Auto industry put pedal to metal

The Volvo S60L [Provided to China Daily]

Manufacturers building on last year's momentum

Editor's note: Seizing the momentum built last year, major foreign automakers are continuing to expand in the country through increased investments in the development of independent brands and expanding capacity. Domestic brands have also established their names in overseas markets, including mature Western countries. The following are the major moves made by companies in 2013.

Daimler buys stake in BAIC

German automaker Daimler AG in November completed the purchase of a 12-percent stake in its Chinese partner BAIC Motor, the passenger car unit of BAIC Group, becoming the first foreign automaker to hold a significant equity position in a Chinese company.

Under the deal, Hubertus Troska, Daimler AG's management board member responsible for China, and Bodo Uebber, a member of the group's management board and chief financial officer, both have seats at the BAIC Motor board of directors.

The two companies also agreed that BAIC will increase its stake in their production joint venture Beijing Benz Automotive Co by 1 percent to 51 percent.

At the same time, Daimler will increase its share in newly integrated sales joint venture Beijing Mercedes-Benz Sales Service Co by 1 percent to 51 percent.

To further cement the partnership, the Beijing-based automaker is also mulling an investment in Daimler, said BAIC chairman Xu Heyi.

Daimler announced in August that it is investing 2 billion euros ($2.7 billion) in Beijing Benz to make it the largest Daimler production facility in the world by 2015, more than doubling the annual capacity to 200,000 units.

Dongfeng, Renault team for joint venture

Chinese carmaker Dongfeng and French Renault inked an operating deal in December for a 50-50 joint venture to produce vehicles and engines in Wuhan, Hubei province.

With a total investment of 7.76 billion yuan, Dongfeng Renault Automotive Co Ltd will produce 150,000 vehicles and 150,000 engines annually in the first phase, which is half of the capacity it will have when all phases are completed.

The venture plans to produce a range of new Renault vehicles, with SUVs slated first for production. It will also develop and promote new-energy cars and its own brands with Dongfeng. It plans to have a localization rate of more than 85 percent.

The venture will use the current sales channels for imported Renault cars to sell locally built vehicles and provide services. The distribution network will be expanded from the current 92 dealers to 120 by the first half of 2016, when production begins. The locally made vehicles may also be exported, subject to Renault's approval.

Four board members from Dongfeng and four from Renault will sit on the company's board of directors. Its CEO will be assigned by Dongfeng and Renault in rotation for a four-year term.

Homegrown Hongqi brand readied for revival

FAW Group in May officially launched its Hongqi H7 sedans in a bid to gain a slice of the lucrative high-end passenger car market, which is currently dominated by foreign brands.

The H7, released as part of the company's effort to revive the Hongqi, or Red Flag, is the country's first self-developed high-end passenger car model.

FAW introduced five H7 models, with prices ranging from 299,800 yuan to 479,800 yuan.

FAW Chairman Xu Jianyi said the H7 will first enter the business-car sector and then be available to the mass market to compete with foreign brands like Audi and Mercedes-Benz.

FAW launched the "Hongqi Revival" project in 2008 and by 2012, it had invested 5.2 billion yuan in the R&D of new models. It plans to invest another 10.5 billion yuan by 2015 to boost R&D and unveil more models.

Created in 1958 as China's top official vehicle, the Hongqi was used by national leaders at major celebrations as well as to transport important foreign guests including US president Richard Nixon during his landmark visit to China in 1972.

But production of the brand stopped in 1981 because of its fuel inefficiency and high cost.

BMW tests waters of electric market

BMW Brilliance released its independent brand, the Zinoro, in April. The brand name in Chinese is Zhinuo, which means commitment or promise.

Its first car, the pure-electric 1E was released in November and will hit the market in the first quarter of this year.

According to BMW, the car is "specially made in China and for China" because the country is headed toward green autos, though the switch to new technology takes time.

The models will be built in Shenyang, Liaoning province, where the BMW Brilliance joint venture now produces the BMW 3 Series and X1.

Zinoro will have a separate distribution channel, and the batteries will be sourced from China.

Analysts said the Zinoro is also likely to be sold to markets outside China.

BMW has been dedicated to bringing alternative-energy vehicles to China. This year, it will also introduce the i3 - an all-electric car under its wholly owned i sub-brand - to China through imports.