Chengdu gears up to become auto industry hub

Target set to make 600,000 vehicles in 2013, 64% growth year-on-year

China's Wolfsburg or Detroit? No, thanks.

Chen Xiaoming doesn't want the name of either of the world's most famous automobile cities tied to Chengdu, Sichuan province.

"We want to make Chengdu a unique international automobile hub in our own way," said Chen, deputy officer of the auto industry department of Chengdu Economic Development Zone.

Though many Chinese cities - including Changchun in Jilin province, Wuhu in Anhui province, and Shanghai - have made huge efforts and investment in the competition to be the center of China's automobile industry, Chengdu was the first to establish an independent promotion commission specifically for the automobile industry. Five years on, it remains the only such commission in China.

The latest figures show that total output last year in the Chengdu Economic Development Zone reached 375,000 vehicles, 1.4 times the number the year before, creating revenue of 105 billion yuan ($16.9 billion) and taxes of 17.1 billion yuan, surging 67.5 percent and 33 percent year-on-year respectively.

This is a dramatic increase from 2011, when only 150,000 vehicles were produced in the city, contributing total revenue of 55 billion yuan.

The city's target for 2013 is to produce 600,000 units with an annual growth of 64 percent year-on-year. The actual output is expected to be 650,000 units, according to the current growth rate.

When the local government set up the special promotion commission for the automotive industry in 2008, Volkswagen's flagship model Jetta rolled off the production line with an annual output of only 40,000 units in the Chengdu zone.

In 2009, FAW-Volkwagen initiated the second phase of its sedan production program in Chengdu, when the State Council approved the city as the automobile manufacturing base.

In January 2013, the third phase of FAW-Volkswagen's Chengdu factory was complete, and is now in full operation. Every 60 seconds, a brand-new vehicle rolls off the assembly line in the factory.

As the second production base for FAW-Volkswagen after its headquarters in Changchun, Chengdu has attracted a total investment of 16.3 billion yuan from FAW-Volkswagen.

The annul output of FAW-Volkswagen's factory in Chengdu also increased from 50,000 units in the beginning to 250,000 units in 2012.

A few kilometers from FAW-Volkswagen's Chengdu manufacturing base, Volvo Cars' local facility is another important indicator of the fast development of Chengdu's auto industry.

In 2011, Volvo Cars China Group announced it would build its first localized plant in Chengdu, following Chinese homegrown automaker Zhejiang Geely Holding Group's takeover of the Swedish luxury brand.

By end of 2012, the four workshops in Volvo Cars' Chengdu factory were complete and had already started localization of Volvo S60L models in China.

The first Volvo model produced in Chengdu has been sent to Europe for testing, and will be ready for mass production this year.

There are currently 10 vehicle manufacturing factories and seven engine plants located in Chengdu.

Another four vehicle manufacturing factories are about to be completed and put into production within the year.

In addition to vehicle production facilities, having a complete supply chain is also key to a strong and sustainable automobile industry.

In Feb 2012, the world's top automobile parts supplier, Robert Bosch GmbH, laid the foundation in Chengdu for its chassis manufacturing plant. It has been reported that Delphi Corp, Bosch's main competitor, is expected to run its business in Chengdu soon.

According to Chen Yudong, president of Bosch (China) Investment, Chengdu is one of the German company's most important strategic manufacturing bases in China, where the company also set up two production facilities for packaging technology and power tools.

Moreover, in October, the company opened its Communication Center in Chengdu. The call center expands Bosch's international network and provides support to its clients in China.

"Our moves in Chengdu are in line with the Chinese government's 'go west' strategy, with the hope it will bring more investment and job opportunities to Chengdu," Chen said.

"Compared with other cities, Chengdu has competitive edges in its talent and business environment, which the local government put a lot of effort in to improve," he told China Daily.

"Last and most importantly, Chengdu's strong commitment to becoming China's automobile hub and even an international auto city has attracted many vehicle OEMs to set up their production facilities. As a parts supplier to the automotive industry, it's important for Bosch to develop together with our clients here in Chengdu," Chen added.

According to its plan, the Chengdu Economic Development Zone hopes to have a production capacity of 1.4 million units of vehicles in 2015 and realize an annual output of 900,000 units.

In order to realize its ambition, the Chengdu Economic Development Zone plans three specific phases.

The first is helping promote the current vehicle factories to reach its production capacity, introducing key auto parts manufacturers so as to expand the auto industry in a fast and efficient way.

The original plan to have an annual production capacity of 1 million units is already complete. Future targets include revenue of 390 billion yuan from the auto industry and a GDP of 105 billion yuan by 2015.

From 2016 to 2020, the Chengdu Economic Development Zone plans to promote a new-energy auto industry, an auto electronics industry and an auto service industry while further expanding the scale of its whole vehicle manufacturing industry.

By then, the zone plans to manufacture 1.25 million units vehicles a year, as well as generate a revenue of 900 billion yuan with a GDP of 226 billion yuan.

Moreover, Chengdu hopes to turn Tianfu New City, which contains Chengdu Economic Development Zone, into an international model district not only for business, but also for residents, with modern manufacturing industries and a high-end service sector.