers expected it to be quenched so rapidly, or thoroughly.After soaring 62 percent in 2002 and 76 percent in 2003,passenger-car sales last year rose only 15 percent over 2003 toabout 2.3 million units.

China's central bank triggered the slowdown in May when itclamped down on credit in a bid to cool the nation'soverheating economy.

This year is off to an even colder start. Car sales for the firsttwo months, the most recent available at press time, fell16 percent from a year earlier to 286,100 while output wasdown 8 percent to 301,200, the China Association ofAutomobile Manufacturers reports.

Most analysts and industry executives now expect the marketthis year to be up no more than 10 to 12 percent over 2004.Still a small pie

While 10 percent growth in most markets today would because for jubilation, it's not robust enough to support theindustry's ambitions in China, where automakers have spentsome $15 billion to date to build new plants and dealernetworks.

For one thing, China's growth rates come on a small base – a10 percent rise in the market this year, for example, would yieldonly about 230,000 more unit sales.

For another, nearly 50 domestic and foreign automakers arecompeting for a piece of what, essentially, still is a smallmarket. Not surprisingly, the competition has turned into aknife fight.

Faced with the unaccustomed problems of weakeningdemand and excess inventory, automakers are slashing pricesacross the board in a bid to keep showrooms open. EvenBMW, a marque considered to have the auto industry's mostunassailable price premium, cut prices by up to $12,100 earlythis year after its sales in China tanked 16 percent in 2004.

In recent weeks, Ford, Honda and Audi have announcedprice reductions. Honda slashed the price of its best-sellingAccord by $2,425 to about $24,000 while Ford cut its compet-ing Mondeo to $23,390 from $26,660.

According to the National Bureau of Statistics in Beijing, carprices in China fell about 10 percent industrywide last year, andwill slump another 15 percent this year. That has taken a toll oncompanies' bottom lines.

Industry analyst and consultant Graeme Maxton estimatesthat margins on vehicles sold in China have plunged to anaverage of about 3 percent or 4 percent from a high of asmuch as 25 percent just three years ago. That is hurtingeveryone.

In January, GM forecast that net profit from its Asia Pacificoperations, where China has accounted for the bulk of profits,would fall to $600 million this year from $729 million in 2004.

That may be optimistic. GM said its profit from China in thefourth quarter slid 68 percent from a year earlier to $33 million.That represented just 5.2 percent of the automaker's worldwidenet of $630 million, vs. 20 percent in the third quarter.

Jean-Martin Folz, CEO of PSA Peugeot-Citroen, disclosedrecently that the French automaker will lose money in Chinathis year for the second year in a row because of the cutthroatpricing environment.

China produced Peugeot's highest profit margin of anymarket as recently as 2003, he said. But the carmaker lost 38million euros, or about $50 million at current rates, at itsventure with Dongfeng Motor last year vs. a 32 million europretax profit in 2003. Officials hold firm

There seems to be little hope for immediate relief. Chineseofficials in March reiterated their commitment to reining inconsumer spending through tight credit policies.

Analysts say the sudden cooling of the hot auto industry hasexposed China's age-old business risk: A period of explosivegrowth may prove alluring, but not necessarily serve as anaccurate gauge of the market's true size.

Few would dispute, though, that China will become a hugeauto market over the long term. But for the foreseeable future,the industry's new operating paradigm in China will beovercapacity, softening demand, price resistance and weakerprofits.

Those also are the building blocks of a shakeout."The price war between automakers last year cut the overall

profit margin of the industry," says Jiang Yuan, a Bureau ofStatistics official. "The price wars will continue until thosebrands that are less competitive are driven out."

James R. Crate, co-editor, Guide to China’s Auto Market

How to reach us:www.autonews.com

Editorial [email protected]

Phone: 313-446-0361 Fax: 313-446-0383

[email protected]

Phone: 888-446-1422 Fax: 313-446-6777

AdvertisingLarry Schlagheck

[email protected]: 313-446-6790 Fax: 313-446-8030

SubscriptionsTo start or renew a subscription e-mail [email protected] or call 888-446-1422

(in the U.S. or Canada) or 313-446-1662 (in all other locations)

Cover photo: Shoppers crowd around a Chevrolet Spark at an automobile market in Beijing. Photographer: Natalie Behring-Chisholm/Bloomberg News.

Guide to China’s Auto Market staffCo-Editors

Anne Wright Curtis James R. [email protected] [email protected]

Contributing researcher Geoff [email protected]

Assistant Managing Editor Mary Beth Vander Schaaf •Graphics Editor Susan Zavela Bamford •Asia EditorJames B. Treece •China correspondent Alysha Webb

•Researchers Deb Domby, Dorota Kowalski •Web EditorVictor Galvan •Advertising and Sales Director Tony Merpi•Director of Business Development Nick White•Conference Director Libby Irwin •Global E-BusinessDirector Andrew Smith •Director of Business PlanningJohn Fitzgerald •Circulation Manager Michelle VanArman

Page 3: Guide To China - Automotive News

China passenger vehicle production and sales ...................4

Global automakers/Joint ventures ...........................7

Map of production facilities in China .....................17

Domestic automakers ..................19Global suppliers in China..............25

Contents

Guide to China’s Auto Market staffCo-Editors

Anne Wright Curtis James [email protected] [email protected]

Contributing researcher Geoff [email protected]

Assistant Managing Editor Mary Beth Vander Schaaf •Graphics Editor Susan Zavela Bamford •Asia EditorJames B. Treece •China correspondent Alysha Webb•Researchers Deb Domby, Dorota Kowalski •WebEditor Victor Galvan •Advertising and Sales DirectorTony Merpi •Director of Business Development NickWhite •Conference Director Libby Irwin •Global E-Business Director Andrew Smith •Director of BusinessPlanning John Fitzgerald •Assistant CirculationManager Myriam Duverger-Buffa

Publisher and Editor-in-ChiefKeith E. Crain

Associate Publisher and Editorial DirectorPeter Brown

Editor, Automotive News EuropeArjen Bongard

Crain Communications Inc.Keith E. Crain Rance Crain

Chairman PresidentM.K. Crain M.P. CrainTreasurer Secretary

Robert C. Adams WIlliam A. MorrowGroup Vice President/ Executive Vice

Technology, Manufacturing, President, OperationsCirculation

G.D. Crain Jr. Mrs. G.D. Crain Jr.Founder (1885-1973) Chairman (1911-1996)

How to reach us:www.automotivenewseurope.com

Editorial [email protected]

[email protected]

AdvertisingThomas Heringer

Sales and Marketing [email protected]

Phone: (49) 8153-907-404 Fax: (49) 8153-907-426

SubscriptionsAutomotive News Europe

To start or renew subscription go to:http://europe.autonews.com/subscription.htm

2005 Guide to China’s Auto Market

Data in this publication was provided by Automotive Resources Asia. Ltd., Suite 619, Chang An Building, 7 Jianguomennei Ave., Beijing 100005 P.R. China. www.auto-resources-asia.com. E-mail [email protected]. (86) 10-6510-1686.

2005 Guide to China’s Auto Market Automotive News • Automotive News Europe • Automotive Resources Asia 3

China's sizzling new-car market had to cool off sometime,but few observers expected it to be quenched so rapidly, orthoroughly. After soaring 62 percent in 2002 and 76 percentin 2003, passenger-car sales last year rose only 15 percentover 2003 to about 2.3 million units.

This year is off to an even colder start. Car sales for the firsttwo months, the most recent available at press time, fell16 percent from a year earlier to 286,100 while output wasdown 8 percent to 301,200, the China Association ofAutomobile Manufacturers reports.

Most analysts and industry executives now expect themarket this year to be up no more than 10 to 12 percent over2004.Still a small pie

While 10 percent growth in most markets today would because for jubilation, it's not robust enough to support theindustry's ambitions in China, where automakers have spentsome $15 billion to date to build new plants and dealernetworks.

For one thing, China's growth rates come on a smallbase – a 10 percent rise in the market this year, for example,would yield only about 230,000 more unit sales.

For another, nearly 50 domestic and foreign automakers arecompeting for a piece of what, essentially, still is a smallmarket. Not surprisingly, competition has intensified.

Faced with weakening demand and excess inventory,automakers are slashing prices across the board in a bid tokeep showrooms open. Even BMW, a marque considered tohave the auto industry's most unassailable price premium,cut prices by up to $12,100 early this year after its sales inChina slumped 16 percent in 2004.

In recent weeks, Ford, Honda and Audi have all announcedprice reductions. The National Bureau of Statistics in Beijingsays car prices in China fell about 10 percent industrywidelast year, and will slump another 15 percent this year. Thathas taken a toll on companies' bottom lines.

Industry analyst and consultant Graeme Maxton estimatesthat margins on vehicles sold in China have plunged to anaverage of about 3 percent or 4 percent from a high of asmuch as 25 percent just three years ago. That is hurtingeveryone.

In January, GM forecast that net profit from its Asia Pacificoperations, where China has accounted for the bulk of profits,would fall to $600 million this year from $729 million in 2004.Profit in the fourth quarter of 2004 slid 68 percent to $33million.

Jean-Martin Folz, CEO of PSA Peugeot-Citroen, disclosedrecently that the French automaker will lose money in Chinathis year for the second year in a row because of the cutthroatpricing environment.

China produced PSA's highest profit margin of any marketas recently as 2003, he said. But the carmaker lost €38million at its venture with Dongfeng Motor last year vs. a €32million pretax profit in 2003. Officials hold firm

There seems to be little hope for immediate relief. Chineseofficials in March repeated their commitment to reining inconsumer spending through tight credit policies.

Analysts say the sudden cooling of the hot auto industryhas exposed China's age-old business risk: A period ofexplosive growth may prove alluring, but not necessarilyserve as an accurate gauge of the market's true size.

"The usual mistake is to extrapolate the initial trend of highprices and growth into 1.3 billion people," said Andy Xie,Morgan Stanley's Hong Kong-based chief economist for Asia.

China is still set to become a huge auto market over thelong term. But for the foreseeable future, the industry will becharacterized by overcapacity, softening demand, priceresistance and weaker profits.

Those also are the building blocks of a shakeout."The price wars will continue until those brands that are less

competitive are driven out," says Jiang Yuan, a Bureau ofStatistics official.

This guide to the country's auto industry should providesome insight into the various national and internationalcompanies that define China's automotive landscape.

Arjen Bongard, editor, Automotive News EuropeJames R. Crate, co-editor, Guide to China’s Auto Market

Cover photo: Shoppers crowd around a Chevrolet Spark at an automobile market in Beijing. Photographer: Natalie Behring-Chisholm/Bloomberg News.

May 2, 2005 Go to www.autonews.com/chinaguide to download this guide in pdf format.

Page 4: Guide To China - Automotive News

2005 Guide to China’s Auto Market

Production Production Percent Sales Sales PercentAutomaker 2004 2003 change 2004 2003 change

Brilliance China Automotive Holdings Ltd.D Shengyang Brilliance Jinbei Automotive Co. (Page 23) 11,806 26,841 –56.0 10,982 25,600 –57.1 G BMW Brilliance Automotive Co. (Page 7) 15,138 7,500 101.8 8,708 4,359 99.8

Beijing Automotive Industry Holdings Co.G Beijing Hyundai Motor Co. (Page 10) 150,158 55,113 172.5 144,090 52,128 176.4 G Beijing Benz-DaimlerChrysler Automotive Ltd. (Page 7) 33,679 19,441 73.3 31,505 19,829 58.9 D Beijing Automotive Industry Corp. (Page 19) 25,036 N.A. – 25,062 N.A. –

Changan Automotive Co.D Chongqing Changan Automobile Group* (Page 20) 582,367 469,651 24.0 579,520 472,114 22.8 G Chongqing Changan Suzuki Automobile Co. (Page 13) 107,337 102,083 5.1 110,052 100,018 10.0 G Changan Ford Automobile Co. (Page 8) 50,000 18,535 169.8 47,119 17,301 172.3

Dongfeng Motor Corp.G Dongfeng Peugeot Citroen Automobile Co. (Page 13) 88,034 105,475 –16.5 89,129 103,126 –13.6 G Dongfeng Yueda Kia Automobile Co. (Page 10) 63,267 52,017 21.6 62,506 51,008 22.5 D Dongfeng Automobile Co. (Page 20) 66,000 N.A. – 61,000 66,048 –7.6 G Dongfeng Motor Co. (Nissan) (Page 11) 64,197 66,134 –2.9 60,784 65,108 –8.0 D Dongfeng Liuzhou Motor Co. (Page 20) 16,486 10,302 60.0 16,589 10,079 64.6 G Dongfeng Honda Automobile (Wuhan) Co. (Page 10) 11,898 – – 10,472 – –

First Auto Works GroupG FAW-Volkswagen Automotive Co. (Page 14) 287,117 302,346 –5.0 300,117 302,385 –0.8 D Tianjin FAW Xiali Automobile Co. (Page 22) 130,506 117,186 11.4 130,182 117,335 10.9 G Tianjin FAW Toyota Motor Co. (Page 14) 83,437 49,535 68.4 77,739 48,567 60.1 D FAW Haima Automotive Co. (Page 22) 66,954 54,824 22.1 66,055 54,406 21.4 D FAW Car Co. (Page 22) 50,066 48,219 3.8 50,789 51,266 –0.9 D FAW Huali (Tianjin) Motor Co. (Page 22) 9,127 742 1,130.1 8,995 713 1,161.6 D Changchun FAW Fengyue Auto Co. (Page 22) 4,207 666 531.7 3,939 666 491.4 G Sichuan Toyota Motor Co. (Page 14) 3,110 397 683.4 3,047 397 667.5

Guangzhou Automotive GroupG Guangzhou Honda Automobile Co. (Page 10) 202,312 117,178 72.7 202,066 117,129 72.5 G Honda Automobile (China) Co. (Page 10) N.A. N.A. – N.A. N.A. –

Shanghai Automotive Industry Corp. (SAIC)G Shanghai Volkswagen Automotive Co. (Page 14) 346,338 405,252 –14.5 353,649 396,006 –10.7 G Shanghai General Motors Corp. (Page 9) 253,000 206,964 22.2 252,000 201,188 25.3 G SAIC GM Wuling Automobile Co. (Page 9) 228,839 N.A. – 225,046 N.A. –G Shangahi GM Dongyue Motors Co.† (Page 9) 50,270 N.A. – 57,839 N.A. –G Shanghai GM Norsom Motors Co. (Page 9) 737 3,559 –79.3 1,653 3,285 –49.7 D Anhui Jianghuai Automobile Co. (Page 23) 17,245 14,746 16.9 17,900 14,263 25.5 D BYD Auto Co. (Page 23) 17,245 20,100 –14.2 17,900 20,100 –10.9 D Chery Automobile Co. (Page 23) 79,565 91,223 –12.8 86,567 85,349 1.4 D Geely Holding Group (Page 24) 91,744 81,285 12.9 96,693 80,056 20.8 D Great Wall Automobile Holding Co. (Page 24) 27,540 28,067 –1.9 27,436 27,101 1.2 D Guizhou Skylark Automobile Co. (Page 24) 165 1,180 –86.0 183 1,144 –84.0 D Hafei Motor Co. (Page 24) 28,599 32,387 –11.7 29,816 33,047 -9.8 D Hebei Zhongxing Automobile Co. (Page 24) 16,192 28,500 –43.2 16,249 28,500 -43.0 G Hunan Changfeng Motor Co. (Page 11) 24,986 29,230 –14.5 24,345 29,693 -18.0 D Jiangling Landwind Automobile Co. (Page 24) 10,000 N.A. – 10,000 N.A. –G Jiangling Motor Corp. (Page 8) N.A. 60,276 – N.A. 58,518 –G Jiangxi Changhe Suzuki Co. (Page 13) 19,354 37,333 -48.2 21,101 36,429 –42.1 D Jiangxi Changhe Automobile Co. (Page 23) 7,402 2,711 173.0 6,288 2,078 202.6 D Jilin Tongtian Automobile Co. (Page 24) 1,200 N.A. – 1,207 N.A. –G Nanjing Fiat Co. (Page 8) 26,598 37,418 –28.9 26,553 37,271 –28.8 D Rongcheng Huatai Automobile Co. (Page 24) 11,000 N.A. – 10,008 N.A. –D Soueast (Fujian) Motor Corp. (Page 24) 41,468 83,535 –50.4 41,089 84,535 –51.4 G Zhengzhou Nissan Automobile Co. (Page 11) 9,383 10,056 –6.7 9,083 10,000 –9.2

Note: Production and sales data reflect personal-use vehicles and some light-commercial vehicles unless noted; D = domestic automaker; G = global joint venture; N.A. = not available*Includes light-commercial vehicles †Included in Shanghai General Motors Corp. totals

China vehicle production and sales, 2004 vs. 2003

4 Automotive News • Automotive News Europe • Automotive Resources Asia 2005 Guide to China’s Auto Market

Page 5: Guide To China - Automotive News

JV: BMW Brilliance Automotive Ltd.No. 14 Shanzuizi Road, Dadong District, ShenyangLiaoning Province, 110044 P.R. China(86) 24-8455-6000, www.bmw-brilliance.cnTop executive: Heinz Preissler, president & CEO

BMW was humbled in China lastyear. Hit by a general slowdown in theoverall market and a sharper pullbackin the luxury segments, BMW salestumbled 16 percent to 15,500 units,including imports, in 2004 afterposting a 176 percent gain the yearbefore.

Of the total, only 8,708 units wereproduced at its joint venture withBrilliance China Automotive HoldingsLtd. The venture, which assembles3- and 5-series sedans, produced15,138 units last year, double the levelof 2003.

That left the joint venture with a glutof nearly 7,000 unsold vehicles at thebeginning of 2005, or nearly a one-year supply.

In a bid to revive its sagging salesand slash the inventory overhang,BMW has fallen back on a tactic notusually associated with a luxurymarque: across-the-board price cuts.The company early this year slashedprices by up to 100,000 yuan, orabout $12,100.

Executives said they expect demandto firm up later this year with themarket introduction of the redesigned3 series and the new X3 SUV.

BMW's performance last year wasthe worst of the three German luxurymarques competing in China.Segment leader Audi AG said its salesrose 0.8 percent while Mercedes-Benzclaimed a 5 percent gain.

BMW AG Beijing Representative Office23/F Millennium Tower, No. 38 Xiaoyun RoadChaoyang District, Beijing 100027, P.R. China(86) 10-8453-9900e Top executive: Christoph Stark, president & CEO BMW Group Region China

Global automakers/Joint ventures

OwnershipBMW - 50%; Brillance China Automotive Holdings - 50%

Capacity2004: 30,000 2003: 30,000

Production2004: 15,138 2003: 7,500

Unit sales2004: 8,708 2003: 4,359

Models produced: BMW 318i, BMW 325i, 520i, 525i, 530iNote: A new 3 series will be launched in mid-2005

2005 Guide to China’s Auto Market Automotive News • Automotive News Europe • Automotive Resources Asia 7

JV: Beijing Benz-DaimlerChrysler Automotive Ltd.No. 36, Guangqu Road, Chaoyang DistrictBeijing 100022, P.R. China(86) 10-6771-223, www.beijing-jeep.comTop executive: Juergen Ziegler, president & CEO

DaimlerChrysler AG is movingswiftly to leverage its diverse assetsinto a major presence in China, havingcommitted some $1.7 billion to thepush.

In its marquee venture, theautomaker will begin production ofMercedes-Benz E- and C-class sedansthis summer in a new facility inBeijing with long-time partner BeijingAutomotive Industry Holding Co. Thefacility is designed to produce up to25,000 units a year.

To reflect the start of Mercedesproduction, DaimlerChrysler late lastyear created Beijing Benz-DaimlerChrysler Automotive Ltd. asthe umbrella organization for its Chinapassenger car manufacturingoperations. Beijing Jeep Corp., thelandmark joint venture with BeijingAutomotive that was launched in 1984as China's first foreign automakingventure, is part of the new entity.

Mercedes-Benz said its import salesin China rose 5 percent last year to11,500 units, although that was belowthe target of 13,000 to 14,000 units.S-class sedans accounted for morethan 50 percent of volume.

Mercedes also has agreed to buildSprinter and Viano/Vito vans at a new

facility in Fuzhou City with FujianMotor Industry Group and ChinaMotor Corp. That facility, with adesigned annual capacity of 40,000units, is expected to start operating by2006.

DaimlerChrysler also says it willbegin assembling the Chrysler 300Cin China if the decision is warrantedby import sales of the sedan, whichhas been a smash hit in the U.S.market. The company expects to sellas many as 2,000 in China this year.

Meanwhile, the German companycontinues to rely on former globalpartner Mitsubishi Motors to buoyproduction at Beijing Jeep.

Although DaimlerChrysler hasdumped most of its former controllingequity stake in Mitsubishi andessentially divorced the Japaneseautomaker, the two continue tocooperate in China.

Beijing Jeep produces the JeepGrand Cherokee and 2500 as well asthe Mitsubishi Outlander and SportSUVs. Output and sales were upsharply last year, but the twoJapanese vehicles accounted for 68percent of production and 66 percentof sales.

Ownership DaimlerChrysler - 50%; Beijing Automotive Industry Holding Co. - 50%

Capacity2004: 100,0002003: 80,000

Production2004: 33,6972003: 19,441

Unit sales2004: 31,5052003: 19,829

Models produced: Jeep4700/Jeep4000, Jeep2500, Jeep Grand Cherokee;Mitsubishi Pajero Sport, OutlanderNote: Production of Mercedes-Benz C and E class sedan to start this Summer 2005

DaimlerChrysler China Ltd.Landmark Tower 1/24F, No. 8 N. Dongsanhuan RoadChaoyang District, Beijing 100004, P.R. China(86) 10-6590-6668, www.daimlerchrysler.com Top executive: Roman Fischer, president & CEO

Mercedes-Benz C class

Page 6: Guide To China - Automotive News

JV: Changan Ford Automobile Co.No.1, ChangFu West Road, Yuan Yang TownNew Northern ZoneChongqing 401122, P.R. China(86) 23-6745-8888Top executive: Ron Tyack, president & CEO

After a clunky start in 2002, FordMotor Co. appears to be mastering thebasics of selling cars in China. Thelesson learned: The Ford oval aloneisn't enough to satisfy China's finickybuyers.

Ford's launch model in China, theFiesta subcompact, was lambasted forbeing old technology. Car shopperslargely bypassed Ford showrooms in2003, and the company was seen asnot being committed to China.

But the automaker last year beganproduction of the European Mondeosedan at its Changan Ford jointventure, adding special luxury touchesto woo the chauffeured set. The carhas been a hit: Changan Ford salessurged 172 percent over 2003 to47,119 units, with the Mondeoaccounting for 67 percent of total.

But Ford remains a second-tierplayer in China, with a thin lineup andrelatively small footprint in the market.It has increased its dealer count toabout 105 from 20 just 15 monthsago, for example, but General Motorshas more than 250, Volkswagen morethan 1,000.

Even with its slow start, Ford hasset a lofty goal of becoming one of thetop three producers in China in thenext five to 10 years. Toward that end,Changan Ford will more than triple its

manufacturing capacity to 200,000units a year this year while groundhas been broken for a greenfield plantin Nanjing, in eastern China.

Industry sources say the Focussedan likely will go into production atChangan this year, but Ford has not letdealers know when it will be available.Dealers and analysts view the Focusas a potential breakout car for Ford inChina.

The Nanjing plant, expected to comeon line in 2008, will have capacity tobuild 200,000 units a year. Ford hasnot disclosed what models will beproduced there, but supplier sourcessay the plant will build the nextgeneration Fiesta and the Mazda2.

Both cars will be based on a newglobal platform being developedjointly by Ford and affiliate MazdaMotor Corp.

Meanwhile, Ford is expected tobegin import sales of the LincolnNavigator SUV this year. The vehicleswill be priced at about $84,500.

Although several other importedpremium SUVs are sold in China,volumes are small. The segment isdominated by Toyota's Land Cruiserand Prado models, both of which aremade in China. The Land Cruiser goesfor $74,600, and the Prado sells for$54,400.

Ford Motor (China) Ltd.33F Shanghai Information Tower, 211 Century Blvd.Pudong New District, Shanghai 200120, P.R. China(86)21-2891-6688, www.ford.com.cn Top executive: Mei-Wei Cheng, chairman & CEO

Global automakers/Joint ventures

OwnershipFord Motor Co. - 50%; Changan Automotive Co. - 50%

Capacity2004: 150,000 2003: 50,000

Production2004: 50,000 2003: 18,535

Unit sales2004: 47,119 2003: 17,301

Models produced: Ford Fiesta, Mondeo

8 Automotive News • Automotive News Europe • Automotive Resources Asia 2005 Guide to China’s Auto Market

JV: Jiangling Motors Corp. 509, Ying Bin Da Dao, Nanchang, Jiangxi Province 330001, P.R. China(86) 791-523-2888, www.jmc.com.cnTop executive: York Chen, President

OwnershipJiangling Motors Corp. Ltd. - 70%; Ford Motor Co. - 30%

Models produced: Ford Transit

Capacity2004: 100,000 2003: 100,000 N.A = not available

Production2004: N.A.2003: 60,276

Unit sales2004: N.A.2003: 58,518

JV: Nanjing Fiat Co.No. 66 Shengtai Road, Jiangning High-Tech ParkNanjing, Jiangsu Province 211100, P.R. China(86) 25-5210-0000, www.fiat.com.cnTop executive: Su Tongchang, genaral manager

Fiat Auto operations in Chinawithered on the vine last year, areflection of the toll being exacted bycontinuing financial turmoil andexecutive upheavals at worldheadquarters in Italy. The Italianautomaker, which has lost more than$9 billion since 2000, got its fourthCEO in just over three years inFebruary.

After a strong launch in 2002-03,Fiat sales in China slid 29 percent lastyear, including imports, in a marketthat was up 15 percent. Production, ina plant designed to produce 100,000cars a year, also fell 29 percent tounder 27,000.

The company produces threeversions of the Palio world car at itsjoint venture with state-owned NanjingAutomobile Group Corp.: a hatchback,a wagon and the Siena sedan. Interms of standard equipment,performance and quality, the compactPalio offers strong competition for thesegment leaders, the Buick Sail,Toyota-based Xiali and Volkswagen

Polo. But it's badly outgunned interms of marketing and after-salessupport.

The one-car, three-model lineup alsois too thin to attract significantnumbers of buyers. Fiat said in 2002that it would launch three new modelsat its Nanjing Fiat joint venture by2003-04, but they have notmaterialized. Nor are they likely toanytime soon, given Fiat's problems athome and new CEO SergioMarchionne's determination to returnto profitability.

Meanwhile, partner Nanjing Autohas been looking for insurance againstFiat's woes. Under a deal thatappeared to be dead at press time, thecompany planned to join ShanghaiAutomotive Industry Corp. in takingcontrol of Britain's ailing MG Rovergroup.

Although the equity takeoverappeared to be ruled out, an outrightpurchase of Rover assets was stillbeing considered at press time.

Fiat China Business Co.Unit 2011, Beijing Silver Tower, No. 2 Dongsanhuan North RoadBeijing 100027, P.R. China(86) 10-6410-0666, www.fiatgroup.com Top executive: Franco Amadei, chairman & CEO

OwnershipFiat Auto S.p.A. - 50%; Nanjing Automobile Group Corp. - 50%

Capacity2004: 100,000 2003: 100,000

Production2004: 26,598 2003: 37,418

Unit sales2004: 26,553 2003: 37,271

Models produced: Fiat Palio, Palio Weekend, Siena

Fiat Palio

Page 7: Guide To China - Automotive News

JV: Shanghai GM Norsom Motors Co.*No. 15 Beidaying St., Dadong District, ShenyangLiaoning Province 110044, P.R. China(86) 24-8834 5678 Top executive: Xu linhua, general manager

*Formerly known as Jinbei GM Automotive Co.

General Motors continued itspedal-to-the-metal expansion pace inChina in 2004, and the automakerplans to move even faster this year.

GM sold a record 492,014 vehiclesin China last year, up 27.2 percent overthe previous year, while market sharerose to 9.3 percent from 8.5 percent.The figures include Wuling-brandminivehicles produced by joint-venturepartner Wuling Automobile Co., andimported Cadillacs, Saabs and Opels.

Sales by the automaker's coreproduction operation in China,Shanghai GM, rose 25.3 percent lastyear, to 252,000 units, and thecompany is forecasting a 15 percentincrease this year. A 50-50 partnershipwith Shanghai Automotive IndustryCorp., Shanghai GM produces Buickand Chevrolet vehicles, and will addthe Cadillac CTS sedan and SRX SUVthis year as part of a plan to bring 10new or upgraded vehicles to themarket.

On the other hand, GM endedproduction of the Blazer SUV in Chinain 2004, throwing in the towel afterseveral years of weak sales. To replaceit at the newly named Shanghai GM(Shenyang) Norsom Motors Co., theformer Jinbei General Motors, GMshifted production of the Buick GL8minivan from Shanghai.

The joint venture has capacity tobuild 50,000 vehicles a year; GM sold29,000 GL8s in 2004. Target: Volkswagen

GM has boldly declared that itintends to displace Volkswagen AG asthe leader in China, an ambitious goalto say the least. Even with its positionunder attack by most of the world'sprincipal automakers, VW stillcommands about a quarter of theChinese market.

To challenge that lead, GM says itwill raise vehicle capacity at its variousjoint ventures from about 550,000units a year now to 1.3 million in2007. In November, GM had said itwould raise capacity to 865,000. In thesame timeframe, GM says it will bring20 new or upgraded products to themarket.

To spearhead the next phase of itsexpansion in China, GM is turning toits mainstay U.S.-market brand,Chevrolet.

The automaker has begun buildingthe Chevrolet Sail and Epica atShanghai GM Dongyue Motors Co. innortheast China.

GM won't say how many Chevroletsit expects to sell in China, but the jointventure plant has a 100,000-unitannual capacity.

Like the Buick Sail, which wasdiscontinued last year, the subcompact

Chevrolet Sail is based on a modifiedOpel Corsa platform. The Epica is amid-sized sedan derived from theDaewoo Magnus. The cars will be soldthrough a Chevrolet dealershipnetwork that is expected to reach 150stores by year end.

GM already sells a Chevrolet-badgedminicar in China, the Spark. Based onthe Daewoo Matiz, the Spark isassembled at the SAIC-GM-Wulingjoint venture in southwest China. Salestotaled 10,142 in 2004.

Despite its stellar growth in 2004,GM has not been immune from thegeneral market slowdown.

Sales in the second half of 2004slowed from the first six months, andare off another 55 percent for the firsttwo months of 2005, the most recentdata available at press time.Profits nosedive

More tellingly, the automaker's netprofit from China in the fourth quarterplunged 68 percent from a year earlierto just $33 million.

That represented only 5 percent ofthe company's worldwide net incomeof $630 million, down dramaticallyfrom about a fifth in the third quarter.

Still to bedetermined iswhat impact thesurprisedeparture ofCEO PhilMurtaugh willhave on thecompany'smid-termfortunes inChina.

Murtaugh, wholaunched Shanghai GM in 1996 andwho had been CEO of GM China Groupsince July 2000, resigned suddenly inMarch, citing personal reasons.

He has been replaced by Kevin Wale,chairman of GM's Vauxhall unit inBritain and a vice president of GMEurope. The 50-year-old Australianwas head of GM Asia Pacific fromSeptember 1998 to August 2001.

On Murtaugh's watch, GM Chinabecame a rare bright spot in the U.S.automaker's troubled global empire.

Although no clarification was issued,the 50-year-old Murtaugh was believedto be chafing under a new GMcorporate decision-making processthat diluted his autonomy and ability togive firm commitments to suppliersand partners.

"Phil's word was the gold standard,"said one supplier executive. "If he gaveyou specs and volume numbers, youcould take them to the bank. He feltsome resentment that he couldn't offerthat anymore."

General Motors China Investment Co.Jinmao Tower 10/F, No. 88 Shiji RoadPuDong District, Shanghai 200121, P.R. China(86) 21-2898-7000, www.gm.com.cn Top executive: Kevin Wale, chairman & CEO

Global automakers/Joint ventures

OwnershipShanghai General Motors Corp. - 50%; Shanghai Automotive Industry Corp. - 25%; General Motors China - 25%

Capacity2004: 50,000 2003: 30,000

Production2004: 737 2003: 3,559

Unit sales2004: 1,653 2003: 3,285

Models produced: Buick GL8**Production moved from SGM to SGM Norsom in late 2004; production and sales data included in SGM totals

2005 Guide to China’s Auto Market Automotive News • Automotive News Europe • Automotive Resources Asia 9

JV: SAIC GM Wuling Automobile Co.No. 18 Hexi Road, LiuzhouGuangxi Province 545007, P.R. China(86) 772-3750-258, www.wuling.comTop executive: Shen Yang, general manager

OwnershipShanghai Automotive Industry Corp. - 50%; General Motors China - 34%;Wuling Automotive - 16%

Capacity2004: 200,000 2003: 180,000 N.A = not available

Production2004: 228,8392003: N.A.

Unit sales2004: 225,046 2003: N.A.

Models produced: Chevrolet Spark, Wuling-brand minivehicles

JV: Shanghai General Motors Corp. No. 1500 Shenjiang Road, Jin QiaoPudong, Shanghai 201206, P.R.China(86) 21-2890-2890Top executive: Ding Lei, president

OwnershipShanghai Automotive Industry Corp. - 50%; General Motors - 50%

Capacity2004: 200,000 2003: 200,000

Production2004: 253,000 2003: 206,964

Unit sales2004: 252,000 2003: 201,188

Models produced: Buick Regal, Royaum, Excelle, GL8**Production moved from SGM to SGM Norsom in late 2004; production and sales data included in SGM totals

JV: Shanghai GM Dongyue Motors Co.No. 118, Changjiang Road, Development Zone, YantaiShandong Province 264006, P.R. China(86) 535-6966-666, www.shanghaigm.comTop executive: Huang Keji, general manager

OwnershipShanghai General Motors Corp. - 50%; Shanghai Automotive Industry Corp. - 25%; GM China - 25%

Capacity2004: 100,000 2003: 100,000

Production2004: 50,270 2003: N.A.

Unit sales2004: 57,839 2003: N.A.

Models produced: Chevrolet Sail, Sail SRV, Epica

Note: Shanghai GM Dongyue Motors production and sales included

Note: N.A. = not available; Shanghai GM Dongyue Motors production and sales included in ShanghiGeneral Motos Corp. totals

Murtaugh

Page 8: Guide To China - Automotive News

JV: Guangzhou Honda Automobile Co.No.1, Guangben Road, Huangpu District, Guangzhou Guangdong Province 510700, P.R. China(86) 20-8227-7789, www.guangzhouhonda.com.cnTop executive: Sho Minekawa, president

Moving to cement its position inChina as the No. 3 foreign automakerbehind Volkswagen and GM, HondaMotor Co. will add still more capacitythere this year and next. Honda, whichstarted passenger-car operations inChina in 1999 by taking over a30,000-unit Peugeot plant, hasexpanded production capacity andsales every year since.

The Japanese automaker isinvesting more than $600 million withpartners Dongfeng Motor Corp. andGuangzhou Automobile Group tonearly double its annual productioncapacity in China to 530,000 unitsnext year.

A second plant with capacity for120,000 cars a year is being built atthe joint venture with Guangzhou,which builds the mid-sized Accord,compact Fit and the Japan-marketOdyssey minivan. That will raisecapacity at the complex to 360,000units a year.

Honda executives say the new plantcould build a hybrid-electric version ofthe Accord, but no decision has beenmade.

Simultaneously, Honda andDongfeng are spending some $340million to quadruple productioncapacity of their joint venture in Hubeito 120,000 units a year next year. TheDongfeng-Honda venture, whichstarted to produce CR-V SUVs in April2004, will add a Civic sedan this year.

A third venture, Honda Automobile(China) Co., a partnership with bothGuangzhou Auto Group and DongfengMotor, produces the Jazz subcompactexclusively for export. The 50,000-unitplant is expected to begin shippingcars to Europe this summer.

Honda aims to sell 271,000 vehiclesin China this year, including 230,000units from Guangzhou Honda and41,000 units from the venture withDongfeng. Honda's sales last yearsurged 74.8 percent over 2003 to215,000 units.

Honda Motor Co. BeijingSuite 2101 Beijing Fortune Building, No.5 N. Dongsanhuan RoadChaoyand District, Beijing 100004, P.R. China(86) 10-6590-9011 Top executive: Hyogo Atsuyoshi

Global automakers/Joint ventures

Ownership: Guangzhou Automotive Industry Group - 50%; Honda Motor Co. - 50%

Capacity2004: 240,000 2003: 120,000

Production2004: 202,312 2003: 117,178

Unit sales2004: 202,066 2003: 117,129

Models produced: Honda Accord, Fit, Fit Saloon, Odyssey

JV: Dongfeng Honda Automobile (Wuhan) Co.No.283, Checheng Dongdao, Economic & Tech Development ZoneWuhan, Hubei Province 430056, P.R. China(86)27-8428-6000, www.dhac.com.cnTop executive: Mitsuru Ozaki, president

Ownership: Dongfeng Motor Corp. - 50%; Honda Motor Co. - 50%

Capacity2004: 30,000Production began late 2004

Production2004: 11,898

Unit sales2004: 10,472

Models produced: Honda CR-V, Civic*To be added in late 2005

JV: Honda Automobile (China) Co. No.363, Kai Chuang Da Dao, East SectionGuangzhou Economic & Tech Development DistrictGuangdong 510760, P.R. China

Ownership: Honda Motor Co. - 65%; Guangzhou Auto - 25%; Dongfeng Motor Corp. - 10%

Capacity2004: 50,000 N.A. = not available

Production2004: N.A.

Unit sales2004: N.A.

Models produced: Honda Jazz

JV: Beijing Hyundai Motor Co.No. 18 Shuntong Rd., Linhe Industry Dev. AreaShunyi District, Beijing 101300, P.R. China(86) 10-8008101100 Top executive: J.M. Noh, president

Hyundai Motor Co. has exploded outof the blocks in China. Just two yearsafter coming into existence, theKorean automaker's Beijing HyundaiMotor Co. joint venture sold 144,000units last year, a 176 percent increaseover 2003.

The venture, a partnership withBeijing Automobile Industry Corp.,aims to hit 200,000 sales this year.That would represent a 39 percentgain in a market expected to be uponly 10 to 12 percent, but analystssay the target is realistic given thesudden popularity of Hyundai and itsaffiliate brand, Kia, among China'syouth.

Beijing Hyundai produces Sonataand Elantra sedans and will add theTucson SUV this year.

The partners are spending $740

million to double capacity to 300,000cars per year by 2007, and to add asecond 300,000-unit plant by 2008.

Including subsidiary Kia Motors,Hyundai Group wants to be producing1 million vehicles a year in China by2010.

Kia and partners Dongfeng MotorIndustry Investment Co. and JinagsuYueda Co. have committed tospending some $650 million toquadruple capacity at DongfengYueda Kia to 400,000 units by 2008.

The joint venture produces Accentand Optima sedans and the Carnivalminivan, and will add the 1.6- and1.8-litre Cerato sedan later this year.The venture also is consideringlaunching an SUV.

The venture's sales rose 22.5percent last year to just over 62,500.

Hyundai Motor Group (China) Ltd.Room 79, Millennium Tower, No. 38Xiaoyun Road, Chaoyang District, Beijing 100027, P.R. China (86) 10-84539666, www.hyundai-motor.com Top executive: Lee Il Jang, president

Ownership: Hyundai Motor Co. - 50%; Beijing Automobile Investment Co. - 50%

Capacity2004: 150,000 2003: 50,000

Production2004: 150,158 2003: 55,113

Unit sales2004: 144,090 2003: 52,128

Models produced: Hyundai Elantra, Sonata

JV: Dongfeng Yueda Kia Automobile Co.No.18 Kaifang Road, Yancheng CityJiangsu Province 224002, P.R. China(86) 515-8226-262 Top executive: Hu Youlin, president

Ownership: Kia Motors - 50%; Dongfeng Motor Industry Investment Co. -25%; Jinagsu Yueda Co. - 25%

Capacity2004: 100,000 2003: 100,000

Production2004: 63,267 2003: 52,017

Unit sales2004: 62,506 2003: 51,008

Models produced: Accent, Carnival, Optima

10 Automotive News • Automotive News Europe • Automotive Resources Asia 2005 Guide to China’s Auto Market

Honda Jazz

Page 9: Guide To China - Automotive News

Global automakers/Joint ventures

JV: Hunan Changfeng Motor Co.Lengshui Beach, YongzhouHunan Province, 425000 P.R. China(86) 746-8456-019Top executive: Li Jianxin, president

Given the financial pressures andsweeping organizational changes ithas been dealing with, China wasn'texactly Mitsubishi Motors' No. 1priority last year.

As part of the major restructuring itunveiled in 2003, Mitsubishi hadplanned to increase sales in China to300,000 units a year by 2007. Itwould sell its newest models under itsown brand while local partners wouldcontinue selling rebadged vehiclesunder their Chinese brands.

Executives envisioned building aplant in China to produceMitsubishi-badged vehicles.

But the Japanese automaker waspart of the DaimlerChrysler empirethen, and its China scenario wasbased on having access to capital andother resources that have since beenwithdrawn. DaimlerChrysler pulled outof Mitsubishi's restructuring, and hassince dumped most of its previous 37percent equity stake.

Mitsubishi owns 25 percent or lessof three vehicle or engine producers

on the mainland, plus 15.4 percent ofTaiwan's China Motor Corp.

Mitsubishi says it wants to obtain asignificant equity stake in all itspartners, and late last year agreed inprinciple to take an undeterminedstake in Southeast (Fujian) Motor Co.

China Motor in turn owns 50percent of Southeast (Fujian).

Mitsubishi said that agreement opensthe way for it to begin production ofMitsubishi-brand vehicles in China,although no timetable or details havebeen announced.

For now, Beijing Jeep Corp. willremain the only production source forMitsubishi-brand vehicles in China.The brand had mixed results in 2004.Sales of the Pajero Sport fell 20percent to 4,659 units while theOutlander, which was launched inJanuary 2004, registered sales of16,162 units.

Sales of Hunan Changfen Motor Co.,which rebadges the Mitsubishi Pajeroas the Liebao, slumped 18 percent to24,345.

Ownership Changfeng Group - 47%; Others - 33%; Mitsubishi Motors Corp. - 20%

Capacity2004: 80,000 2003: 50,000

Production2004: 24,986 2003: 29,230

Unit sales2004: 24,345 2003: 29,693

Models produced: Mitsubishi Pajero (Liebao)

Mitsubishi Motors Corp. Eastern Wing F18, Hanwei Plaza, No. 7 Guanghua RoadChaoyang District, Beijing 100021, P.R. China(86) 10-6561-3030 Top executive: Hiromi Endo, general manager

JV: Dongfeng Motor Co.No. 13 Che Cheng Xi Lu, ShiyanHubei Province 442001, P.R. China (86) 719-8201-255 Top executive: Katsumi Nakamura, CEO & president

Nissan Motor Co. missed its target inChina by a wide margin last year amid agovernment clampdown on consumercredit and stiffening competition, but theJapanese automaker says it expects tomore than double sales this year.

Sales of Nissan's 50:50 joint venturein China, Dongfeng Motor Co., slipped6.7 percent last year to 60,784 units,20,000 units shy of target.

But officials early this year reiteratedthe company's goal of selling 300,000Nissan-brand cars in China by 2007,and said sales in 2005 would hit140,000 with the addition of newmodels.

Nissan late last year added the high-end Teana sedan to Dongfeng, whichbuilds the Sunny and Bluebird sedans,and the Tiida compact.

Nissan also will begin importing the3.5-liter Fuga luxury sport sedan inmid-2005 to go head to head withToyota's Crown. The Fuga is sold in theUnited States as the Infiniti M series.

Like other automakers, Nissan hasbeen forced to compete on price as wellas quality. In mid-2004, it announcedprice cuts averaging $3,010 on itsbread-and-butter Bluebird line.

Nissan also moved late last year tostreamline operations by folding itsother joint venture in China, Zhengzhou

Nissan Automobile Co., into DongfengMotor. Zhengzhou, based in HenanProvince in central China, produces thePaladin SUV and had assembled theFrontier compact pickup until late lastyear.

Analysts said the merger paves theway for Nissan's controllingshareholder, Renault SA, to proceedwith its plan to set up a joint venturewith Dongfeng Motor Corp., a parent ofDongfeng Motor Co. Renault said lastyear that it wanted to begin producing150,000 cars a year in China by 2007,rising to 300,000 units annually by2010.

But Dongfeng President Miao Weidisclosed recently that the deal hadbecome stalled for undeterminedreasons, although he said he still hopedto seal an agreement by year end.

In another development, Nissan andDongfeng are underway this year on a$365 million greenfield engine plant inGuangzhou. The plant, scheduled tostart up in early 2006, will have capacityfor 360,000 engines a year.

Having a local source for engines willgive Nissan a critical cost advantage inChina's ever more competitive market.Taxes on imported components such asengines can run as much as 30 percentof their assessed value.

Nissan Motor Co.Rm. 802, The Exchange-Beijing, No. 118 Jian Guo Lu YiChaoyang District, Beijing 100022, P.R. China(86) 10-6567-9623 Top executive: Tadashi Ishihara, general manager

OwnershipNissan Motor Co. - 50%; Dongfeng Motor Industry Investment Co. - 50%

Capacity2004: 150,0002003: 100,000

Production2004: 64,197 2003: 66,134

Unit sales2004: 60,784 2003: 65,108

Models produced: Bluebird, Sunny, Teana, Tiida

JV: Zhengzhou Nissan Automobile Co.No. 62 Longhai Dong Lu, ZhengzhouHenan Province 450004, P.R. China(86) 371-6311-931 Top executive: Guo Zhenfu, general manager

OwnershipNissan Motor Co. - 30%; Dongfeng Motor Co. - 51%; Zhengzhou Light Vehicle Co. - 19%

Models produced: Nissan Paladin

Capacity2004: 60,000 2003: 60,000

Production2004: 9,383 2003: 10,056

Unit sales2004: 9,083 2003: 10,000

2005 Guide to China’s Auto Market Automotive News • Automotive News Europe • Automotive Resources Asia 11

Mitsubishi Pajero

Page 10: Guide To China - Automotive News

Global automakers/Joint ventures

JV: Dongfeng Peugeot Citroen Automobile Co. 165 Ave. Shenlong Wuhan Economic & Tech Development ZoneHubei Province 430056, P.R. China(86) 27-8429-0095, www.dpca.com.cnTop executive: Liu Weidong, general manager

PSA/Peugeot-Citroen struggled inthe first full year of the Peugeotbrand's re-introduction to China. Salesof the automaker's joint venture withDongfeng Motor Corp. fell 13.6percent last year to 89,129 units,despite several price cuts on thePeugeot 307 sedan.

The 307 accounted for sales of11,291 units, or 12.7 percent of total.

PSA was among the first foreignautomakers to set up shop in China,opening a joint venture withGuangzhou Auto Group in 1985. Butthe venture flopped, and Peugeot soldits stake to Honda Motor in 1997.

It then folded Peugeot productioninto the Dongfeng venture, whichopened in 1994 to produce Citroens.

The venture reported a loss of $60million last year.

PSA Peugeot Citroen CEO Jean-Martin Folz attributed the loss to afailure to upgrade the Citroen lineupas the venture focused on the launchof the Peugeot brand. A strong euroadded to the company's woes.

Folz pledged to push ahead withexpansion plans regardless of themarket's slowdown. In early 2004,the joint venture announced plans tospend more than $800 million todouble capacity to 300,000 by 2006.

PSA Peugeot Citroen aims to sell115,000 cars in China in 2005, and tolaunch at least one new model a yeargoing forward. The Peugeot 206compact car is scheduled for a late2005 roll out, and the company saystwo new Citroen models will belaunched in 2006.

PSA/Peugeot-Citroen Group Beijing Office, Unit 416, 4th Floor, Tower A Beijing Kelun Building12A Guanghua Lu, Chaoyang District, Beijing 100020, P.R. China(86) 10-6581-4682, www.psa-peugeot-citroen.com Top executive: Jean-Claude Germain, chief representative

OwnershipPSA - 50%; Dongfeng Motor Industry Investment Co. - 50%

Capacity2004: 150,000 2003: 150,000

Production2004: 88,034 2003: 105,475

Unit sales2004: 89,129 2003: 103,126

Models produced: Citroen Elysee, Fukang, Picasso, Xsara; Peugeot 307

JV: Chongqing Changan Suzuki Automobile Co.Yu Dong Town, Ba Nan DistrictChongqing 401321, P.R. China(86) 23-6628-8600Top executive: Tosiaki Hasimoto, general manager

Suzuki Motor Corp. predicted in2002 that it would be producing morethan 100,000 vehicles a year in Chinaby 2005 at its principal joint venture,Chongqing Changan SuzukiAutomobile Co. They were wildlywrong – Suzuki cracked the 100,000threshold in 2003, producing just over102,000 Alto and Swift subcompactsthat year.

Production edged up another 5.2percent last year, to 107,337. Officialshave said the venture will doubleproduction capacity to 200,000 units ayear by 2007, and that one new modelwill be launched every year for thenext three.

The venture will launch theredesigned Swift this summer.

The Changan venture, in whichSuzuki has a 35 percent stake, is theonly one in China producing Suzuki-badged vehicles.

But Suzuki minivehicles, vans andsubcompacts are widely manufacturedin China under a tangle of licensingagreements the automaker signed inthe 1980s and 1990s. The vehicles areeverywhere on China's roads under a

plethora of brand names.Suzuki's other equity venture in

China, Jianxi Changhe Suzuki,produces the Wagon R for sale asthe Bei Dou Xing. Production andsales fell sharply last year, but thecompany did not provide anyclarification.

Indeed, if every Suzuki sold inChina carried a Suzuki badge saleswould have been 553,500. TheJapanese automaker would be theNo. 2 brand in China behindVolkswagen.

Not including its equity venture withSuzuki, the Changan AutomobileGroup sold some 422,349 Suzuki-derived and Suzuki-licensed mini- andsubcompact vehicles last year throughfive wholly controlled companies. Allproduce versions of the Suzuki Alto,Swift and Wagon R for sale under SCmodel names.

The vehicles are widely used astaxis, minibuses and vans.

Changan sold another 110,052Suzuki-badged Altos and Swiftsthrough its joint venture with theJapanese company.

Suzuki Motor Corp.Room 502, Beijing Fortune Building, No. 5 Dong San Huan Bei Chaoyang District, Beijing 100004, P.R. China(86) 10-6590-8040, www.suzuki.com Top executive: Kunihisa Matsubara, general manager

OwnershipChangan Auto Shareholding Co. - 51%; Suzuki Motor Corp. - 35%;Nisshio Iwai Trading - 14%

Capacity2004: 100,000 2003: 100,000

Production2004: 107,337 2003: 102,083

Unit sales2004: 110,052 2003: 100,018

Models produced: Suzuki Alto, Swift

JV: Jiangxi Changhe Suzuki Co. Mail Box 518, No. 1 East RoadJin De Zhen, Jiangxi Province 333002, P.R. China(86) 798-8462-611Top executive: Takeuchi Masahiro, general manager

OwnershipChanghe Group - 51%; Suzuki Motor Corp. - 39%; Okaya - 10%

Capacity2004: 100,000 2003: 100,000

Production2004: 19,354 2003: 37,333

Unit sales2004: 21,101 2003: 36,429

Models produced: Suzuki Wagon R (Bei Dou Xing)

2005 Guide to China’s Auto Market Automotive News • Automotive News Europe • Automotive Resources Asia 13

Page 11: Guide To China - Automotive News

Global automakers/Joint ventures

JV: Tianjin FAW Toyota Motor Co.No. 2 LiuLi Road, Yang Liu Qin, Xiqing DistrictTianjin Province 300380, P.R. China(86) 22-2794-4050 Top executive: Takemoto Shozo, general manager

Unaccustomed to lagging the pack inany market, Toyota Motor Corp.continues laying the foundation for anaggressive catch-up program in China.

Toyota, which did not open a jointventure in China until mid-2002, saysit will invest up to $2.5 billion in newcapacity to increase its market shareto 10 percent in 2010 from about 3percent last year. Among foreignpassenger-vehicle makers, thecompany is a distant fifth in Chinaafter Honda and Hyundai.

Despite the market's recentcool-down, senior executives vow, thecompany will not change that goal.

Underscoring the point, Toyotaexecutives disclosed at the opening ofthe company's second assembly plantin Tianjin in March that the automakerwill build still another plant there. Thethird plant will have the capacity toproduce 500,000 vehicles a year by2007, executives said.

The new facility was announced atthe opening of a plant designed toproduce up to 100,000 Toyota Crownsedans a year, marking the first timethat the luxury car will be built outsideJapan. Toyota has targeted sales of

20,000 this year. The two assembly plants are part of

Tianjin FAW Toyota Motor Co.,Toyota's core partnership in China withFirst Auto Works, .

FAW Toyota produced 83,437 Corollaand Vios compact cars in 2004, up 59percent from a year earlier. To prop upsales in last year's cut-throat market,Toyota cut prices on the two modelsby an average of $2,410.

FAW also assembles versions of theToyota Yaris/Echo at Tianjin FAW Xiali;the Land Cruiser Prado at SichuanToyota, in which Toyota has a 50percent stake; and another version ofthe Land Cruiser at FAW's main facilityin Changchung.

In still another assembly venture,Toyota late last year won approval forwhat will be its fourth plant in China.The $460 million venture in thesouthern city of Guangzhou will havean initial capacity of 100,000 Camrysedans a year, rising to 250,000 asdemand warrants.

Operating at maximum capacity, thefour plants would give Toyota thecapability of producing some 950,000vehicles a year by 2008.

Ownership: Toyota Motor Corp. - 40%; Toyota Motor (China) Investment Co. - 10%;FAW Xiali Automobile Co. - 30%; First Auto Works - 20%

Capacity2004: 120,000 2003: 50,000

Production2004: 83,4372003: 49,535

Unit sales2004: 77,739 2003: 48,567

Models produced: Toyota Corolla, Vios, Crown

Toyota Motor Corp.Room 3806-11 Jin Guang CenterHujialou, Chaoyang District, Beijing 100020, P.R. China(86) 10-6597-3995, www.toyota.com.cn Top executive: Hattori Etsuo, chief representative

JV: Sichuan Toyota Motor Co.No. 9 Tiao Den He Nan Lu, Chenghua DistrictSichuan Province 610051, P.R. China(86) 28-8472-7491 Top executive: Jiang Zhizhong, president

Ownership: Chengdu FAW Auto - 50%; Toyota Motor Corp. - 45%; Toyota Tsusho Corp. - 5%

Models produced: Toyota Land Cruiser Prado

Capacity2004: 10,000 2003: 10,000

Production2004: 3,110 2003: 397

Unit sales2004: 3,047 2003: 397

JV: FAW-Volkswagen Automotive Co.Dongfeng Street, ChangchunJilin Province 130011, P.R. China(86) 431-5990-151Top executive: Qin Huanming, general manager

Volkswagen AG posted anunwelcome first in China last year - itsfirst year-to-year sales decline since itstarted local production almost twodecades ago. Combined sales at its twojoint ventures, FAW Volkswagen andShanghai Volkswagen, slipped 6.4percent last year to 653,766.

The German automaker has steadilylost market share in China in recentyears in the face of rising competition,falling 5.6 points last year to 25.2percent. As recently as 2001, VWcommanded a 50 percent share.

But the declines in share had alwayscome on higher volumes as the marketexpanded at often astonishing rates.That cycle ended last year when overallmarket growth slowed to about 15percent vs. a 76 percent gain from2002 to 2003. Sales continue to be softthis year.

But VW is not taking the slippagelying down. Executives insist theautomaker is working intensively tomaintain market share at 25 percent to30 percent.

Despite the market cool-down, theautomaker still plans to doublecapacity in China to 1.6 million cars ayear by 2008 by expanding both of itsjoint ventures at a cost of some$8 billion.

It also will build two engine plants

and expand an existing one as a meansof cutting costs.

VW also has launched a brand-building campaign, its first, and isstudying the possibility of producingone of its other brands, such as Skoda,in China.

Shanghai VW makes the VolkswagenSantana, Santana 3000, Passat, PoloTouran and Gol, and will launch a newPassat later this year. Volkswagen-FAWproduces the Volkswagen Jetta, Bora,Caddy and Golf, and the Audi A6 andA4.

Because its two joint ventures builddifferent vehicles and compete witheach other with separate sales, serviceand distribution networks, low brandrecognition remains a problem for VWin China.

The Santana sedan, the first VWmodel made in China, is ubiquitous.But many Chinese consumers don'trealize that newer models such as theBora and Passat also are Volkswagens,executives say.

VW also is willing to remain flexibleon prices, which fell an estimated 13percent for the entire industry in Chinalast year. Responding quickly to sharpprice cuts by rival BMW on its 3- and5-series sedans, FAW Volkswagen inMarch slashed prices on the Audi A4and A6 by as much as $5,200.

Volkswagen China Investment Co.3A Sanlitun RoadChaoyang District 100027, Beijing P.R. China(86) 10-6505-3232, www.volkswagen.com.cn Top executive: Bernd Leissner, president Volkswagen Group China

OwnershipFirst Auto Works - 60%; Volkswagen AG - 20%; Volkswagen (China)Investment Co. - 10%; Audi AG - 10%

Capacity2004: 400,000 2003: 300,000

Production2004: 287,117 2003: 302,346

Unit sales2004: 300,117 2003: 302,385

Models produced: Audi A4, A6; VW Bora, Golf, Jetta, Caddy

JV: Shanghai Volkswagen Automotive Co.No. 63 Luo Pu Road, An TingJiading Distict, Shanghai 301805, P.R. China(86) 21-5956-1888, www.csvw.comTop executive: Chen Zhixin, general manager

OwnershipVolkswagen - 40%; Shanghai Automotive Industry Corp. - 50%; Volkswagen (China) Investment Co. - 10%

Models produced: VW Gol, Passat, Touran, Polo, Santana, Santana 3000

Capacity2004: 450,000 2003: 450,000

Production2004: 346,338 2003: 405,252

Unit sales2004: 353,649 2003: 396,006

JV: Guangzhou Toyota Motor Co.No. 8 Huangge Duan Huangge Zhen, Shi Nan Road Panyu District, Guangzho, P.R. China(86) 20-3939-8888 Top executive: Toru Kuzuhara, general manager

Ownership: Guangzhou Auto - 50; Toyota Motor Corp. - 50%Plant is under construction. Production of the Camry to begin in 2006.

14 Automotive News • Automotive News Europe • Automotive Resources Asia 2005 Guide to China’s Auto Market

Page 12: Guide To China - Automotive News

C H I N A

MONGOLIAKYRGYZSTAN

INDIA

NEPAL

MYANMARLAOS

PHILIPPINES

JAPAN

AKISTAN

VIETNAM

Guangdong

Tianjin

Sichuan

Shaanxi

Shandong

Shanxi

Shanghai

Beijing

Ningxia

Inner Mongol ia

Liaoning

Guizhou

Guangxi

Gansu

Tibet

Xinj iang

Hubei

Hunan

Hebei

Henan

Heilongjiang

Fujian

Qinghai

Jilin

Jiangsu

Jiangxi

Zhejiang

Anhui

Hong Kong

Taiwan

Hainan

Yunnan

Chongqing

2

2

3

1

1

5

4

6

5

4

3

8

7 9

8

7

6

11

10

12

11

10

9

14

13

15

14

13

12

17

18

17

16

15

16

20

21

19

18

19

23

24

22

1 - BMW Brilliance Automotive Ltd. Shenyang, Liaoning Province

2 - Beijing Benz-DaimlerChrysler Automotive Ltd. Chaoyang District, Beijing

3 - Nanjing Fiat Co. Nanjing, Jiangsu Province

4 - Changan Ford Automobile Co.New Northern Zone, Chongqing

5 - Jiangling Motors Corp.Nanchang, Jiangxi Province

6 - Shanghai GM Norsom Motors Co.Shenyang, Liaoning Province

7 - SAIC GM Wuling Automobile Co.Liuzhou, Guangxi Province

8 - Shanghai General Motors Corp.Pudong, Shanghai

9 - Shanghai GM Dongyue MotorsYantai, Shandong Province

10 - Guangzhou Honda Automobile Co. Guangzhou, Guangdong Province

11 - Dongfeng Honda Automobile Co. (Wuhan)Wuhan, Hubei Province

12 - Honda Automobile (China) Co.Guangzhou, Guangdong Province

13 - Beijing Hyundai Motor Co.Shunyi District, Beijing

14 - Dongfeng Yueda Kia Automobile Co. Yangcheng City, Jiangsu Province

15 - Hunan Changfeng Motor Co.Yongzhou, Hunan Province

16 - Dongfeng Motor Co.Shiyan, Hubei Province

17 - Zhengzhou Nissan Automobile Co.Zhengzhou, Henan Province

18 - Dongfeng Peugeot Citroen Automobile Wuhan, Hubei Province

19 - Chongqing Changan Suzuki AutomobileBa Nan District, Chongqing

20 - Jiangxi Changhe Suzuki Co. Jin De Zhen, Jiangxi Province

21 - Tianjin FAW Toyota Motor Co.Xiqin District, Tianjin

22 - Sichuan Toyota Motor Co.Chenghua District, Sichuan Province

23 - FAW-Volkswagen Automotive Co. Changchun, Jilin Province

24 - Shanghai Volkswagen Automotive Co.Jiading District, Shanghai

1 - Dongfeng Liuzhou Motor Co. Liuzhou, Guangxi Province

2 - Dongfeng Automobile Co. Xiangfan, Hubei Province

3 - FAW Car Co. Changchun, Jilin Province

4 - FAW Haima Automotive Co. Haikou, Hainan Province

5 - Changchun FAW Fengyue Auto Co. Changchun, Jilin Province

6 - FAW Huali (Tianjin) Motor Co.Xiqing District, Tianjin Province

7 - Tianjin FAW Xiali Automobile Co.Xiqing District, Tianjin Province

8 - Chery Automobile Co. Wuhu, Anhui Province

9 - Anhui Jianghuai Automobile Co. Hefei City, Anhui Province

10 - Shenyang Brilliance Jinbei Automotive Co. Shenyang, Liaoning Province

11 - BYD Auto Co. Xian, Shaanxi Province

12 - Jiangxi Changhe Automobile Co. Jing De Zhen, Jiangxi Province

13 - Geely Automobile Holdings Ltd.Hangzhou, Zhejiang Province

14 - Great Wall Automobile Holding Co. Baoding City, Hebei Province

15 - Guizhou Skylark Automobile Co. Anshun City, Guizhou Province

16 - Hafei Motor Co. Harbin, Heilongjiang Province

17 - Hebei Zhongxing Automobile Co. Baoding City, Hebei Province

18 - Rongcheng Huatai Automobile Co. Rongcheng CIty,Shangdong Province

19 - Soueast (Fujian) Motor Corp.Fuzhou, Fujian Province

20 - Jilin TongtianLongtan, Jilin Province

21 - Jianglin LandwindNanchang, Jiangxi Province

22 - Beijing Automotive Industry Corp.Chaoyang District, Beijing

23 - Chongqing Changan Automobile GroupJang Bei, Chongqing

Global automakers/Joint ventures Domestic automakers

Production facilities in China

20

21

22

2005 Guide to China’s Auto Market Automotive News • Automotive News Europe • Automotive Resources Asia 17

23

Page 13: Guide To China - Automotive News

Domestic automakers

2005 Guide to China’s Auto Market Automotive News • Automotive News Europe • Automotive Resources Asia 19

Beijing Automotive Industry Corp. straddles threeof China's hottest segments – premium andeconomy sedans, and SUVs – through jointventure partnerships.

The city-owned automaker, which produces heavy,medium and light trucks, and passenger vans forsale under the Beijing name, assembles cars withHyundai, and Jeep and Mitsubishi SUVs withDaimlerChrysler.

Production of Mercedes-Benz C- and E-classsedans is scheduled to begin this summer.

Buoyed by a 176 percent surge at its Beijing-Hyundai joint venture, the group posted a 58percent gain in unit sales last year to 531,000,including commercial trucks. With the introduction

of the compact Elantra, Beijing-Hyundai sales roseto 144,090 from 52,128 in 2003, the venture's firstfull year of production.

Sales are projected to be up another 39 percentthis year, to 200,000.

The partnership with Hyundai bodes well forBeijing Automotive. As the government's credittightening shifts auto demand toward "economy"and "value" purchases, Hyundai stands to be a majorbeneficiary because these are attributes closelyidentified with the Korean automaker.

Indeed, the partners have committed some $750million to double the capacity of their existing plantto 300,000 units a year by 2007, and to add a

second 300,000-unit plant by 2008. Sales at Beijing Benz-DaimlerChrysler, the group's

other joint venture, soared 59 percent over 2003with the introduction of the Mitsubishi Pajero Sportand Outlander SUVs.

The two Japanese vehicles accounted for 66percent of the venture's sales last year.

But as Mitsubishi continues to search for a way toproduce vehicles on its own in China, it's unclearhow long Beijing Benz will continue to produce theJapanese company's SUVs.

Exclusive of its joint ventures, Beijing AutomotiveIndustry Corp. has 10 manufacturing plants with acumulative capacity of more than 300,000 units.

Beijing Automotive Industry Corp.

Ownership: Municipal government - 100%

Models produced: Beijing SUV

No. 25, Dong San Huan South RoadBeijing 200021, P.R. China(86) 10-8766-9888 Top executive: Dong Yang, president

Capacity2004: 100,0002003: N.A.N.A. = Not available

Production2004: 25,036 2003: N.A.

Unit sales2004: 25,0622003: N.A.

Global JV’s:Beijing Benz-DaimlerChrysler Automotive Ltd. – Beijing – Jeep4700/Jeep4000, Jeep2500, Jeep Grand Cherokee; Mitsubishi Pajero Sport, Outlander (Page 7)Beijing Hyundai Motor Co. – Beijing – Hyundai Elantra, Sonata (Page 10)

China's tier 2 automakers last year were again squeezed by declining profitmargins and government pressure to consolidate or die. The pressure likelywill worsen this year as the government's crackdown on consumer creditcontinues and auto sales soften, or decline outright.

The five biggest automakers strengthened their chokehold on the market lastyear, leaving fewer crumbs for the tier 2s. According to data from the ChinaAssociation of Automobile Manufacturers, the top five automakers raised theirshare of the total market to 68.9 percent from 63.5 percent in 2003 as eachincreased sales in a softer market.

The five – First Automotive Works Group, Shanghai Automotive IndustryCorp., Chongqing Changan Automotive Group, Beijing Automotive IndustryCorp. and Dongfeng Motor Corp. – reported combined sales of 3.49 millioncommercial and passenger vehicles last year, up 23.8 percent from 2.82 millionin 2003.

Most growth came from the companies' joint ventures with foreignautomakers. Beijing Automotive sales, for example, surged 57.7 percent to531,000 units, including commercial vehicles and a boost from partnerHyundai Motor, whose sales jumped 176.5 percent to 144,090.

But the growth in passenger-vehicle sales in China slowed to about 15percent last year from a 76 percent increase in 2003, and few tier 2 makershave the resources to compete for long in the kind of price-driven marketshaping up in China.

Brilliance China Automotive Holdings Ltd. warned in early March, forexample, that its 2004 profit would be hurt by a significant setback in vehicle

sales in China, including a downturn at its joint venture with BMW AG. Thecompany was scheduled to report in late April after this went to press.

According to the Ministry of Commerce, the combined profit of China's 5,857assemblers and parts makers fell 6 percent last year to 72 billion yuan, or $8.7billion, as price-cutting eroded margins. The ranks of unprofitable companiesgrew by 17.4 percent to 1,020, and their combined losses worsened by a quarterto about $785 million, the ministry said.

The combined profit of the 15 largest automakers fell 5.12 percent to about $4.6billion, the ministry said.

"More auto companies will report losses and some may go bankrupt before theindustry consolidates and restructures into a few big players," said Hu Song, ananalyst at Haitong Securities in Shanghai, in an interview with Xinhua newsagency.

Adding to the price pressure on automakers has been the government's push toforce consolidation in the market. The Ministry of Commerce says that makerswith capacity of less than one million will not be able to survive, and those withcapacity of less than two million will face strong restructuring pressure.

Faced with intense price pressure in China, and reluctant to be forced intoshotgun alliances, some tier 2 companies such as Chery Automobile Co. arelooking at exports to Europe and North America as a possible relief valve.Although Volkswagen exports China-made Golfs to Australia and HondaMotor Co. is beginning to ship 50,000 Fit subcompacts a year to Europe, it's stillan open question whether a car sporting a Chinese company's badge can be soldin appreciable numbers in the developed markets.

Big 5 tighten grip on production, sales

Workers assemble a ‘Jie Fang’ model truck at the First Auto Works plant inChangchung. FAW, which is partnered in the world’s fastest growing car market withVolkswagen AG, Toyota Motor Corp. and Mazda Motor Corp., is China’s biggestautomaker with sales of more than 1 million units in 2004.

Photographer: Natalie Behring-Chisholm/Bloomberg News

Page 14: Guide To China - Automotive News

Domestic automakers

JV: Dongfeng Liuzhou Motor Co.No. 286, Pingshan Ave., Liuzhou Guangxi Province, 545005 P.R. China(86) 772-3383-908 Top executive: Cheng Daoran, general manager

Dongfeng Motor Corp., the state-run automakerthat has production ventures with Nissan, Honda,Peugeot and Kia, says it expects to sell more than600,000 vehicles this year valued at some 100billion yuan, or about $12.1 billion.

In a market that was up 15 percent, thecompany's sales rose 7 percent last year to 523,000vehicles (including commercial trucks), generatingturnover of $11.2 billion yuan, up 17 percent. Profitrose 23 percent to $507 million, the company said.

Dongfeng produces heavy-duty and light-dutytrucks under its own name and cars with itspartners: the Nissan Teana, Sunny and Bluebird andTiida; the Citroen Picasso, Fukang, Xsara and

Elysee, and Peugeot 307; the Honda CR-V andCivic; and the Kia Accent and Optima and theCarnival minivan. All but the Peugeot ventureregistered sales gains in 2004.

This year has opened strong, Dongfeng said.Sales for the first two months, the most recent dataavailable at press time, rose 24 percent from a yearearlier to 91,000 units, while production is up 32.6percent to 95,000 units.

Dongfeng hopes to launch an IPO on the HongKong exchange this year. The group had planned toraise $1 billion from a Hong Kong share offeringlast year, but apparently has scaled that back to

around $600 million in the face of China's overallmarket slowdown.

In an interview with Reuters, Dongfeng CEO MiaoWei confirmed that the IPO still is a possibility. Buthe declined to give a timetable or value for the deal.

Miao also disclosed that talks have stalled on aproposed joint venture with France's Renault SA,but that he still hoped to conclude a deal by yearend.

Renault, which owns a controlling 44 percentstake in Dongfeng's partner, Nissan, has said ithopes to make 150,000 cars a year in China startingin 2007.

Dongfeng Motor Corp.

Ownership: Dongfeng Motor Corp. - 100%

Capacity2004: 50,000 2003: 50,000

Production2004: 16,486 2003: 10,302

Unit sales2004: 16,5892003: 10,079

Models produced: Future

JV: Dongfeng Automobile Co.1 Dongfeng Qiche Da Dao, Auto Industry Development ZoneXiangfan, Hubei Province 441004, P.R. China(86) 710-339-6006 Top executive: Zhu Fushou, general manager

Ownership: Dongfeng Motor Co. - 70%; Others - 30%

Models produced: Light-commercial vehicles, Cummins diesels

No. 747 Jianshe Ave.Hankou, Wuhan, Hebei 430015, P.R. China(86) 27-8428-5000, www.dfmc.com.cn Top executive: Miao Wei, chairman

Capacity2004: 150,000 2003: 100,000

Production2004: 61,0002003: N.A.

Unit sales2004: 61,0002003: 66,048

Global JV’s:Dongfeng Motor Co. – Shiyan, Hubei Province – Nissan Bluebird, Sunny, Teana, Tiida (Page 11)Dongfeng Honda Automobile (Wuhan) Co. – Wuhuan, Hubei Province – Honda CR-V, Civic (Page 10)Dongfeng Yueda Kia Automotible Co. – Yancheng City, Jiangsu Provice – Kia Accent, Carnival, Optima (Page 10)Dongfeng Peugeot Citroen Automobile Co. – Wuhan, Hubei Province – Citroen Elysee, Fukang, Picasso, Xsara; Peugeot 307 (Page 13)

20 Automotive News • Automotive News Europe • Automotive Resources Asia 2005 Guide to China’s Auto Market

The Changan Automobile Group, which traces itsroots back to a 1950s military truck factory in thewestern city of Chongqing, has become China'sthird biggest vehicle maker through licensing andjoint-venture ties with Japan's Suzuki Motor Corp.

Also known as the Chana Automobile (Group),Changan sold 579,520 light trucks, cars andminibuses last year, up nearly 23 percent over2003. But only 157,000 units were sold by thegroup's two joint ventures, Changan FordAutomobile Co. and Chongqing Changan SuzukiAutomobile Co.

Changan Suzuki sales edged up 10 percent in2004 to 110,052 units while Ford sales jumped172 percent to 47,119, reflecting the addition ofthe European Mondeo. The Ford venture beganproduction in 2003.

Although the joint venture with Ford promises tobecome increasingly important to its fortunes,

Changan's rice bowl continues to be its relationshipwith Suzuki, which dates back to 1982.

Not including its joint venture with the Japaneseautomaker, Changan sold 422,349 Suzuki-derivedand Suzuki-licensed mini- and subcompactvehicles last year through a tangle of five whollycontrolled companies: Chongqing ChanganAutomobile Co.; Nanjing Changan Automobile Co.;Hebei Changan Automobile Co.; Hebei ChanganShengli Automobile Co.; and Chongqing ChanganKuayue Automobile Co.

All produce versions of the Suzuki Alto, Swiftand Wagon R under SC model names.

Changan surprised many industry observers lastyear, though, by introducing two proprietaryconcept cars at the Auto China 2004 exhibition inBeijing. One, named the Yangtze River Sturgeon,was a handsome proposal for a European-stylesport sedan. The other, a roadster proposal called

the Chinese Dragon, was powered by a 3.2-literV-8.

Like other Chinese carmakers, Changan hasmade no secret of its desire to begin exportingcars to Europe and the United States. Someobservers see the two concept cars as a steptoward that goal.

Meanwhile, government planners in Januaryapproved Changan Ford's request to build asecond assembly plant. The plant, in Nanjing, willbegin producing 160,000 to 200,000 cars annuallyin 2007-08 and will raise the partners' capacity inChina to some 400,000 cars a year.

Changan Ford produces the Ford Fiesta andMondeo, and is expected to begin assembling theFocus this year. The new plant is expected to buildthe next generation Fiesta and the Mazda2, whichshare a common platform.

Chongqing Changan Automobile GroupNo. 260 Jian Xin East Road, Jiang Bei DistrictChongqing 400023, P.R. China(86) 23-6759-1349, www.changan.com.cn Top executive: Yin Jiaxu

Global JV’s:Changan Ford Automobile Co. – Chongqing – Ford Fiesta, Mondeo (Page 8)Chongqing Changan Suzuki Automobile Co. –- Chongqing –Suzuki Alto, Swift (Page 13)

Ownership: Municipal government - 100%

Capacity2004: N.A. 2003: N.A. N.A. = Not available

Production2004: 425,0302003: 349,033

Unit sales2004: 422,3492003: 344,795

Models produced: Suzuki-based SC models

Page 15: Guide To China - Automotive News

Domestic automakers

JV: FAW Car Co.No. 4888 Weishan Road, High Technology Development Zone Changchun, Jinlin Province 130011, P.R. China(86) 431-5781108 , www.fawcar.com.cn Top executive: Zhang Pijie

First Automobile Works Group set an importantbenchmark for China's auto industry in 2004when it became the country's first vehicle makerto produce and sell more than 1 million cars andtrucks in a year.

The threshold is important because the highervolume can generate significant cost savingsthrough economies of scale – yielding a potentialcompetitive edge for FAW in China's newlyhypercompetitive marketplace.

The No. 2 automaker in China last year,Shainghai Automotive Industry Corp., trailed FAWby nearly 159,000 units.

FAW, which is partnered with Volkswagen AG,Toyota Motor Corp. and Mazda Motors in jointventure and licensing deals, sold 1,007,471vehicles in 2004, up 12.4 percent over 2003, theChina Association of Automobile Manufacturerssaid. Passenger-vehicle sales rose 11 percent to639,863 units, accounting for 63.5 percent of total.

Sales of FAW's legacy vehicles – the companywas founded in 1953 to make heavy trucks –soared 34 percent last year to 127,850, whilemedium-truck sales rose 39 percent to nearly60,000. The company exports small numbers ofcommercial vehicles to developing countries.

FAW's two joint ventures accounted for 59percent of passenger-vehicle sales in 2004. FAWVolkswagen sold 300,117 Volkswagens and Audiswhile Tianjin Toyota sales totaled 77,739 units.

FAW sold another 260,000 units under its ownbadge or under license, including: 35,740Mazda6s; 66,000 Mazda Familias and Premacys;130,182 Toyota-based Xialis; and 15,000 Red Flag(Honqui) limousines.

Because FAW's two partners are underway oncapacity expansions totaling 930,000 units, thestate-owned automaker appears to be solidly ontrack to hit its target of 2 million sales annually by2008.

Both Volkswagen and Toyota have vowed toproceed with their plans despite the market'sdramatic slowdown in 2004 and so far this year.

Volkswagen, FAW's senior partner, is building asecond, 300,000-unit plant at Changchun to openin 2007, and expanding the existing plant to330,000 units a year.

Toyota, a late entry to China and FAW's newestpartner, has announced plans to build a thirdplant in Tianjin that would raise its maximumcapacity there to some 700,000 cars a year.

In addition, FAW and Mazda have agreed to putall of the Japanese automaker's sales in China,including units produced at a Ford Motor Co.joint venture with Changan Automotive Group,under a new FAW-Mazda joint venture.

FAW will hold a 75 percent stake in the salescompany, which will be based in Changchun.

Mazda announced last week that it aims to sell300,000 cars in China annually by 2010.

First Automobile Works Group

Ownership: First Auto Works - 64%; Others - 36%

Capacity2004: 100,000 2003: 90,000

Production2004: 50,066 2003: 48,219

Unit sales2004: 50,789 2003: 51,266

Models produced: Red Flag, Mazda6

JV: FAW Haima Automobile Co.22 Jinpan Road, Jinpan Industry Development Area, HaikouHainan Province 570216, P.R. China(86) 898-6682-0333, www.hnmazda.com Top executive: Jing Zhu, gen. mgr.

Ownership: First Auto Works - 49%; Haima Automobile Group - 49%; Haima Provincial Government - 2%

Models produced: Mazda Familia, Premacy

No. 83 Dongfeng StreetChangchun Province, Jilin 130011, P.R. China(86) 431-5901-140, www.faw.com.cn Top executive: Zhu Yanfeng, president

Capacity2004: 150,000 2003: N.A.

Production2004: 66,954 2003: 54,824

Unit sales2004: 66,055 2003: 54,406

Global JV’s:FAW-Volkswagen Automotive Co. – Changchun, Jilin Province – Audi A4, A6; Volkswagen Bora, Golf, Jetta, Caddy (Page 14)

Tianjin FAW Toyota Motor Co. – Xiqing, Tianjin – Toyota Crown, Corolla, Vios (Page 14)

JV: Changchun FAW Fengyue Auto Co. No. 5 Dongfeng StreetChangchun, Jilin Province 130011, P.R. China(86) 431-5786-808Top executive: Dai Zhi, general manager

Ownership: First Auto Works - 100%

Models produced: Toyota Land Cruiser

Capacity2004: 10,000 2003: 10,000

Production2004: 4,207 2003: 666

Unit sales2004: 3,939 2003: 666

JV: FAW Huali (Tianjin) Motor Co.Yan Liu Qing Li Lou Nan, Xiqing DistrictTianjin Province 300380, P.R. China(86) 22-2794-4446 Top executive: Fang Yongping, general manager

Ownership: First Auto Works - 75%; Golden Lion Group of Malaysia - 25%

Models produced: Daihatsu Terios, Move

Capacity2004: 60,000 2003: 50,000

Production2004: 9,1272003: 742

Unit sales2004: 8,9952003: 713

JV: Tianjin FAW Xiali Automobile Co.Lilou Nan Zhong Bei Street, Xiqing DistrictTianjin Province 300380, P.R. China (86) 22-2305-6010, www.tjfaw.com.cn Top executive: Xu Xianping, gen. mgr.

Ownership: Subsidiary State Holding - 51%: Corporate - 34%; Others - 15%

Models produced: Charade, Vizi, Vela

Capacity2004: 180,000 2003: 180,000

Production2004: 130,506 2003: 117,186

Unit sales2004: 130,182 2003: 117,335

22 Automotive News • Automotive News Europe • Automotive Resources Asia 2005 Guide to China’s Auto Market

Page 16: Guide To China - Automotive News

Domestic automakers

Anhui Jianghuai Automobile Co.

Models produced: Refine (Hyundai Starex)

No. 176 Dongliu Road, Hefei City, Anhui Province 230022, P. R. China(86) 55-1229-6839, www.jac.com.cn Top executive: Zuo Yanan, president

Shenyang Brilliance Jinbei Automotive Co.Ownership: Brilliance China Automotive Holdings - 51%;Shenyang Jinbei Automotive Co. - 49%

Models produced: Zhonghua, New Zhonghua Grandor, Jinbei Granse

No. 14 Shanzuizi Road, Dadong District, Shenyang, Liaoning Province 110044, P.R. China(86) 24-8820-1183, www.brilliance-auto.com Top executive: Lin Xiaogang, chairman

Capacity2004: 120,0002003: 100,000

Production2004: 11,8062003: 26,841

Unit sales2004: 10,9822003: 25,600

BYD Auto Co.Ownership: BYD Co. - 92%; Shanxi Investment Group - 8%

Models produced: Flyer, BYD F3**Production to begin late 2005.

Yan An Road, Kuichong Longgang, Shenzhen, Guangdong Province 518119, P.R. China(86) 755-8421-8888, www.bydauto.com.cn Top executive: Wang Chuanfu, president

Capacity2004: 60,0002003: 50,000

Production2004: 17,2452003: 20,100

Unit sales2004: 17,9002003: 20,100

Jiangxi Changhe Automobile Co.Ownership: Jiangxi Changhe Aviation Industry Co. - 64%; Others - 28%;Hefei Changhe Automobile Co. - 8%

Models produced: Ideal

Mail Box No. 108, Jing De Zhen, Jiangxi Province 333002, P.R. China(86) 798-8462-032, www.chideal.com Top executive: Cai Suping, general manager

Capacity2004: 60,0002003: 60,000

Production2004: 7,4022003: 2,711

Unit sales2004: 6,2882003: 2,078

Chery Automobile Co.Ownership: Chery Automobile Co. - 100%

Models produced: Fengyun, QQ, Qiyun, Son of East, Tiggo

No. 8 Changchun Road, Anhui Province 241009, P.R. China(86) 553-5843-348, www.chery.cn Top executive: Yin Tongyao, president

Capacity2004: 350,0002003: N.A.N.A. = Not available

Production2004: 79,5652003: 91,223

Unit sales2004: 86,5672003: 85,349

Shanghai Automotive Industry Corp.

Global JV’s:SAIC GM Wuling Automobile Co. – Liuzhou, Guangxi Province – Chevrolet Spark (Page 9)Shanghai General Motors Corp. – Pudong, Shanghai – Buick Regal, Royaum, Excelle (Page 9)Shanghai GM Dongyue Motors – Yantai, Shandong Province – Sail, Sail SRV, Epica (Page 9)Shanghai Volkswagen Automotive Co. – Jiading Distict, Shanghai – VW Gol, Passat, Polo, Santana, Santana 3000, Touran (Page 14)Shanghai GM (Shenyang) Norsom Motors Co. – Shenyang, Liaoning Province – Buick GL8 (Page 9)

489 Weihai Rd.Shanghai 200041, P.R. China(86) 21-2201-1888, www.saicgroup.com Top executive: Hu Maoyuan, president

Shanghai Automotive Industry Corp. is a distantsecond to giant First Auto Works in annual unitsales, but its ambitions take a back seat to noone.

SAIC, which is partnered with Volkswagen andGeneral Motors in what for now are China'sbiggest automotive joint ventures, aims to be oneof the world's top six automakers by 2020. Thecompany would need sales of some 4.0 millioncars a year by then to achieve its target.

SAIC's sales rose 8.5 percent last year to848,542 units.

The automaker, which is owned by the City ofShanghai, is counting on its own internationalinitiatives, as well as its partnerships with China'sbiggest foreign automakers, to fuel that growth.

Volkswagen aims to double capacity of itsShanghai joint venture to near 1 million units ayear by 2008, while General Motors says it willraise capacity in China to 1.3 million units a yearby 2007 from 550,000 now.

All of GM's ventures in China are linked toShanghai Automotive in one way or another.

But SAIC is looking for growth separate fromits partners.

In 2003, Shanghai Automotive became the firstChinese carmaker to take a stake in a foreignautomaker when it took a 10.6 percent share ofGM Daewoo in Korea. The link gives it directaccess to state-of-the-art small-car engineeringthat can be used in developing its own-brandvehicles. The company has said it intends to beselling 50,000 Shanghai-badged cars a yearbeginning in 2007.

Then, last year, SAIC agreed to acquire acontrolling 48.9 percent stake in Korea'sSsangyong Motors, a maker of SUVs, for some$500 million. The deal gives it direct access tothe Korean market, as well as a way to enterChina's fast-growing SUV segment.

But as this was going to press, SAIC's

ambitious bid to acquire a 70 percent stake inBritain's MG Rover Group appeared to be dead,victim of the British government’s refusal toguarantee Rover’s huge pension liabilities.

In any event, many analysts question whetherthe Chinese company could have made a successof a carmaker that BMW AG once owned – andcould not turn around.

On an even more ambitious scale, SAIC hasconfirmed that it's in discussions with Italy's FiatAuto concerning a possible, unspecifiedcollaboration.

Fiat has not done well in China, where it ispartnered with Nanjing Automobile Group, so theItalian automaker may be looking for ways toextend its reach there.

On the other hand, SAIC has what Fiat needsmost – cash – and Fiat has what SAIC desiresmost: automotive technology and a global reach.A deal of some kind seems likely.

2005 Guide to China’s Auto Market Automotive News • Automotive News Europe • Automotive Resources Asia 23

Anhui Jianghuai Automobile Co.Ownership: Anhui Jianghuai Auto Group - 43%; Others - 41%; MalaysiaAngkasa Transport Equipment - 16%

Models produced: Refine (Hyundai Starex)

No. 176 Dongliu Road, Hefei City, Anhui Province 230022, P.R. China(86) 55-1229-6839, www.jac.com.cn Top executive: Zuo Yanan, president

Capacity2004: 40,0002003: N.A.N.A. = Not available

Production2004: 17,2452003: 14,746

Unit sales2004: 17,9002003: 14,263

Ownership: Shanghai municipal government - 100%

Page 17: Guide To China - Automotive News

Domestic automakers

Hebei Zhongxing Automobile Co.Ownership: Hebei Zhongxing - 67%; Taiwan United Leaders Co. - 33%

Models produced: Star SUV, Admiral SUV, Cruiser 2400

No. 29 Jianguo Road, Baoding City, Hebei Province 071001, P.R. China(86) 312-2172-251, www.zxauto.com.cn Top executive: Xiao Wei, general manager

Capacity2004: 100,0002003: 100,000

Production2004: 16,1922003: 28,500

Unit sales2004: 16,2492003: 28,500

Jiangling Landwind Automobile Co.Ownership: Jiangling Motors Co. Group - 100%

Models produced: Landwind SUV

Jiaoqiao, Nanchang, Jiangxi Province 330044, P.R. China(86) 791-3806-666, www.landwind.cn Top executive: Lu Shuifang, president

Capacity2004: 50,0002003: N.A.N.A. = not available

Production2004: 10,0002003: N.A.

Unit sales2004: 10,0002003: N.A.

Jilin Tongtian Automobile Co.Ownership: Jilin Jiangbei Machine Factory - 10%; Lingtian Automobile Co. - 90%

Models produced: Glow

No.16 Ningbo Road, Longtan District, Jilin Province 132021, P.R. China(86) 432-3044-919, www.ttauto.com Top executive: Li Xubin, president

Capacity2004: 30,0002003: N.A.N.A. = not available

Production2004: 1,2002003: N.A.

Unit sales2004: 1,2072003: N.A.

Rongcheng Huatai Automobile Co.Ownership: Rongcheng municipal government - 100%

Models produced: Terracan

Middle Part of Rongshan Ave., Rongcheng City, Shangdong Province 264300, P.R. China(86) 631-7554-888, www.huataixiandai.com Top executive: Zhang Xiugen, president

Capacity2004: 30,0002003: 30,000N.A. = not available

Production2004: 11,0002003: N.A.

Unit sales2004: 10,0082003: N.A.

Soueast (Fujian) Motor Corp.Ownership: Fujian Motor Industry Group - 50%; China Motor Corp. - 50%

Models produced: Freeca, Lioncel, Soveran

Soueast Auto City, Fuzhou, Fujian Province 350119, P.R. China(86) 591-2276-6566, www.soueast-motor.com Top executive: Ling Yuzhang, president

Capacity2004: 150,0002003: 120,000

Production2004: 41,4682003: 83,535

Unit sales2004: 41,0892003: 84,535

Great Wall Automobile Holding Co. Ownership: Founder-member - 72%; Public - 28%

Models produced: Safe, Pegasus, Sing, Hover**Production to begin in 2005

No. 115 South Great Wall Road, Baoding City, Hebei Province 071000, P.R. China(86) 312-2192-888, www.gwm.com.cn Top executive: Wei Jianjun, president

Capacity2004: 170,0002003: 45,000

Production2004: 27,5402003: 28,067

Unit sales2004: 27,4362003: 27,101

Guizhou Skylark Automobile Co.Ownership: China-National Guizhou Aviation Industry Group - 51%;Tan Chong International - 49%

Models produced: Skylark GHK7071 Series

Shuangyang Economy & Tech. Development Zone, Anshun City, Guizhou Province 561018, P.R. China(86) 853-3413245 Top executive: Chi Yaoyong, president

Capacity2004: 50,0002003: 50,000

Production2004: 1652003: 1,180

Unit sales2004: 1832003: 1,144

Hafei Motor Co.Ownership: Harbin Aircraft Industry Group - 100%

Models produced: Lobo, Saima, Saibao

No. 1 Yantai Road, Pingfang Industrial Area, Harbin, Heilongjiang Province 150060, P.R. China(86) 451-8658-1122, www.hafeiauto.com Top executive: Liu Tao, president

Capacity2004: 300,0002003: 150,000

Production2004: 28,5992003: 32,387

Unit sales2004: 29,8162003: 30,047

Geely Automobile Holdings Ltd.Ownership: Founder-member - 53%; Public - 47%

Models produced: Beauty Leopard, Haoqing, Maple, Merrie, Uliou

Jiangnan Ave., Binjiang District, Hangzhou, Zhejiang Province, 301152 P.R. China(86) 431-5990-471, www.geely.com Top executive: Li Shufu, president

Capacity2004: 360,0002003: N.A.N.A. = Not available

Production2004: 91,7442003: 81,285

Unit sales2004: 96,6932003: 80,056

24 Automotive News • Automotive News Europe • Automotive Resources Asia 2005 Guide to China’s Auto Market

Page 18: Guide To China - Automotive News

Delphi

Global suppliers in China

2005 Guide to China’s Auto Market Automotive News • Automotive News Europe • Automotive Resources Asia 25

12 A Pos Plaza, No. 1600 Century Ave., Shanghai 200122, P.R. China(86) 21-6875-8866, www.delphi.com

PlantsBeijing Delphi Wan Yuan Engine Management Systems Co. Beijing Engine management systems, partsShanghai Delphi International Battery Co. Shanghai Maintenance-free batteriesDelphi Saginaw Lingyun Drive Shaft Zhuozhou, Hebei Province Constant velocity joints, half-shaftsShanghai Delphi Emission Control Systems Co. Shanghai Catalytic converters, catalystsShanghai Delphi Automotive Air Conditioning Systems Co. Shanghai HVAC, heat exchangersDelphi Shanghai Dynamics and Propulsion Systems Co. Shanghai ABS brakes, steering systems, fuel injectors Shanghai Delco Electronics and Instrumentation Co. Shanghai Instrument clusters, sensors, HVAC equipmentDelphi Electronics Suzhou Co. Suzhou, Jiansu Province Entertaiment systems, electronicsDelphi Packard Electric Systems Co. Shanghai, Guangzhou; Changchun, Baicheng Wiring harnesses, ignition cables, CablesShanghai Delphi Automotive Door Systems Co. Shanghai Door hardware

Bosch 13/F Bank of China Tower, 200 Yincheng Road Central, Pudong, Shanghai 200120, P.R. China(86) 21-2898-1111, www.bosch.com.cn

PlantsBosch Automotive Products (Suzhou) Co. Suzhou, Jiangsu Province Chassis and energy systems, electronics, multimediaUnited Automotive Electronic Systems Co. Shanghai Gasoline engine management systemsNanjing Huade Spark Plug Co. Nanjing, Jiangsu Province Spark plugsBosch Automotive Diesel Systems Co. Wuxi, Jiangsu Province Diesel fuel injection systemsBosch Automotive Products (Changsha) Co. Changsha, Hunan Province Energy and body systemsZF Shanghai Steering Co. Shanghai Steering pumpsZF Steering Jincheng (Nanjing) Co. Nanjing, Jiangsu Province Steering pumpsFAW Zexel Climate Control Systems Co. Changchun, Jilin Province Condensers, evaporatorsHuada Zexel Automotive Air conditioner Co. Loudi, Hunan Province Air-conditioning compressor components Shanghai Delphi Automotive Door Systems Co. Shanghai Door hardware

Lured by promises of long-term, high-volume contracts from their majorcustomers – and sometimes encouraged at gunpoint, metaphorically speaking –auto suppliers are finding plenty of justification for their early caution aboutcommitting to the Chinese market.

The sharp, government-driven pullback in demand for passenger vehicles thatbegan last year has jolted every rung in the supply chain. Automakers begantrimming production in the third quarter last year as inventories of unsold cars builtup, and most are basing their future parts orders on the expectation of lower salesthis year.

According to the semi-official China Auto publication and Web site, the industry'soverhang of unsold cars stood at 500,000 cars at year end–200,000 units morethan what it considers a normal inventory.

Suddenly, suppliers have found themselves holding parts ordered, but notaccepted, by the customer. And capacity added in the expectation of steadilyincreasing production has become unused and expensive excess capacity.

Jinya Chen, president of Delphi China, says the company's long term plans inChina are unchanged. But "in the short term, we have to adjust our way offorecasting and manufacturing," he says. "We have a lot of work to do at this pointto adjust ourselves."

Delphi, GM's biggest supplier, has invested more than $400 million to open 11factories in China since 1991 and is building a $15 million research anddevelopment center in Shanghai. GM says it expects to increase its parts purchasesfrom China 20-fold in six years – from $200 million in 2003 to $4 billion in 2009 –while spending another $6 billion on sourcing for its China production.

But those forecasts were made while automakers were basking in the heat of theindustry's hottest demand curve. Cooldown chills profits

Passenger-car sales last year rose only 15 percent over 2003 to about 2.3 millionunits after soaring 62 percent in 2002 and 76 percent in 2003. This year is off to aneven colder start. Car sales for the first two months, the most recent available atpress time, fell 16 percent from a year earlier to 286,100 while output was down8 percent to 301,200, the China Association of Automobile Manufacturers reports.

China's central bank triggered the slowdown in May when it clamped down oncredit in a bid to cool the nation's overheating economy.

The slowdown quickly showed up on the industry's bottom line.According to the Ministry of Commerce, the combined profit of China's 5,857

assemblers and parts makers fell 6 percent last year to 72 billion yuan, or $8.7billion. The ranks of unprofitable companies grew by 17.4 percent to 1,020, andtheir combined losses worsened by a quarter to about $785 million, the ministrysaid.

But the impact is more severe than the percentages suggest; most of the hit onprofits was incurred in the third and fourth quarters, after sales began tumbling andmakers began cutting production. Sales through the first five months of 2004 hadbeen up over the year-earlier periods.

The pain has worsened so far in 2005. According to the National Bureau ofStatistics, profits in the automobile sector in the first two months of this year slid61.5 percent from a year earlier to the equivalent of $423 million. Profits of thecountry's 100 vehicle manufacturers dived 78.5 percent year-on-year to about$154.6 million while parts suppliers as a group posted a 20 percent decline, thefirst for the segment in the past decade, the agency said.

"This is a poor start for the auto sector and shows that a full-year profit declinewill be inevitable in 2005," the bureau's auto analyst, Jiu Jiang, told the China Dailynewspaper.

Some suppliers see a silver lining in the slowdown."It is not a bad thing for BorgWarner," said Freeman Shen, president of

BorgWarner China. "In the past, the OEMs just picked a supplier, not necessarily thebest supplier. We had to compete with a lot of local companies, who were copiers.Now that the market is slower and OEM competition is higher, they want to go witha company like BorgWarner."Long-term proposition

In any case, he says, suppliers know they have to look at China for the long term.The company is investing $90 million to build a production campus in Ningbo,

just down the coast from Shanghai, that includes a plant to assemble componentsfor Volkswagen-Audi's four-cylinder world engine. The plant is scheduled to open inMay. The company also is moving production of emissions systems for BeijingJeep Corp. from a plant in Dixon, Ill., to Ningbo.

BorgWarner supplies transmission, engine and powertrain assemblies.Customers in China include First Auto Works, Dongfeng, Shanghai-VW, FAW-VW,Shanghai-General Motors, Changan Ford, Beijing Jeep and Chery.

Denso Corp. says it also intends to maintain its pace of investment. It willproceed with plans to invest $67 million on a plant in Tianjin to produce heatexchangers for car air conditioners and radiators. The new company, which will beDenso's fourth air conditioning venture in China, will begin production in July 2006.Denso projects sales of some $130 million a year for the venture by 2010.

Mike McKenzie, a senior emerging market analyst with PricewaterhouseCoopersLLP, says the China market may not grow as fast as some have thought, andprobably won't hit the predicted 10 million units a year by 2008. But it will still be amajor player on the world stage.

From 2003 to 2012, China will represent 30 percent of all automotive growthworldwide, he predicts. But with that growth will come challenges.

For example, China faces a serious shortage of electricity as well as rising rawmaterial costs. Other potential negative factors include the likelihood of wageincreases, misaligned supply and demand, increased domestic competition and theglobal ambitions of Chinese suppliers.

"As margins thin and pricing competition intensifies," McKenzie says, "an efficientand developed low-cost assembly and supply base will be essential for financialsuccess."Note: The companies listed on the following pages were identified from theAutomotive News list of the Top 100 global suppliers as also being the top OEMsuppliers in China. They are ranked by global OEM parts sales.

Suppliers feel bite of market slowdown

Page 19: Guide To China - Automotive News

Global suppliers in China

Lear Room 1506 Citi Tower, No. 33 Hua Yuan Shi Qiao Road, Pu Dong, Shanghai, P.R. China (86) 21-5208-0666, www.lear.com

PlantsShanghai Songjiang Lear Automotive Carpet & Acoustics Co. Shanghai Carpet, insulatorsShanghai Lear Automotive Interior Trim Co. Shanghai Door trimShanghai Lear STEC Automotive Parts Co. Shanghai Wire harnesses, switches, electrical partsChongqing Lear Changan Automotive Interiors Trim Co. Chongqing Seats, door trims, headliners, carpetsJiangxi Jiangling Lear Interior System Co. Nanchang, Jiangxi Province Seats, door trim, headliners, carpetsWuhan LEAR-DPCA Auto Electric Co. Wuhan, Hubei Province Wire harness Nanjing Xindi-Lear Automotive Interiors System Co. Nanjng, Jiangsu Province Seats, headliners, door trimShenyang Lear Automative Seating & Interior System Co. Shenyang, Liaoning SeatsWuhan Lear-Yunhe Automotive Interior System Co. Wuhan, Hubei Province SeatsLear Dongfeng Automotive Seating Co. Wuhan, Hubei Province SeatsLear Corp. Changchun Automotive Interior Systems Changchun, Jilin Province SeatsBeijing Lear Dymos Automotive Systems Co. Beijing SeatsTacle Guangzhou Automotive Seat Co. Guangzhou, Guangdong Province Seats

Johnson Controls A-1802 Far East International Plaza, No. 319 Xianxia Road, Shanghai 200051, P.R. China(86) 21-6235-0255, www.johnsoncontrols.com

PlantsShanghai Yanfeng Johnson Controls Seating Co. Shanghai SeatsBeijing Johnson Controls Automotive Components Co. Beijing Seats, door panels, airbagsChangchun Fawer Johnson Controls Automotive Systems Co. Changchun, Jilin Province Seats, door panels, electronicsShenyang Jinbei Johnson Controls Automotive Interiors Co. Shenyang, Liaoning Province Seat, door panels, instrument panels, sun visorsChongqing Yanfeng Johnson Controls Automotive Seating Co. Chongqing Seats

Magna River Harbor Business Park, No. 3000 Longdong Ave., Pudong, Shanghai 200000, P.R. China(86) 021-6879 6246, www.magna.com

PlantsShanghai Lomason Automotive Seating Systems Co. Shanghai Seat frames, hood latches, seatsIntier Closures Kunshan Kunshan, Jiangsu Province ActuatorsMagna Donnelly (Shanghai) Automotive Systems Co. Shanghai Rearview mirrorsGuangdong Donnelly Zhenhua Automotive Systems Co., Shunde, Guangdong Province Rearview mirrorsShanghai Donnelly Fu Hua Window Systems Co. Shanghai Incapsulation windowsGuangzhou Automotive Seat Co. Guangzhou, Guangdong Province Seats

Aisin Seiki 7th Floor Aster Plaza, No. 32 Taierzhuang Road, Heping District, Tianjin 300040, P.R. China (86) 22-2303-3582, www.aisin.co.jp

PlantsAisin Tianjin Body Parts Co. Tianjin Body components, seat, window regulatorsTianjin Aisin Automobile Parts Co. Tianjin Brake boosters, clutch covers and disksAisin Hongda Automobile Parts Co. Taizhou, Zhejiang Province Engine componentsTang Shan Aisin Gear Co. Tangshan, Hebei Province Manual transmissionsAisin Seiki (Fuoshan) Automobile Parts Co. Shunde, Guangdong Brake boosters, clutch covers and disksAisin Seiki (Fuoshan) Body Parts Co. Xiaotang, Guangdong Body parts, seats, window regulators

Denso Room 418 Fortune Building, No. 5 Dong Sanhuan North Section, Chaoyang District 100004, P.R. China(86) 10-6590-8337, www.denso.com.cn

PlantsYantai Shougang Denso Co. Yantai, Shandong Province Evaporators, condensers, compressorsTianjin Denso Engine Electrical Products Co. Tianjin Starters, alternatorsTianjin Denso Electronics Co. Tianjin Fuel pumps, clusters, airbags, air filters, relays, fan motorsChongqing Denso Co. Chongqing Amplifiers, ignition coils Tianjin ASMO Automotive Small Motor Co. Tianjin Wiper/washer motors, wiper links, washer tanksTianjin Denso Air-Conditioning Co. Tianjin HVAC; condenser, radiator and blower assembliesGuangzhou Denso Co. Guangzhou, Guangdong Province Air conditioners, bus coolers, radiatorsShanghai Denso Fuel Injection Co. Shanghai Fuel injection pumps, nozzles for diesel vehiclesTianjin Fawer Denso Tianjin Air Conditioner Co. Tianjin Air conditionersTianjin GAC Air-Conditioning Corp. Tianjin Air conditioner hoses and tubesToyota (Tianjin) Co. Tianjin Air and oil filtersDenso (Guangzhou Nansha) Co. Guangzhou, Guangdong Province Fuel injection systems

Visteon Suite 2311, Maxdo Centre 8, Xingyi Road, Shanghai 200336, P.R. China(86) 21-5208-1100, www.visteon.com

PlantsYanfeng Visteon Automotive Trim Systems Co. Shanghai Seats, doors, consoles, trim, bumpers, steering wheelsYanfeng Visteon Electronics Co. Shanghai Clocks, instrument clusters, radios, amplifiersShanghai Yanfeng Johnson Controls Seating Co. Shanghai Seat systemsYanfeng Visteon Automotive Trim Systems (Beijing) Co. Beijing Interiors trim systems and componentsYanfeng Visteon (ChongQing) Automotive Trim Systems Co. Shanghai Cockpit assemblies, bumpers, door panelsDongfeng Visteon Automotive Trim Systems Holding Co. Wuhan, Hubei Province Interior/exterior trimVisteon Climate Control (Beijing) Co. Beijing HVAC, powertrain cooling systems, heat exchangersUnited Aluminum Radiator Co. Changchun, Jilin Province Aluminum radiators/heater coresVisteon Jiangxi Fuchang Climate Systems Co. Nanchang, Jiangxi Province A/C hoses and assembly, brake linesYanfeng Key Safety Systems Co. Shanghai Steering wheels, airbags, seat belts

26 Automotive News • Automotive News Europe • Automotive Resources Asia 2005 Guide to China’s Auto Market

Page 20: Guide To China - Automotive News

Global suppliers in China

2005 Guide to China’s Auto Market Automotive News • Automotive News Europe • Automotive Resources Asia 29

Valeo 1905 Scitech Tower, 22 Jian Guo Men Wai Ave., Beijing 100004, P.R. China(86) 10-6515-0366, www.valeo.com.cn

PlantsFAW - Zexel Climate Control Systems Co. Changchun, Jilin Province Climate control systemsNanjing Valeo Clutch Co. Nanjing, Jiangsu Province TransmissionValeo Shanghaï Auto Electric Motors and Wiper Systems Co. Shanghai Electric motors, wiper wystemsValeo Automotive Air Conditioning Hubei Co. Shashi, Hubei Province Air conditioningValeo Wenling Automotive Systems Co. WenLing, Zhejian Wiper systemsHubei Valeo Auto Lighting Co. Wuhan, Hubei Province Lighting systemsShangai Valeo Automotive Electrical Systems Co. Shanghai Electrical systemsHuada- Zexel Climate Control Systems Co. Loushi, Hunan Province Climate control systems

Siemens VDO 1128 Jiaxin Road, Malu Jiading District, Shanghai 201801, P.R. China(86) 21-5915-5870, www.siemensvdo.com

PlantsSiemens VDO Electric Motor Shanghai Window motors, cooling modules, HVAC Siemens VDO Automotive Changchun Co. Changchun, Jilin Province Electronic controls Siemens VDO Automotive Huizhou Co. Shanghai Radios and componentsSiemens VDO Automotive Wuhu Co. Wuhu, Anhui Province Instruments, fuel supply units, throttle body systems

ThyssenKrupp 22/F China Life Tower, No.16 Chaoyangmenwai Ave., Chaoyang District, Beijing 100020, P.R. China (86) 10-8525-2999, www.thyssenkrupp.com.cn

PlantsLiaoyang K.S. Automotive Spring Co. Liaoyang, Liaoning Province Coil springs, stabilizer and torsion barsThyssenKrupp Presta Huizhong Shanghai Co. Pudong, Shanghai Steering columnsThyssenKrupp Presta Fawer (Changchun) Co. Changchun, Jilin Province Steering columns ThyssenKrupp Zhong-Ren Chassis Co. Wuhan, Hubei Province Chassis components

Dana3804 Bund Center Office Tower, 222 Yan An Road East, Shanghai 200002, P.R. China (86) 21-6335-2336, www.dana.com

PlantsDana (Wuxi) Technology Co. Wuxi, Jiangsu Province Commercial vehicle axlesFujian Spicer Drivetrain System Co. Fuzhou, Fujian Province Passenger vehicle axlesShenyang Spicer Driveshaft Co. Shenyang, Liaoning Province Driveshafts

ArvinMeritor No. 580 Nanjing Road West, Room 1105 Nan Zheng Building, Shanghai 200041, P.R. China(86) 21-6218-9292, www.arvinmeritor.com

PlantsArvinMeritor CVS (Shanghai) Co. Pudong, Shanghai Commercial vehicle systems ArvinMeritor Light Vehicle Systems (Shanghai) Co. Shanghai Light vehicle systems Xuzhou ArvinMeritor Co. Xuzhou, Jiangsu Province Commercial vehicle systemsArvinMeritor LVS Zhenjiang Co. Zhenjiang, Jiangsu Province Light vehicle systems

Faurecia 6th Floor No. 88 Building, No.1199 Qinzhou North Road, Caohejing Hi-Tech Park, Shanghai, P.R. China(86) 21-5426-3737, www.faurecia.com

PlantsChangchun Faurecia Xuyang Automotive Seat Co. Changchun, Jilin Province SeatsChangchun Lat Exhaust Systems Co. Changchun, Jilin Province Exhaust systemsFaurecia GSK (Wuhan) Automotive Seat Co. Wuhan, Hubei Province SeatsFaurecia Tongda Exhaust Systems (Wuhan) Co. Wuhan, Hubei Province Exhaust systemsFaurecia Honghu Exhaust Systems Shanghai Co. Shanghai Exhaust systemsFaurecia (Wuxi) Seating Components Co. Wuxi, Jiangsu Province Seat componentsFaurecia (Changchun) Automotives Systems Co. Changchun, Jilin Province SeatsFaurecia (Changchun) Automotives Systems Co. Changchun, Jilin Province Interior systems

TRW Room 3501-3520 Central Plaza, 381 Huaihai Middle Road, Shanghai 200020, P.R. China(86) 21-6120-2266, www.trw.com

PlantsTRW Fawer Automotive Safety Systems (Changchun) Co. Changchun, Jilin Province Rotors, drums, adapters, spindles, hubsTRW (Ningbo) Components & Fastening Systems Co. Ningbo, Zhejiang Province Valves, fasteners, plugsShanghai TRW Automotive Safety Systems Co. Shanghai Seat belts, airbag modulesTRW Automotive Components (Shanghai) Co. Shanghai Hydraulic steering systems, safety electronicsTRW (Suzhou) Automotive Electronics Co. Suzhou, Jiangsu Province Switches, HVAC, steering locksTRW Automotive Lucas Varity Langzhong Brake Co. Langfang, Hebei Province Caliper machining and assembly

GKN Group 1266 Nanjing Road West, 5810 Henglong Building, Shanghai 200040, P.R. China(86) 21-6288-1059, www.gkn.com

PlantsShanghai GKN Drive Shaft Co. Pudong, Shanghai Constant velocity joints, propeller shaftsJilin GKN Norinco Drive Shaft Co. Jilin, Jilin Province Constant velocity jointsKrebsoge Feida Danyang Filters Co. Danyang, Jiangsu Province Special metals materials

Page 21: Guide To China - Automotive News

Global suppliers in China

Autoliv Bridge No.5, Shengxin Road, Jiading Industrial Zone, Shanghai 201821, P.R. China(86) 21-6916-9699, www.autoliv.com

PlantsAutoliv (Shanghai) Automotive Restraint Systems Co. Shanghai Automotive restraint systemsAutoliv Shanghai Vehicle Safety Systems Co. Shanghai Vehicle safety systemsAutoliv Shanghai Safety Belt Webbing Co. Shanghai Seat belt webbing Autoliv (Changchun) Maw Hung Vehicle Safety Systems Co. Changchun, Jilin Province Vehicle safety systemsChangchun Jongguang Autoliv Changchun, Jilin Province Vehicle safety systemsNanjing Hongguang Autoliv Nanjing, Jiangsu Province Vehicle safety systemsTianjin Yizhong Autoliv Vehicle Safety Tianjin Vehicle safety systems

Freudenberg Citic Square 35F, No. 1168 Nanjing Road West, Shanghai 200041, P.R. China(86) 21-5292-5185, www.freudenberg.com

PlantsFreudenberg & Vilene Nonwoven (Suzhou) Co. Suzhou, Jiangsu Province Cabin filters, carpet and interior facingFreudenberg & Vilene Filter (Changchun) Co. Changchun, Jilin Province Engine intake filtersWuxi NOK-Freudenberg Oilseal Co. Wuxi, Jiangsu Province Oil seals, boots, dust coversChangchun NOK-Freudenberg Oilseal Co. Changchun Jilin Province Oil seasl, valve stem seals

Yazaki 79 Anson Road #06-01, Singapore 079906(65) 6226-6910, www.yazaki.com

PlantsChongqing Yazaki Meter Co. Chongqing MetersTianjin Yazaki Automotive Parts Co. Tianjin Wiring harnessesShantou Special Economic Zone Yazki Auto Parts Co. Shantou, Guangdong Province Wwiring harnessesYantai Yazaki Automotive Parts Co. Yantai, Shandong Province Wiring harnesses, electric wireHuanan Yazaki (Shantou) Auto Parts Co. Shantou, Guangdong Province Wiring harnessesHangzhou Yazaki Auto Parts Co. Hangzhou, Zhejiang Province Wiring harnesses

BorgWarner Suite 4206 Maxdo Center, No. 8 Xing Yi Rd., HongQiao Development Zone, Shanghai 200336, P.R. China(86) 21-5208-0277

PlantsBorgWarner Morse TEC China Ningbo, Zhejiang Province Engine parts, 4-wheel drive systems, thermal products

30 Automotive News • Automotive News Europe • Automotive Resources Asia 2005 Guide to China’s Auto Market


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