Today is Chinese New Year's Eve and as people around the world celebrate the start of the lunar new year, here at Xcite Car Leasing we’re celebrating by taking a look at China’s automotive industry.
In this article we’ll look at the origins of the automotive industry in the country as well and their exports around the world.
Before we start discussing the car industry though, we just wanted to give you a little more information about Chinese New Year.
As mentioned above, Chinese New Year celebrates the new lunar year so doesn’t always fall on the same day but is generally late-January to mid-February.
The lunar calendar has 12 Chinese zodiac animal signs and these rotate yearly. The animals are a rat, ox, tiger, rabbit, dragon, snake, horse, goat, monkey, rooster, dog and pig. Today marks the start of the year of the ox.
The history of China’s automotive industry
China’s automotive history isn't as long as some other countries and though its growth has accelerated rapidly since the 1990s, its origins were much more modest and the industry grew very slowly during its first half a century.
The first motor vehicle produced in China was a truck called the Mingsheng in 1931. However, although this was designed and a prototype built, it was never mass produced as the factory was bombed by invading Japanese forces. In the early 1930s Japan and China were in conflict as part of the beginning of the Second Sino-Japanese War which lasted until 1945.
During the war there was very little development in China’s automotive industry. So, it wasn’t until the 1950s that the industry really developed, and this was with assistance from the Soviet Union who helped China to build plants and licence designs and patents.
There were several assembly plants and factories set up across the nation during the 1950s and 1960s.
The first Chinese vehicle mass produced was the Jiefang CA-30 truck in 1956 by First Automotive Works Group (FAW).
FAW is a state-owned company that's still operating nearly 70 years later, and continues to make automobiles, buses, light trucks, medium trucks and heavy-duty trucks as well as parts for them all.
Other manufacturers at this time included Nanjing (now Nanjing Automobile (Group) Corporation), Shanghai (now Shanghai Automotive Industry Corporation), Jinan (China National Heavy Duty Truck Group), Beijing (now Beijing Automotive Industry Holding Corporation) and Second Automobile Works (Dongfeng Motor Corporation).
China’s industry originally focused on trucks and commercial vehicles and as late as the mid-1980s they were producing less than 10,000 cars. It’s thought that this was in part due to the socialist approach to the economy and personal spending that were still prevalent in the country.
In 1978 China went through economic reforms and opened the country to imports from companies outside of China. This opened up their car industry to imports from big name brands around the globe like Toyota and Mercedes.
The story of a peasant chicken farmer Sun Guiying, who saved up for a silver Toyota Publica, was widely publicised and encouraged others to purchase their own cars as well, increasing the number of cars produced domestically and imported into the country.
Initially, as domestic production was limited, there were a lot of imported foreign vehicles but this was soon stopped by the Chinese government imposing heavy import tariffs, and for a couple of years a moratorium on nearly all vehicle imports.
Along side this they also worked to increase domestic production by boosting and increasing the number of joint-venture passenger car production agreements with established manufacturers including a 20-year agreement with American Motors Corporation to produce Jeeps in Beijing and a 25-year contract with VW to make cars in Shanghai. It was with these and other production advancements in the 1990s that China’s automotive industry really began to grow. In 1992 China produced over 1 million vehicles for the first time and by the new millennium they were up to 2 million vehicles produced annually.
New Chinese car manufacturers also arrived on the scene during this time including Chang’an Motors, Geely Automobile, Great Wall Motors, and many more.
2001 saw China join the World Trade Organisation (WTO) and with this, the country gained access to a wider market for exporting cars, vans and vehicle parts. The country’s automotive industry continued to rapidly grow and within 10 years China overtook the USA to produce the highest volume of vehicles in 2009, a position it has maintained since then.
China’s automotive industry today
Today China’s automotive industry is the largest in the world in terms of the number of vehicles it produces.
According to Statista, China produced approximately 21.36 million passenger cars and 4.36 million commercial vehicles in 2019.
There are several companies who have joint manufacturing ventures in China including Daimler-Benz, Honda, Toyota, Nissan and General Motors. These plants produce vehicles for the Chinese market as well as to export to the wider Asian and worldwide markets, depending on the particular model.
VW and Audi also manufacture some models in China through their Volkswagen Group China division, that are exported across the globe including to the UK.
Other brands with Chinese partnerships include BMW who work with the Chinese company Brilliance Automotive Group Holdings and Jaguar Land Rover who partnered with Chery.
Volvo's owned by Chinese car manufacturer Geely and several of their models are produced in China for export. Though Volvo maintains a separate identity, its Chinese ownership's important in the wider context of China's growing power in the automotive industry.
China produces a lot of vehicles for its domestic market as well as exports and this is both from the partnerships mentioned above as well as Chinese owned automotive manufacturers.
Some of the biggest brands on the Chinese market include Geely, Great Wall, Chery and BYD.
The automotive industry in China's expected to continue to grow, maintaining its place as the world's top automobile producer. We also expect it to shift towards greener fuels as demand for new technology and electric models increases globally.
We hope however you're celebrating today; stay safe and have fun!
