A Brief History of the Auto Industry in China

A short piece from my auto archives 2003-2004.

--peter



Ford Motors, GM and Mercedes-Benz set up auto plants in Shanghai during the Republican period. In 1902, Yuan Shikai bought a Mercedes-Benz from Hong Kong as a gift to the Dowager Empress Cixi. This vintage model is housed in the Summer Palace Museum.

China began to manufacture automobiles in 1955 with Soviet trucks, buses and tractors. The first commercial vehicle to roll of the assembly line was the 'Jiefang' (‘Liberation’) truck, manufactured by the Changchun No.1 Automotive Plant in 1956. The Plant started production of Hongqi (‘Red Flag’) limousines, and a passenger car called Fenghuang (‘Phoenix’).

From the 1950s to the early 1980s, passenger cars were essentially the prerogative of China’s ruling elite. In the early 1990s, however, the Chinese government designated the automobile industry as one of the country’s so-called pillar industries making it easier for individuals to purchase motor vehicles.

In the 1980s, Steyr-Daimler-Puch , AMC Chrysler Jeep, Volkswagen and Audi had set up shop in China. U.S. component manufacturers Delphi, Ford, and Bosch soon followed. By the early 1990s, one million auto vehicles were rolling off the assembly lines annually.

 With China’s entry into the WTO in December 2001 the auto industry turned a new page. Foreign manufacturers were keen to grab a piece of the fastest growing auto market in the world. Sales of passenger cars soared from 750,000 units in 2001 to 1.2 million in 2002 and then nearly doubled to 2.1 million in 2003.

China's auto industry, however, was far from regulated. As Erik Eckermann writes in his book World History of the Automobile (2001):

the auto boom of the early 1990s often generated chaotic conditions. High custom duties gave rise to organizations involved in smuggling parts and entire cars. Auto parts and dealerships sprouted in huge numbers, while a fragmented industry operated in an uneconomical and labor-intensive manner (p. 209).

Some 4.5 million cars rolled off the Chinese assembly line in 2004 making China the fourth largest producer in the world. By 2010, it is predicted that China will become the world’s number two producer after the USA.

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