Volvo Chengdu plant puts automakers in focus to build "automobile city" in the west
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The western automobile market with Chengdu as the leader is one of the most dynamic auto markets in China. In 2013, through the opportunity of the Fortune Forum, Chengdu became the debut of major luxury car brands. Behind this is the vastness of the automotive market in western China and the escalation of consumer demand. Today, Chengdu has gathered FAW-Volkswagen, FAW-Toyota, Volvo, Geely and many other automotive companies, upgrading from the consumer capital to the automotive industry capital. The upgrading of consumption is driving the industry's run.
On August 28, the Volvo Chengdu plant was officially put into production. At this point, two years after Volvo made the domestic project, it finally settled. With the launch of the first domestic model S60L, Volvo will open a new stage of development in the Chinese market.
In fact, building a factory in the west has become a new choice for automotive companies in China. Whether FAW-Volkswagen, Shanghai Volkswagen, or Beijing Hyundai, Chery Automobile and other auto companies, have spent huge sums of money to build a production plant in the west.
In order to support the development of the western region, the National Development and Reform Commission and the Ministry of Commerce will continue to promote the manufacture of complete vehicles in the “Foreign Investment Industry Guidance Catalogue (Revised in 2011)†as an encouragement project for the western provinces (autonomous regions and municipalities). According to the analysis, it is expected that more auto joint ventures will expand to the western region in the future.
Domestic dust settled
On August 23, Volvo formally announced the approval of localization. According to Volvo official, Volvo Car's local chemical industry layout in China has officially been approved by the Chinese government. This arrangement includes the establishment of a vehicle manufacturing base in Daqing, the establishment of an engine manufacturing base in Zhangjiakou, the establishment of a China R&D base in Shanghai, and the establishment of a vehicle manufacturing base in Chengdu.
On August 28th, the Chengdu plant of Volvo was exposed for the first time, and the domestic S60L was formally produced here. The localization of Volvo that lasted for more than three years finally settled.
At the launch of the Chengdu factory production line, Lars Weber, senior vice president of production and procurement at Volvo Car Group, said that the commissioning of the Chengdu plant is a “milestone event†for Volvo. The first domestic model S60L will be officially released in the fourth quarter of this year.
In accordance with the relevant policies of the Chinese automobile industry, Volvo Car Group and Geely Holding Group form a joint venture company as a joint venture, in which Volvo Car Group holds 30% of the shares. After approval, two plants in Daqing and Zhangjiakou were operated as joint ventures. Chengdu Plant currently operates under the qualification of Zhejiang Haoqing Automobile Manufacturing Co., Ltd., a subsidiary of Geely Holding Group, and produces Volvo products in an authorized form.
The Daqing plant will begin trial production before the end of 2013. The Zhangjiakou plant will be put into operation this fall, providing engines for Chengdu and Daqing factories. According to the relevant person in charge of Volvo, the three Chinese factories will strictly abide by Volvo Cars' global procurement, global quality control, R&D system and management standards, and produce quality products of the same quality as European factories.
Data show that in June this year, Volvo sales in the Chinese market reached 5,797 vehicles, an increase of up to 73.9%. In the first half of the year, total sales reached 28,702 units, a year-on-year increase of 34.3%. The Chinese market has become the world's fastest growing market for Volvo Cars.
For the western market, Fu Qiang, president and chief executive officer of Volvo Cars China Sales, told the Daily Economic News reporter that the western market has now become the market that has contributed the most to the growth rate of mainstream brands. The current rules of the market in the eastern coastal areas and developed regions will also appear in the western region. In other words, from now on, we will increase our coverage of the western market network, increase investment in this region, and increase our market influence. The effect will certainly be a multiplier.
Focus on the new fulcrum of western consumption
Some analysts pointed out that for the Chengdu city, the opening of the Volvo Chengdu factory further established Chengdu’s position as “the center of the automotive manufacturing industry in western Chinaâ€.
In an interview with reporters, Lars Weber said that Chengdu was selected based on the combined effects of numerous factors. The most important of these is that many auto companies and parts and components companies have already established factories in Chengdu, making Volvo a partner in procurement. The industrial chain is more complete and efficient.
According to report, Chengdu plans to build the Chengdu International Automobile City in the Longquan Area of ​​Tianfu New District into a trillion-scale automotive industry base in the future. So far, Chengdu has owned Toyota, Volkswagen, Geely and other important brands of production bases.
At the same time, the establishment of these vehicle companies brought a large number of world-class auto parts suppliers to settle down. For example, Bosch in the United States, Johnson in the United States, Harman in the United States, and other international component giants have all started production in Chengdu.
In addition to the southwest region, the northwest region is becoming an emerging area of ​​the automotive industry. Zhang Jian, deputy general manager of Beijing Automotive Group, said at a forum that in the first half of this year, the total number of new cars nationwide was 8.05 million, down 2% year-on-year; and the number of cards in the northwestern region was 913,000, an increase of 78% year-on-year. “This shows that the northwestern region has become an important driving area for the automobile consumer market. With the continued advancement of urbanization in the northwest region, it will also stimulate new consumption growth.â€
The industry generally believes that there is huge potential and space for development in the northwest region. Focusing on and laying out the western market will be an effective combination of the development of the automobile industry and the economic development of the western region, and it will also be an opportunity for car companies to cultivate new growth points.
Market capacity to be tested
Recently, the Catalogue of Advantageous Industries for Foreign Investment in the Central and Western Regions (2013 Revision) released by the National Development and Reform Commission and the Ministry of Commerce explicitly encourages foreign investors to invest in labor-intensive industries that meet environmental protection requirements in the central and western regions, and promote the resource advantages of key industries. Convert to economic development advantages.
Some analysts believe that the launch of the “Directory of Foreign Investment in Industries in the Central and Western Regions (2013 Revision)†has stimulated the enthusiasm of relevant local governments for the development of the automotive industry. It can be predicted that in the future more car manufacturing plants will be built in the western regions.
For this new policy orientation, automotive analyst Zhang Xin analyzed that the encouragement of foreign investment in the central and western regions for investment and construction is not the demand of the auto industry itself, but that these regions hope to promote local economic development by attracting more foreign investment.
Cui Dongshu believes that the expansion projects implemented by auto companies in the current micro-growth of the auto industry are often large strategic projects.
However, relevant officials from the National Development and Reform Commission made it clear that the local government's capacity for planning automobiles in 2015 has far exceeded the capacity planning of 31.24 million vehicles in 2015 by 30 major auto companies in China, reaching 40 million vehicles, and signs of overcapacity have appeared. Previously, there was an analysis report clearly pointing out that in 2011 China's auto spare capacity was up to 6 million, which is equivalent to twice the size of the German auto market. It is estimated that by 2016, idle capacity will increase to 9 million.
In this regard, the State Council Development Research Center, Minister of Industry and Economic Research Feng Fei believes that to address the excess capacity in China's auto industry should rely on market mechanisms, rather than strengthen the approval. The so-called market mechanism is to transform the examination and approval system based on the economic scale as a method of social regulation. The supervision method is transferred from the preliminary approval to the event or afterwards, so as to truly solve the overcapacity of the automobile industry in China. 
