BARRIE WILLS looks to the East and foresees some intriguing outcomes, for example in Iran, India and Indonesia…
In Halle 4 of the Frankfurt IAA, I felt I was participating in a moment of automotive history. It was 2:15 pm on September 14, 2005. Battling against the din of the Korean drummers from the nearby SsangYong stand, Jie (George) Zhao, vice president of Geely International Corporation of Shanghai, China, was struggling to make himself heard.
In perfect English, his role was to introduce Lu Shufu, his 41-year-old chairman and 53 per cent controlling shareholder of Geely Automobile Holdings Limited, to an expectant press gathering.
Behind the two of them was a car under wraps, surrounded by a fantastically made-up and be-robed troupe from the China Opera. Elsewhere on the stand was a range of four models: the HQ, MR, PU and Maple Series of cars and pick-ups – all sharing a range of petrol engines from 1- to 1.6-litre capacities.
The new car launch revealed a sports coupé, somewhat reminiscent of Hyundai’s first attempt. Ironically to us Brits, the range is known as the BL series and the example on display was in Triumph red.
Close attention to the range of cars revealed design similarities to several other brands. More than hints of Citröen, Daihatsu, Fiat and Mercedes-Benz were evident – ‘Chinese copies’ if ever there were. Poor panel fits, lower than average quality paint finish and components produced from low quality tooling were signs of a company not yet ready to export.
Indeed, in his launch speech, Mr Lu admitted that Geely needed help from the West to assist his company’s development. Almost inevitably, the major automotive newspapers followed up with headlines such as ‘Chinese car makers not ready for Europe’ and quotes like: ‘It will take years before Chinese car makers can sell cars that comply with EU pedestrian-impact and emissions requirements’.
This may prove to be so, but Geely Auto’s progress since it was formed in 1998 – after a period of 10 years making refrigerator components and then motor cycles – is particularly impressive.
Setting out to produce ‘affordable cars for the masses’, it attained annual production capacity of 360,000 units by 2004, although it built only 92,000 and sold 97,000 in that year.
The analysts’ instant and overt criticism of Geely’s cars took my mind back to 1964. As a young member of Jaguar’s purchasing team, I had been invited to a gathering at GKN’s then-HQ in Birmingham. GKN’s commercial director, the late Keith Douglas, had invited engineers and buyers from the UK industry in the Midlands to inspect a sample of Honda’s first mini-car. Until then, Honda had designed and manufactured only motor cycles.
Most of the attendees came from BMC, Standard-Triumph, Rootes Group, Rover and Jaguar.
Their observations were almost entirely critical, with nothing short of ridicule reserved for the car’s somewhat flimsy – to say the least – injection-moulded plastic boot lid. With hindsight, to say that this mockery was ill-advised is an understatement – as within 20 years the same Honda was being hailed as the saviour of the future employer of most of those present: British Leyland.
The determination and the will of the Chinese to succeed should not be underestimated. As the most populous nation on earth, it looks enviously at the international automotive success of its much smaller Japanese and Korean neighbours.
In the same week as the Frankfurt show, JD Power announced that the most reliable mid-sized car in the USA was the Hyundai Sonata.
This was surely some progress from the Korean company’s conversion from an assembler of CKD Ford Cortinas to manufacturer of the original Pony sedan, guided by former British Leyland managing director George Turnbull and his team of British specialists, and supported by technology transfer from the UK’s component and tooling industries in the mid-1970s.
Apart from Geely in China, we also have the equally ambitious Chery, with cars being designed and developed by the likes of Italy’s PininFarina, Bertone and IDeA, and engines by Austria’s AVL.
Chery plans to enter the US market with the help of the serial entrepreneur Malcolm Bricklin – whose previous import activities have embraced Subaru and Yugo.
Despite Bricklin’s mixed success – his Canadian gull-winged sports car project failed spectacularly in the 1970s – he is another force not to be under-estimated, particularly if the quality standards, so absent from his short-lived 250,000 per annum Yugo sales can be offset by Chery’s collaboration with the Italians. Low manufacturing costs are, of course, near-guaranteed.
Examples of the products of Jiangling Landwind and Shenyang Brilliance were also on display at Frankfurt.
China was not alone in taking a major automotive step forward at the IAA. Almost un-noticed, Iran’s premier manufacturer, Iran Khodro, was present on the Peugeot stand for the launch of the new 206 sedan, designed and developed by the French and Iranian companies in conjunction with Germany’s EDAG.
The project commenced in March, 2004, for production and sale in Iran, mainly to replace the ex-Rootes Group Hillman Hunter, known as the Peykan, which finished production in Tehran in early 2005 – after 2,295,095 units over 39 years. More than 35 per cent of all cars on the road in Iran are Peykans.
The Peugeot 206 sedan will be exported from Iran to 39 countries, mainly to the east of Tehran. Iran Khodro is now the largest manufacturer of cars in the Middle East and with its sister company, SAIPA, Iran is heading for manufacture of 1 million units in 2006.
There is little doubt that Iran will become the main production base for exports to the Middle East and West Asia over the balance of this decade.
So who is next? Watch out for India. Tata Motor’s ill-advised false start with MG Rover should be seen as an aberration. Tata represents a rapidly expanding force, and several recent strategic acquisitions in Europe will contribute significantly to this company’s technology base.
Success for Ratan Tata’s much heralded ‘1 Lakh Car’ project would transform Tata’s volumes, capabilities and export potential – especially in this world of rapidly increasing oil prices.
Finally, there is Indonesia, the sleeping giant with the fourth largest population in the world.
Until the Asian financial crisis of 1997, it was heading towards manufacture of 1 million vehicles per annum, and had formed three ‘National Car’ projects, all of which stalled – with Rover, Kia and a British design engineering company.
Indonesia’s day will come as its government remains committed in principle to offsetting the domination of Japan over its auto industry.
Watch this space, and don’t underestimate the so-called emergent nations.
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