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back to index backCHINAtalk April,  2007


Japanese Makers Have Guangzhou Poised to Surpass Shanghai as Auto Capital of China

The roaring success stories of the three Japanese automakers with plants in and around the southern metropolis of Guangzhou—Honda, Nissan and Toyota—make it all but certain that the area will soon be the auto capital of China, Nikkan Jidosha reported.

Their growth may also have dashed Shanghai’s longtime ambition—based on its early partnerships with Volkswagen and General Motors—to call itself the Chinese Detroit,” the paper added.

The reversal of fortunes for the two cities can also be seen as a reflection of the global situations of the foreign makers the two cities host.

Trend Lines

Shanghai still topped Guangzhou in local production last year, 620,000 vehicles to 500,000. But the trend lines favor the southern city, because Toyota, Honda and Nissan are all planning big expansions there, while the VW and GM ventures with Shanghai Automotive Industries Corp (SAIC) aren’t doing much at the moment.

As a result, Guangzhou is getting more new investment by foreign parts makers than Shanghai, and some parts manufacturers with units in Shanghai are either moving south or setting up additional facilities in Guangzhou.

More Suppliers

According to data collected by the Tokai Japan-China Trade Center, there were 217 Japanese auto parts suppliers in the Guangzhou area as of last summer, or about 10% more than the peak figure of 194 in Shanghai, in 2005.

Parts investment in Guangzhou soared in 2004-2005, soon after Toyota decided to locate there, the report said. In 2005 alone, 56 Japanese parts makers set up shop in the city.

In fact about 90% of Toyota’s first-tier suppliers now have operations in the region, and they are putting pressure on second- and third-tier suppliers to come along with them, so as to raise local content, the paper said.

The future looks even more promising. Guangzhou Toyota, with its second assembly line open since last fall, will make 150,000 vehicles this year, and begin production of the Yaris in 2008.

Honda will make about 350,000 vehicles, including about 43,000 for export, and Dongfeng Nissan will turn out at least 250,000. That adds up to 750,000, still about 50,000 short of what Shanghai makers plan to produce this year.

Infrastructure

But the Guangzhou makers are working with the local government, to put in place infrastructure projects that will help them to make a million cars a year by 2010.

That makes them certain the city will surpass Shanghai as the auto capital of China in reality as well as name, Nikkan Jidosha said.

To see sample issue of or to order The Japan Automotive Digest, click here.

Source:  The Japan Automotive Digest - GAI


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