China keeps getting better at making cars

Article by Christian Andrei, on September 24, 2012

Zhejiang Geely Holding Group Co. has found a way to cut corners. For its Panda model, only 20 to 25 crash tests were conducted, several of its engineers told Reuters. It’s typical for global automakers to do 125 to 150 crash tests for every new model. Geely depended more on computer simulations, resulting to savings of at least 200 million yuan ($31.57 million).

The engineers said that Panda was in development for two years. Geely is one of the biggest automakers in China. The cost bases of the dozens of automakers in China are lower due to the reduction in the number of crash tests as well as lessening the frills, making designs simpler, using less expensive materials, and outsourcing majority of their designs and engineering.

Some automakers can sell affordable small cars for around 40,000 yuan ($6,350), which is lower than half of the price of a plain Toyota. A decade ago, no smart Chinese consumer would have purchased China-designed cars. Many of these vehicles were illegal counterfeits of foreign models and their safety and quality can’t be relied on. But the current domestic models may not have exciting looks but they’re of satisfactory quality and are affordable.

This is what’s regarded in China as the car that’s good enough. There may be significant implications for the global auto industry. Models like the Panda and the Great Wall Haval H3 are becoming famous not just in China but also in emerging markets like Indonesia, Egypt and Ukraine. Because of the demand, China's auto exports have reached record levels even if the domestic market gets slower.

Topics: china

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