The Truth About Cars » Chengdu The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Wed, 23 Jul 2014 18:25:17 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » Chengdu Geely & Volvo to Jointly Develop Cars, Volvo Pilot Production Begins in Chengdu, Two More Chinese Volvo Factories Approved Fri, 23 Aug 2013 20:50:56 +0000 Pilot production begins at Volvo's Chengdu plant in China

Pilot production begins at Volvo’s Chengdu plant in China

Geely Automobile Holdings Ltd., owned by the same Chinese company that bought Volvo Cars in 2010, announced that it will soon start developing cars jointly with the Swedish company. The cars will be intended for the Chinese and export markets and will go on sale in 2015. Geely has ambitions to be China’s largest car exporter. Working jointly with Volvo is seen as giving Geely products some of Volvo’s reputation for safety and reliability.

“We have entered into actual research and development stage and I believe we can see the new product in the year after next,” said Geely Chief Executive Officer Gui Sheng Yue yesterday in Hong Kong.

Zhejiang Geely Holding Group Co., bought Volvo from Ford for $1.8 billion and last year the two companies signed a memorandum to “leverage its full access” to technology to develop vehicles. Earlier this year, Volvo announced that it was going to build a joint R&D center with Geely in Gothenburg. Volvo has also started assembling test builds at its first factory in China, in Chengdu, which will have an annual capacity of 120,000 cars.

Volvo Cars also announced today that it has received approval from the Chinese national government to build two more factories in China. The assembly plant in Daqing, in northeast China, will have a capacity of 80,000 units a year and is hoped to be fully operational some time next year. The facility in Zhangjiakou will be an engine plant and it will supply the Chengdu assembly operation where actual production will begin in Q4 2013. The two assembly plants are not expected to reach capacity for a few years.

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Chengdu Motor Show: Communist Government Blasts Near-Naked Booth Babes (NSFW In America) Mon, 10 Sep 2012 13:15:06 +0000

The Chinese government reprimanded organizers of the Chengdu Motor Show for showing way too much flesh than what’s appropriate for a harmonious society.  The exhibitionist exhibits were all foreign. A finger-wagging received the display of female charms at Citroen and Kia, and a serious finger-wagging was directed at an “almost-naked Ms Yan Yu who briefly posed with a Toyota Camry before things got so mad with ‘journalists’ taking pictures that she was quickly taken back-stage,” as Tycho de Feyter reports at Carnewschina.

The showing of almost naked ladies is standard fare at communist China car shows, but could trigger arrested hearts and mass firing in the allegedly free West. Therefore, the almost naked Camry lady was trafficked below the fold. Don’t click if you are under age, easily offended, or easily fired.  Your have been warned.“Is that a jelly bra?” asks TTAC’s cross-cultural adviser, Frau Schmitto-san. “I have one in Tokyo.”

“I don’t want to see it,” answers the editor in chief.

As suspected a week ago, the reprimands were handed out at the end of the show.  Same thing happened in Beijing.  This way, organizers receive full promotional impact, the government keeps face, and there is a last-minute rise in traffic, based on righteous reporting

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Nissan’s Shiga: Tensions Over Islands Hurt Chinese Sales Of Japanese Cars Thu, 06 Sep 2012 15:28:53 +0000

The hordes of Chinese and Japanese reporters roaming the halls of the Chengdu Global Automotive Forum in Chengdu were not really interested in exports. They were sniffing blood. There are tensions between China, Japan, and a few other countries over some rocks in the sea. The rocks are called Diaoyu by the Chinese, Senkaku by the Japanese, and choice words by many others. Nissan’s COO Toshiyuki Shiga sat on the podium, next to the always photogenic Atsushi Niimi. The Japanese were flanked by a BAIC president and a Dongfeng CEO. The reporters wanted to know: How bad is it?

Shiga says the tensions have “some impact.” As things stand, Nissan would rather not risk going outdoors.

“It is very difficult to conduct big sales promotional campaigns, especially promotional events outdoors. Overall, not only for Nissan but also all Japanese makers, we have been hit by a drop in sales, especially August sales. That means there is some impact,” Shiga told Reuters reporter Norihiko Shirouzu, who arrived at the conference in full riot gear, black jeans and t-shirt. Shiga told the same to Bloomberg’s Liza Lin, who also arrived in a black number, albeit a much more elegant one than Shirouzu’s duds. Toyota’s Niimi ducked the reporters.

Many cities saw anti-Japanese demonstrations, and there are Twitter-style calls for boycotts of Japanese goods. A Japanese embassy vehicle in Beijing was stopped by two cars, and the meatball pennant was ripped off. Two men were arrested and fined with five days in jail, writes The Nikkei [sub].

A white Infiniti and a black Toyota  were parked outside of the Chengdu conference center without causing riots.

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Chinese Car Exports: Not Yet, We have to Euthanize “Backwards Car Companies” First Thu, 06 Sep 2012 15:27:12 +0000

There is one thing about the Chinese car industry that can’t be said often enough: It is learning fast. A year ago, the recurring theme at the Chengdu Global Automotive Forum was brands, brands, brands. This year, nobody talks about new brands anymore. The only one who does is the CEO of Dongfeng, one of China’s largest automakers. He says last year’s brand binge was misguided, “irrational, incompetent, and immature.”

At this year’s Global Automotive Forum in Chengdu, the gateway to China’s wild west, Zhu Fushou admonishes the room that “brands don’t happen overnight.” Instead, he recommends that Chinese companies “acquire foreign carmakers in the U.S. and Europe.” A message that makes investment bankers in the room, and there are many, immediately whip out their Blackberrys.

The tone at this year’s Chengdu Global Automotive Forum in Chengdu definitely is more subdued, and more professional. Did I mention they learn fast?

If “brands, brands, brands” was the recurring theme of last year’s conference, this year, it’s the big slowdown. The Chinese bubble did not burst as many prophesied, it slowly deflates to what Zhu calls “micro growth,” or single digits to none. He actually predicts that China will be in micro growth mode for the next 10 years.

If Chinese companies want growth, they have to go abroad and look for it. It will be a tough job.

Chinese exports still are quite low, about 5 percent of total production. Where Chinese cars made inroads, they run into serious roadblocks. Russia and Brazil, the “B” and the ”R” of the BRICS, demanded that carmakers invest locally, or get hit by delirious custom duties for imports. Chinese companies did not get the message. They finally did after they were devastated both in Russia and Brazil, to the effect that China “contemplated exiting the market completely,” as Commerce Ministry Deputy Director Zhi Luxun says. Zhi has uncomplimentary words for the products the Chinese car industry tries to sell abroad. Too much focused on price, lacking in quality and aftersales service. If a Chinese functionary says that …

The exports usually come from “backwards companies,” as Donfeng’s Zhu calls China’s second and third tier car companies. They won’t be around for much longer, thinks Zhu. China’s planners will “withhold resources,” and the backwards companies will die a more or less natural death, if they don’t want to become part of a “withdrawal mechanism” that leads to consolidation among a few large carmakers, Zhu says.  Once that is done, then China will become another Germany, Japan, or Korea that export more than half of their domestic production. Both Zhu and Zhi are sure that it will only be a matter of time.

But it won’t be next year in Chengdu.

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Chengdu Motor Show: White, Brown, And Black Lincolns Are In Fact Grey Mon, 03 Sep 2012 16:34:19 +0000

A few days ago, an anonymous source told us that Lincolns have been in China for years, and that Ford won’t admit it.  Ford said they probably were grey imports.  Before the Chengdu Motor Show opened its doors, three Lincolns were seen entering the hall with big grins on their faces, and everybody thought they were brought by Ford.  No they were not.

Grey imports again! The source of these grey imports are said to be dealers on the US West Coast, who make their quota by shipping the beasts to China.

Says Tycho of Carnewschina:

The Lincolns, two MKT, two MKX and a Navigator, were on display at the booth of a local Chengdu dealer group. On these smaller shows in the Chinese hinterlands, dealer booths are quite the norm. Some dealers offer cars that the brands officially don’t sell, and this is the case here. The Navigator is widely sold grey all over China, but this is the first time I see the MKT and MKZ. “

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Chengdu Sings Ode To Joe Mon, 03 Sep 2012 16:09:39 +0000

It looks like news of the sacking of Joel Ewanick has not reached China. Or at least not Chengdu.

This yellow Chevrolet Camaro with a giant Manchester United sticker was spotted at the Chengdu Motor Show. Supposedly, the decoration is the idea of a local Chevrolet dealer, but who know’s, if public reaction is strong enough. Tycho of Carnewschina is checking the boxes:

“The Camaro is very popular in China: check! Soccer is very popular in China: check! Manchester United is by far the most famous soccer club in China: check! China is the biggest auto market in the world and GM is big out here: check! All good, what are the bean counters whining about?”

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Pictures From The Chengdu Motor Show. The What? Fri, 31 Aug 2012 17:48:57 +0000 “A model poses beside a car by Beijing-Hyundai during the 15th Chengdu Motor Show (CDMS) in Chengdu City, southwest China’s Sichuan Province,” writes China’s state-owned Xinhua news agency under a spread that is long on long legged girls and short on cars.  Well, we aren’t Xinhua.

You will be immediately familiar with the toothy grin. But have you ever heard of the Chengdu Motor Show? That annual affair in the city of 14 million in China’s Southwest is gaining in importance as the car industry reaches into China’s vast hinterlands and to demographics that just yesterday were thought to live under a rock. The Chengdu show is the perfect stage to show off cars that appeal to China’s masses of all strata.

TTAC didn’t go to the show. We will be in Chengdu next week as guests of the Global Automotive Forum, and three days of spicy Sichuan cuisine is enough. Our friend Tycho de Feyter of Carnewschina has a solid handle on the show anyways.

Ford announced only two days ago that the Lincoln brand would come to China in 2014. Today we see  three Lincolns arriving at the exhibition hall for the Chengdu Auto Show.

The Chevrolet Malibu 1.6 Turbo has been launched on the China auto market, priced at 209.900 yuan  ($33,000).

The 1.6 turbo comes with 180hp and 235nm, mated to a 6-speed manual.

The monster Cadillac CTS-V Coupe was officially launched on the China auto market during the first day of the Chengdu Auto Show. Price is set at 1.28 million yuan or 202.000 USD. The CTS-V Coupe is powered by a 6.2 liter supercharged V8  with  556hp and 747nm. Cadillac already sells the CTS sedan in China but only with the 3.0 and 3.6 V-sixes.

The star of the show is the new Jetta.  Two were seen driving around in downtown Chengdu on the day before the show – without license plates. The new Jetta replaces the ancient Jetta MK2, which coincidentally can be seen right behind the two new cars.

This is the new Volkswagen (China) Jetta debuted earlier today and will be launched in China before the end of this year.

Despite other rumors from Brazil (that got lost in a tempest in the Oriental tea pot), the new Jetta swill definitely be based on Volkswagen’s PQ25 platform  which also underpins the new Volkswagen Santana which is expected to debut at the Guangzhou Auto Show in November.

The new Jetta will be made in China by the FAW-Volkswagen joint venture, it will be produced in Changchun and in a new factory in Chengdu. Engines: 1.4 with 89bhp or a 1.6 with 109bhp, mated to a five-speed manual or a six-speed automatic.


A new arrival from Germany: The Mercedes-Benz B-class. The B-class is imported, there are no plans yet for local production. Prices start at 278.000 yuan ($44,000) and end at 328.000 yuan ($52,000). Two engines: B180 with 122hp and the B200 with 156hp. The first B’s will be delivered to customers late next month.

For more Chengdu coverage, head over to Carnewschina. They will be on it all week.

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China On A Deadly Brand Binge Thu, 13 Oct 2011 18:53:44 +0000

If your dearest wish is that the Chinese car industry will implode, then you should pray that the Chinese remain on strategy. For whatever inconceivable reason, the Chinese car industry has embarked on a plan, which – if properly executed – will mean its assured destruction.

Government planners tell Chinese car manufacturers: “Create successful brands.”  Manufacturers reply as a chorus: “Yes, we will create as many brands as possible.”  Every second word at the Chengdu conference appeared to be “brand.”  If Chinese carmakers will do what they say – and they appear to be utterly committed – then China will soon wallow in a sea of car brands nobody has ever heard of, and nobody will ever be able to remember. Sometimes, it feels as if it is the long-term goal to give each and every of the 1.3 billion Chinese his or her individual car brand.

It’s not that there is a shortage of brands already. Nobody has an exact number, but the guesses are over 100. Soon, that number could easily double. BAIC alone announced today that it will add 9 new brands on short notice. Others have similar plans.

At the same time, speakers at the conference named many reasons why it is less than prudent to create many brands.

  • “Our brands have low name recognition.” But nobody warns that it costs untold sums of advertising money to create this recognition.
  • “We compete against brands that sometimes are over 100 years old.” But nobody warns that a new brand can take decades to be successful – if it doesn’t succumb to crib death.
  • “The multinationals invest a lot of money into advertising.” But nobody warns that already small budgets will get increasingly smaller when spread over many brands.
  • “Customers expect to pay 20 percent less for homegrown brands.” But nobody says that it is more lucrative to stay with the brands we know.
  • “Consolidation is a given.” But nobody says that the easiest way to consolidate is to trim down brands.

While large car companies the world over prune their brand portfolios, Chinese carmakers  are turning from car factories into brand factories. Joint ventures that have successful and well-known brands are urged to create new unknown brands. The knowledge and grasp of branding appears to be rudimentary. Colleagues in the business say that often, “branding” in China begins and ends with developing a logo.

Developing a new cars brand is risky, costs untold amounts of time and money. China appears to be dead-set to embark on this treacherous, costly and long journey with a highly doubtful return. In the bad old days, GM tried to leverage the equity remaining in existing brands by sticking their badges on the same body.  Even the smallest carmaker in China appears to be bent on being a miniature GM. Except that now unknown badges are stuck on the same body.

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Chengdu Global Automotive Media Summit: Better Luck Next Time Thu, 13 Oct 2011 16:19:44 +0000

The third day of the Chengdu get-together morphed into what was called a “Global Automotive Media Summit.” The idea was to prep the Chinese car manufacturers for their global push as far as the global media are concerned. For that, the services of TTAC were enlisted.  The manufacturers need any help they can get when it comes to handling the media. From BAIC to SAIC, from Chery to Geely, from state-owned Dongfeng all the way to wannabe manufacturer Pangda, they all were there and delivered their speeches. The speeches could be summed-up in two words, looped like techno-rock:

“Global. Global. Global. Global. Brands. Brands. Brands. Brands. Global Brands.”

Paul Ingrassia, deputy chief of Reuters and winner of the Pulitzer Prize for his coverage of the management turmoil at General Motors, was there and warned about too much haste. His warnings largely fell on deaf ears. Then it was time for a round-table that was supposed to teach the manufacturers what the international media expects from them and what it can do for them if handled right. It was a good group.

All the way from Sao Paulo came Micheli Rueda, the editor of the business paper Brasil Economico. From London came Jim Holder, editor of the venerable AutoCar. The “Chinese, writing for a foreign publication” side was well represented by Yang Jian, Editor in Chief of  Automotive News China. The Made-in-China foreign media had its ambassador in Zheng Wu, founder and CEO of the Chinese edition of Germany’s Auto Motor und Sport – honestly, I heretofore had no idea that something like this existed. Just like China is full with car manufacturers, there is no shortage of buff-books covering every conceivable angle. Yours truly was the moderator.

In a way, the round table showed everything that is wrong with how Chinese manufacturers handle the media in general and the international media in particular. We discussed how the big ones in Japan, Europe and the U.S. do it, we talked about what ideas the Chinese can appropriate for themselves. However, the first two rows of chairs, reserved for the captains of the Chinese auto industry, were mostly abandoned. After making their announcements, the execs had quietly left the room. No questions were fielded.

My remark “this round-table should be especially interesting for China’s auto manufacturers, but I see they mostly went home” caused a minor scandal in a room packed with Chinese auto journalists.

Make a mostly substance-free statement, and hide before anyone raises a question – that’s usually the way it goes in China, and the Media Summit did not break that mold.

Paul Ingrassia was right. Go slow, and do your homework first.

(Excerpts, in Chinese, are here.)

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China: Big But Weak, Attack On The West Postponed For 5 Years Tue, 11 Oct 2011 13:55:48 +0000 The Global Automotive Forum is an annual confab of Chinese politicos, functionaries, industry leaders and wonks of the world. This year, it is in Chengdu, and the motto is “From volume leader to innovation leader.” The subhead could very well be: “What now?”

Speaker after speaker bemoans the fact that China is winning by sheer numbers, but is falling behind in the innovation race. The fractionalized Chinese car industry simply does not have the wherewithal to keep up with the big multinationals. No longer are the multinationals afraid of being frozen out. The power shift towards  the multinationals is so pronounced that Jay Kunkel, China chief of German systems supplier Continental, can smugly remark: “Strategies are one thing, but the secret is in the doing.”

Continental had nearly been taken down after a not so friendly takeover by Schaeffler Group in 2008 – definitely the wrong time for such a maneuver. Now, Continental’s Chinese CEO can dispense haughty advice, and the audience applauds.

Speaker after speaker says that the ICE will likely be around for a while, and that incremental improvements in efficiency, weight, rolling resistance etc. are beyond the grasp of Chinese companies. Functionaries of Chinese ministries openly remark that the Chinese car industry is “big but weak” – no lightning strikes from the sky, and nobody drags them off to a slave labor camp. Instead, the audience applauds.

The Chinese car industry is being out-researched, out-developed, and out-engineered by the big industry behemoths. Most of all, China is being outspent. The big companies usually spend 5 percent of sales for R&D, we hear today. Chinese makers spend maybe 2 percent of their much smaller sales, and that “mostly on application research and rarely on future technologies, “ as one panelist remarks. (Applause.)

Even the wages aren’t as low as they used to be. One panelist comments that an engineer hour in Shanghai now costs the same as in Rüsselsheim. Another says that German carmakers don’t have to go all the way to China for low wages. They get the same in Slovakia, 8 truck hours from Frankfurt. None of the Chinese registers a veto. Someone adds: “Yes, and most of those Chinese engineers are under 25.” The Chinese industrial giant looks a bit pale around the nose today in Chengdu.

As far as the feared Chinese exports go, they simply aren’t happening. Last year, China exported less than 3 percent of its car production. This year will be about the same. China imports more cars than it exports. The big joint ventures say they don’t need exports, China is a big enough market. Smaller makers like Chery must export to round out the small domestic volume. They focus on markets like South America and Russia, while admitting that their sales and service networks there are weak. Lu Jian Hui, Deputy General Manager of Chery says any push into Europe or America has to wait “until after the end of the 12th Five Year Plan.” That ends in 2015.

One thing is utterly perplexing: Functionary after functionary demands more local brands, both from the independents and from the joint ventures. China is awash in car brands. There are small carmakers that have more brands than GM in the bad old days. We are in a land where the exact number of car makers remains a mystery (the guesstimate used to be somewhere above 100, today, it grows to 150 without anybody complaining). We are at a meeting where frequent mentions of “consolidation” elicit round after round of applause. Nevertheless, they demand more brands. Privately, Western wonks say that establishing a car brand takes many decades and untold sums of money and patience. They snicker that Western makers shed brands instead of adding them. Publicly, nobody questions the sanity of the avalanche of Chinese brands. Except for one speaker, who coyly shows a slide that has Saturn on it, as an example that new brands don’t have assured success. Too subtle. Applause from the audience.

PS: On Thursday, yours truly will host a roundtable with members of the Chinese and foreign press. We’ll discuss how the foreign media sees the Chinese auto industry – if it sees it at all.

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