What Pakistan Can Learn From The Chinese Automobile Industry: How About A Indus Motor Car?
In 2008, The Chinese automobile industry became the largest in the world in terms of unit production. And since 2009, the annual production of automobiles in China exceeds that of the European Union, or that of the United States and Japan combined. In 2014, total vehicles produced in China reached 23.72 million, accounting for 26 percent of total global automotive production. Sales of vehicles in China in a single month are usually way more than the combined number of cars sold in Pakistan in an entire year.
There are approximately 140 car makers in China including domestic and foreign. And the number is on the rise since new companies are budding even today as everyone tries to tap the lucrative car selling business. While the prime focus remains to sell alternate and new energy vehicles, China happens to be the largest producer of hybrid & electric vehicles in the world.
Car makers from around the world also offer products specifically designed for the Chinese market, products that are not available in any other part of the world. For example, luxury brands like Audi, Jaguar, Range Rover, Volkswagen, Mercedes and BMW all produce long wheelbase versions of their vehicles to be sold specifically in China since Chinese buyers prefer extra legroom in the back seats.
Similarly, Honda City which is available in 1.3 & 1.5-liter engines elsewhere is also available with a 1.8-liter engine exclusively in China. Toyota Belta that comes with a 1.0 & 1.3-liter engine is also available with a 1.6-liter engine in China.
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This just doesn’t end here, what’s even more interesting is the fact that any automaker willing to sell cars in China can venture with more than one company, and each Chinese company can have a venture with more than one automaker as well. This creates an interesting mix of cars that happens when two different ventures intend to produce the same car. The result is the spawning of a new product which is technically the same but visually different than the other. Here are a few examples:
Toyota Corolla / Toyota Levin
Toyota has ventures with two separate automobile manufacturers in China; FAW (First Automobile Works) and GAC (Guangzhou Auto Corporation). In addition to Toyota, FAW also has joint ventures with GM, Mazda and Volkswagen, while GAC has ventures with Honda, Fiat and Mitsubishi other than Toyota. Both the manufacturers also sell their independent range of vehicles based on the licensed technology acquired from their venture partners.
The 11th generation Toyota Corolla was launched by FAW-Toyota venture, which is more like the one we have here, i.e. the international version. GAC-Toyota wanted to sell the same; hence, they launched the Toyota Levin, which is the restyled American version of the same 11th generation E170 Corolla. And while the world is getting to see the leaked pictures of the facelift Corolla, the Chinese have already started to get the taste of it. Both the ventures are already rolling out the facelift versions as well as Hybrid/ Electric versions of these vehicles.
Honda City / Honda Greiz
Honda has ventures with two companies in China as well, GAC (Guangzhou Auto Corporation) and DMC (Dongfeng Motor Corporation), DMC in addition to Honda also has ventures with Nissan/ Infiniti, Peugeot/ Citroen, Renault & Kia. Since the GAC-Honda venture is already selling the 6th gen Honda City, no wonder DMC-Honda wanted a share of it as well, and thus, the Greiz was developed. It has the same 1.5-liter engine and same technical specs as the GAC-Honda City. However, visual characteristics are different. The taillights seemed to be borrowed from the Civic-X, which doesn’t go so well with the car, nevertheless its China, so it sells! The GAC-Honda City is also available with a 1.8-liter engine as mentioned earlier, but the DMC- Honda Greiz doesn’t.
Honda Vezel / Honda XR-V
Here is another example from the same joint ventures, the GAC-Honda produces Honda Vezel in China while DMC-Honda wanted to sell the same, so it came up with the restyled Vezel and named it the XR-V. The Vezel in China isn’t a hybrid vehicle; instead it comes with a choice of two 4-cylinder petrol engines, a 1.5-liter producing 131 hp, and a 1.8-liter engine producing 165hp, both are mated to either a 5-speed manual or a CVT transmission. The same engines are found in the DMC-Honda XR-V, and there is no technical difference between the two either.
But what’s good about the Chinese is that they get the technology-transfer from their joint venture partners, and with the help of that, are able to learn and develop their own vehicles, bringing the Chinese auto industry to such growth. Sirius and V2 sold by Al Haj-FAW, are also good examples of the technology transfer. Sirius is based on the Daihatsu Xenia while the V2 is based on Toyota Vitz, both Xenia and Vitz were being sold by FAW-Toyota joint venture in China, and FAW was successfully able to acquire their platform.
Also Read: Affordable Small Chinese Cars Can Be A Great Option For Buyers In Pakistan
This is something that Pakistan should be able to adapt. Get the technology of an out-going (or gone) model, and develop an own car based on that platform. Unfortunately, none of the local assemblers have acquired the technology from their joint ventures. Platforms of popular cars of our market such as the Suzuki Baleno, Honda City SX8 or the Toyota Corolla E120 could have helped these companies kick start their own project resulting in a new local made product based on the acquired technology. But alas!
Pakistani companies had many chances to improve the quality of life of Pakistani people.
For one, people do not easy get accustomed to “new shape”. Pakistani people are a bit conservative, so they would not prefer rapid departures. Mostly the consumer himself/herself does not know what he/she wants (this is well established fact written in books of marketing). By example if we see, Pakistanis are generally complaining that cars’ shape never change. But when a new shape comes around, even if it is not radically different, people still do not receive it well. Consider Santro, Liana, etc.
Another is that it has been an international practice in developing countries that exterior of cars remains same with minor facelifts, but small, incremental upgrades happen ever so often. Very good examples are from Germany – Germany wasn’t exactly ever a developing country, yet they selected the Beetle and Micro (one private car and one people/goods carrier), whose production ran for decades. But with incremental upgrades over the years, the end-model was much better in terms of safety, comfort, fuel consumption than the initial model.
Similar examples are Ford Transit in the USA. In India also, they introduced newer versions but still did not stop selling the old ones. Such as after the launch of Alto 800, Maruti 800 still kept selling. In China, different generations of Honda and Mitsubishi Lancer sell together.
This is also a method of meeting increased demand in case of a booming market.
Good options are still with Pakistan in terms of acquiring Suzuki Kei, Toyota Cami, Mitsubishi Lancer, Mitsubishi Pajero (Lancer and Pajero both were discontinued this year by Mitsubishi Japan).
Let’s see what happens.
Pakistan is a developing country and being a laggard has enormous resources to exploit completely efficiently. The options are infinite.
Hi bro….I’m from India and would like to confirm you that Alto 800 replaced the Maruti 800 and the old Alto 800cc variant together. So, they cleverly named it Alto 800 and it started selling faster than ever!
stop writing these useless articles as non of us is concerned what others or china is doing………..tell us about pak auto industry and future progress what is going to happened ….after new auto policy are there some manufacturers doing talks with govt officials or not….when some break through is expected….
ignorance is the last thing we need
Usman bhai , i have a question.
will a locally made car , made with the help of technology transfer , be cheaper than its ‘Original’ Counterpart ?
e.g for instance if the Corolla E120 cost 10 lacs , will the a locally made version through technology transfer cost more or less than the original E120 ?
Mrs Harris Gardezi, only you are not concerned with what others are doing. Observing the comments on pakwheels blog, it is quite apparent that people definitely are keeping an eye on what is happening in other places like India or China.
The writers are not your personal slaves that you can order them to “stop writing” whatever you do not like. It is a topic of concern that you are not concerned with what is necessary for you to know. Just like the LCM and algebra which the young boy hates but needs to learn anyway, if he doesn’t he hurts not immediately but after 20 years. So Mrs Harris Gardezi, take note that the blog has the journalistic responsibility of spreading awareness about what the people are missing and are not even aware of missing it. In fact some people like you are even against the enlightenment even when they are being given it for free.
And the 4 things which you require are already being covered in other articles on the same blog.
Maybe, or maybe not. Depends upon many any factors, including the amount of bhatta, economy of scale, cost of raw material, currency conversion etc.
Usually the technology transfer and localization happens for a bit older models (only one or two generations older). You can see examples in Malaysia and Indonesia, China, Korea, Thailand etc. and that makes them cheaper to produce and maintain as R&D cost has been fully recovered in some other country.
“including the amount of bhatta” oh boy … and what is “economy of scale” ???
and im PERFECTLY fine with older models being released as long as
1. they’re best bang for the buck
2. they are ACTUALLY CHEAP
Pricing actually depends on lots of factors but regardless of price the ‘technology transfer’ is beneficent for the industry and its progress. Leave Chinese aside, look at Malaysian Proton. They started with the older technology acquired from Mitsubishi, they launched their own products based on that technology and after that they were able to completely develop a vehicle on their own. Its a lot easier to acquire the rights of an out-gone model, examples of what i have mentioned in the article but none of the joint ventures in Pakistan have ever worked on doing so.
Since there is no R&D required, tools & dies are already there, vendors already produce the spares it normally doesn’t require much financial resources to develop a vehicle this way. When Suzuki started its joint venture in Pakistan, a pre-condition of the government approval was that the cars produced would achieve about 84% deletion in about 6 years. Since then, the schedule has been revised
time to time, and even after 30 years the technology to develop an obsolete Mehran on our own has not yet been achieved. Sad but true.
“tell us about pak auto industry and future progress what is going to happened”
1. Honda has no plans to launch the 6th gen City, so keep buying the current one.
2. Honda Atlas will introduce a new sticker for their bikes, prepare to buy one.
3. Mehran wont be changing in next 10 years but prices will go up. Keep saving if you want to buy one, by the way the 2020 Mehran will look no different than the 1989 one.
4. Suzuki is planning to stop pasting emblems on their cars since everyone knows how Bolan, Ravi & Mehran looks like, but since not pasting an emblem is something new, they will charge you a few thousand rupees extra, and if you still want an emblem you can pay them more for this optional feature.
horrifying !
we should have had this 2 decades ago when the Indus Corolla SE LIMITED EDITION was being made locally :/ !
see this, its the E120 Corolla on sale parallel with the current Corolla in China. It cost some 17 thousand yuan (PKR 2.72 lac) less than the latest Corolla. See how they have worked to make it look different than the actual one. These low cost cars are preferred by those in suburban areas mostly, as they get a bargain deal.
i see
we could have done SOO much with this !
WHat a stupid line::: The taillights seemed to be borrowed from the Civic-X, which doesn’t go so well with the car, nevertheless its China, so it sells!
oh bhai Chinese never buy that substandard rubbish stuff what our importers import from China. Nearly all of them prefer big brands not fake or clone brands what Pakistanis associate with China.
they are just modifying it and selling it because it is way cheap to do so. I suspect this old corolla can be this expensive as I think this model is still cheaper there even with 1.6L engine.
some 4,955 Honda Greiz were sold within just 2 months of its launch in China. Hence “nevertheless its China, so it sells” is defined as!
they sell quality stuff in China. Complete with safety and premium features.
It is complete with safety and premium features but not long lasting (quality).
Even the quality of paint of Toyota, Honda, or even Mercedes in China is worse than the quality of paint done by Atlas.
Crash safety is better. They don’t try to save that much money on welding as crash safety ratings are the main seller. You’d ask any Chinese the main reason of his/her choice of vehicle and they’d tell you the crash safety rating was the main factor influencing their decision.
Paint quality was worse than Atlas Honda? Lol you must be joking. Remember iPhone’s body is made in China. Do you even know what they do manufacture? Stop being living in jungle, they make everything for everyone it is just that most Pakistani nearly 90 % import shi## from China which you can’t even find in Chinese markets.
4955 cars in 2 months is nothing. For popular cars in China, 4955 units get sold in 2 or 3 days. Not two months.
An example is Baojun whose daily sale is more than 2000 units. Or Haval H6.
read “within just 2 months of its launch”. Haval H6 & Baojun 560 are already established names in China (sales around 1400 units per day). Both Baojun 560 & Haval H6 are SUVs which are more popular in China than sedans. Greiz sedan being a new comer is doing reasonably well.