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 China's car makers cut corners to success

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مُساهمةموضوع: China's car makers cut corners to success   18.09.12 12:08

Paring back on crash tests, skimping on
frills, simplifying designs, using cheaper materials and, in a departure
for the industry, outsourcing most of their design and engineering are
having a profound effect on the cost bases of China's dozens of car
makers. Some are now able to sell cheap and cheerful small cars for
about 40,000 yuan ($6,350) - less than half the price of a plain vanilla
Ten years ago, no
discerning Chinese consumer would have bought China-designed cars. Not
only were such vehicles accused of being illegal counterfeits of foreign
models, but their quality and safety were also mistrusted.
despite their homely looks, some indigenous models are striking a
balance between no-frills affordability and acceptable quality. In
China, it is the age of the good-enough car - and that has potentially
significant implications for the world auto industry.
such as the Panda and the Great Wall Haval H3 are becoming popular not
only in China but increasingly so in emerging markets, from Indonesia to
Egypt and Ukraine. They are driving China's auto exports to record
levels, even as growth in China's auto market slows down.
of Chinese-produced vehicles are forecast by China's auto association
to hit one million vehicles this year from 849,500 vehicles last year.
Some automotive analysts are predicting a 50 percent increase to 1.25
million vehicles.
Some executives
at big foreign manufacturers say China's new model of creating
good-enough cars poses a serious challenge to the way the international
industry operates.
"This is a
warning shot to the established engineers who have told their management
time and time and again that this is the minimum cost they can achieve
with their existing design and production methodology," says Shiro
Nakamura, a top Nissan Motor Co. executive and the company's chief
designer. "Now the Chinese are saying they can cut another 30, 40
percent of the cost."
It normally
takes four to five years for established players like General Motors Co
and Toyota Motor Corp to come up with a new car from the ground up.
Chinese manufacturers can now do so in just two and half years by
deploying an abbreviated design process.
the Chinese achieve their low cost by sacrificing quality standards,"
says Nakamura. "But in many ways their way also points to ‘over quality'
or ‘waste' we have built into our conventional design process over the
Chinese approach is a product of the extraordinarily fast rise of its
auto industry. As the country opened up to the West, car makers were
faced with relatively poor customers at home and sophisticated products
made abroad. Global automakers could sell their pricey cars to rich
Chinese, but local Chinese automakers had to come up with cheap cars for
the masses.
Rapid growth in the
economy spurred the creation of more than 100 registered automakers
across China by the early 2000s - but they lacked expertise. Their
solution in coming up with affordable cars was simple: copy the designs
of foreign makers.
"Around 2000,
China began embracing an approach it described as ‘reverse-engineering.'
It was essentially a fancy word for copying," says Dai Ming, a senior
engineer at CH-Auto Technology Corp, an independent design and
engineering company based in Beijing. "The problem with those copied
cars was that the Chinese were able to emulate the shape of a foreign
car, but not its soul."
Chinese car
makers tended to sift through a foreign vehicle to identify expensive,
non-critical features and functions to skimp on or eliminate, such as a
door that closes with a proper "thump," as well as power windows and
passenger-airbags. The result was often dubious quality and durability.
After a few years of use, bumpers and door handles would start falling
Dai says of the typical cheap
knock-off model: "It didn't drive well like the foreign car, either, and
in some cases it was a safety hazard on the road."
clutch of design firms is driving the advances in affordability and
quality in the industry, including CH-Auto, where Dai works; IAT
Automobile Technology Co. of Beijing; and TJ Innova Engineering &
Technology Co. of Shanghai.
indigenous automakers are so new many have not had time to groom their
own engineers, and their best engineers are usually occupied more with
manufacturing than design. Companies thus often outsource product design
and development to outside engineering houses filled with Chinese
engineers trained overseas.
analysts say these houses are responsible for helping engineer seven to
eight out of every 10 cars China's indigenous car makers sell here. By
using the same few design and engineering firms, Chinese car makers have
effectively created a shared pool of home-grown automotive technology.
for instance, has helped design an array of cars over the past decade,
each time gaining fresh expertise, which it deploys for its next project
- in most cases for a different company. CH-Auto was established in
2003 by a small group of jobless Chinese engineers who had trained with
Beijing Jeep, a now-defunct joint venture set up initially by Beijing
Automotive Industry Holding Co. and American Motors Corp.
and its rivals say they have moved beyond aping foreign designs.
Instead of copying the shape of a component or an entire foreign car,
they try to match its performance as well - often successfully - even as
they improvise and simplify the original design to cut costs. The aim
is to make cars affordable to China's emerging middle class, people who
are earning 50,000 to 60,000 yuan a year ($7,900-$9,500).
not copying. It's not that simple anymore," said Wang Kejian, president
of CH-Auto, a former Beijing Jeep engineer who was trained for a time
in Detroit by Chrysler. "Since Chinese car makers have no accumulated
vehicle design technology or know-how, we have to develop our own by
studying foreign cars and use local parts suppliers to approximate the
components and the cars."
Automobile, which owns Swedish carmaker Volvo, turned to CH-Auto around
2005 for help on a project that led to the Panda, now one of China's
most popular small cars. CH-Auto was responsible for the exterior
styling and engineering the underpinnings. The rest was handled by
Geely, according to the two companies.
and Geely made a clear departure from copying with the Panda. To be
sure, they still selected a car to emulate or bench-mark - in this case,
the Aygo, a "city car" that Toyota produces in Czech Republic and has
been selling in Europe since 2005.
instead of simply producing a fake Aygo, engineers at CH-Auto first
studied and tested the Aygo and its components - often with the help of
three-dimensional digital scanners - to collect data on their design and
performance. Then they tried to manufacture components by adapting
parts made in China to match desired functions and performance. If
suitable local parts weren't available, they worked with suppliers to
create new ones by simplifying the scanned Aygo designs.
The purpose was "not to copy but approximate the Aygo," Dai said.
example is the Panda's chassis. The under-body carriage, which the
suspension and wheels are attached to, is key to how a vehicle handles
corners on the road.
The Aygo,
which starts at 6,462 pounds (about $10,000) in Britain, has a
relatively sophisticated under-body structure formed in a single piece
by using a process called "hydroforming," in which pressurized water is
used to shape metal. For the Chinese this was a problem.
and its chassis suppliers have no proven know-how in hydroforming. And
the light-weight steel that Toyota uses for the Aygo's under-body
carriage was too pricey for Geely to use in a car to be sold in China.
and CH-Auto's solution was to use cheap "everyday" steel commonly
available in China, Dai said. Geely and CH-Auto divided the Panda's
chassis frame into two pieces - upper and lower units - to simplify
their structure so they could be easily stamped rather than using the
more expensive hydroforming method. Then Geely welded those two pieces
to create a chassis frame for the car.
problem was our solution compromised the Panda's NVH," Dai says, using
the acronym for noise, vibration and harshness, the key attributes of
drive feel.
Dai's engineers tweaked
the Panda's suspension, adjusting the so-called rubber bushes, or
isolators, to make them softer to better absorb shocks and vibrations.
using cheaper materials and processes, Geely and CH-Auto were able to
largely match the performance of the Aygo's platform in terms of the
vehicle handling and NVH, which Dai says was confirmed by a third-party
testing company. More important, by tweaking the design and using
cheaper materials and manufacturing processes, Geely and CH-Auto were
able to produce a platform for the Panda with "roughly half" the Aygo's
cost, according to Dai.
the advances in design, safety standards in Chinese-made cars still lag
those of U.S. and European manufacturers, in part because its
government doesn't impose as stringent a body of safety requirements.
more, Chinese car makers ignore what they consider minor, non-critical
risks, such as using far fewer crash tests with dummies.
the client only gives me two-and-a-half years to design a car, then I
can only eliminate major risks. And the smaller risks, well, there's
nothing we can do," says CH-Auto's president Wang.
does have vehicle safety standards, and any automaker launching a new
car needs to meet them. But there is no required number of crash tests.
and CH-Auto do not want to do as much crash-testing as global
automakers because creating prototype cars costs up to 2 million yuan a
car ($316,000), CH-Auto's Wang said.
Geely spokesman, Victor Yang, would not say how many crash tests Geely
conducted on the Panda. But Yang noted that the Hangzhou-based automaker
conducted "more than what's typically performed in China." For cars
being developed today, it routinely conducts more than 70 crash tests,
Yang says.
By contrast, an
established global player such as Toyota routinely tests a new car by
crashing it a "minimum 120 to 150 times," according to a Toyota chief
engineer who spoke on condition of anonymity. If the car is sold in many
different markets around the world, Toyota crashes even more cars, he
the Panda is a watershed product for both Geely and CH-Auto. The car's
stylized exterior - featuring a Panda-eyed grill and tail lamps in the
shape of paws - was considered cute and timely when launched in 2008 to
coincide with the Beijing Olympics.
exterior contrasted with the car's highly utilitarian interior,
including exposed screws and a plasticky dashboard. The 1.3-liter,
86-horsepower motor pulls the Panda from a standstill to 100 kilometers
an hour in an unthrilling 13.1 seconds. Nor is the Panda, like other
no-frills Chinese cars, ready to meet the stringent safety regulations
of Europe and America.
But there is
one very eye-catching thing about the car: its price. A new Panda
starts around 40,000 yuan ($6,400) in China and about 5,000 euros
($7,400) abroad.
After the Panda,
CH-Auto's business began booming. It developed or helped develop a slew
of cars and sport-utility vehicles for Changfeng, an automaker
affiliated with Japan's
Mitsubishi Motors. The Changfeng projects then led to deals with
Jiangling Motors Co. and Chongqing Changan Automobile Co., as well as
Beijing Auto.
One of CH-Auto's
upcoming models is a Beijing Auto vehicle based on technology the
company purchased from the now defunct Saab of Sweden.
also has a major contract from Dongfeng Motor Co. — the 50-50 joint
venture between Nissan and Dongfeng Motor Group Co. The team will
develop a subcompact car based on the Nissan March (known as the Micra
in Europe) to buttress a new "indigenous" brand called Venucia launched
in China earlier this year.
advent of the good-enough car is emboldening Chinese automakers to build
up their own product development capabilities to rely less on CH-Auto
and other independent engineering houses.
one of China's top indigenous car makers, is expected to sell about
370,000 cars in China and 90,000 abroad this year. By 2016 the company
forecasts its export volume will hit as high as 300,000 or possibly
"My vision," said Geely Chairman Li Shufu, "is to sell outside China the same number of cars we sell within China."

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China's car makers cut corners to success

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