C h i n a A u t o m o t i v e M a g a z i n e Subscribe it! · Chery A1 test drive 13 Brilliance delist SAIC share hot 16 New vehicle ship tax in P.R. China 18 C-NCAP: a long march

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This year IAA 2007 car show is the debut for an-other Chinese carmaker Shuanghuan. The SUV S-CEO, which is a knock-off of BMW SUV X5 and may have a German price tag of 25.000 Euro — but is it worth to consider?

CAM shall visit the booth of German importer and interview trade visitors to learn more about it (See story in October edition).

Another round of Chinese N-CAP test results on page 19 and 32 reveal that FAW’s Besturn has caught up with a **** rating. We hope other follow soon!

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Hope you enjoy the Sep-tember edition of CAM!

Michael Sikora Editor-in-Chief

Dear Reader !

China’s passenger car sales jumped to 2.64 million vehicles in the first seven months this year, which reflects an in-crease of 27 percent for the same period last year, whereas SUV sales sky-rocketed to 187,600 units (+46%) and MPV sales increased by 124,400 units(+17%).

But these figures did not eject Chinese carmakers into the limelight of in-dustry analysts. In fact, it was the government en-forced merger talks bet-ween SAIC and Nanjing Auto as well as the loom-ing joint venture break up between Fiat and NAC.

Another breaking news this summer concerned the first Chrysler & Chery Assesment Team meeting on 6th August, and, a few days later, the 1st million car rolling off assembly line celebration (see page 2). CAM was told, that Chery target to produce one million cars in 2009—good news for car EU/US car importer !

In our “New Models“ sec-tion we take a closer look at new Chinese launches in 2007: FAW Weizhi C1, a B1 segment hatchbach, the recently launched Haima 3, Dongfeng‘s

Liuqi Jingyi MPV‘s, Geely‘s refur-bished Vision, and two new Brilliance cars: M3 Coupe and Splendor FRV came to our atten-tion.

S-VW is going to develop new models for Chinese and US markets in China. Also Fiat may follow after the EU carmaker also signed an agreement with Chery. CAM forsees that China shall become in the next years production base for export models to Europe and US — good news for automotive wor-kers & trade unions in these regions.

Some Chinese OEM share prices sky-rocketed in the first half of 2007, such as SAIC, FAW, and Beiqi Fo-ton, so the only question remains for a Chinese consumer: “Shall i buy a (another) car or invest in stocks?“

Most foreigners know Yalong bay beach at Hainan island — but have you ever heard about Chi-nese carmaker Haima? As CAM has visited this carmaker a month ago, we not only recall a very hot summer day but also found a descendant of former Hainan Mazda, on the long march to join the 1st league of carmakers in China in the near future.

H i g h l i g h t s 9/07

Chery‘s 1 millon car in Golf class

2

SAIC & NAC start cooperation talks

3

Chery & Fiat team up

4

Fiat to terminate NAC joint venture

5

Chinese brand on the rise

6

BYD F1 city car Car launches 07

8

S-VW China and US models

11

FAW Weizhi C1 on sales

12

Chery A1 test drive

13

Brilliance delist SAIC share hot

16

New vehicle ship tax in P.R. China

18

C-NCAP: a long march to go

19

Profile: Haima Quality first !

2026

China-made Chrysler to US

27

YAIP industry park introduction

27

Upcoming Events Appointments

29 30

September 2007 Issue 10

C h i n a A u t o m o t i v e M a g a z i n e 中国汽车杂志

© Automotive Business Consulting Ltd. September 2007

The A3 is Chery’s compact car in the C-segment and the Chinese budget answer to Ford Focus and VW Golf.

At the recent Shanghai motor show, the company even intro-duced the Chery A3 hybird. The car combines a 1.3-litre diesel engine with integrated starter-generator technology and a stop-start system to turn the engine off when idling. It’s a so-called mild hybrid, not able to run in electric-only mode,but the extra assistance given by the electric motor allows for fuel consumption of up to a claimed 94.2mpg when equipped with the optional CVT transmission :

The company has been gearing up to compete against foreign joint ventures. Chery said in a statement yesterday that it spent six years to make the first 500,000cars and just another 18 months to reach the one-million record.

Chery is also expected to break into the commercial-car seg-ment soon with the first model likely to be a light vehicle or pickup in addition to its 10 pas-senger car models.

Chery is now able to manufacture 400,000 units a year, 400,000engines as well as 300,000 transmission modules. Besides its production facility in Anhui, seven overseas plants have been set up in Iran, Russia, Ukraine, Indonesia, Egypt and Uruguay.

Since 2001,Chery has exported 153,694 cars to 56 countries, making it the biggest Chinese sedan exporter for four consecutive years. It plans to raise annual exports by 800 percent from last year to 400,000 by 2010.

As a four-door A3 hatchback rolled off its assembly

line, Chery became the first Chi-nese automaker to have pro-duced 1 million cars.

Following newly inked deals with Italy’s Fiat and India’s biggest automaker, Khodro, the Chinese flag bearer proclaimed to double the number of its offshore plants in the three years.

CAM has counted about 2,000 guests at the launching cere-mony, with more then 200 se-lected Chinese and international 200 suppliers.

Our German editor on the spot reported, that A3 is one of the first models, which the Chrysler & Chery Assessment/Review team kicked-off Monday, 6th August at Chery HQ in Wuhu city. Mission of this meeting was besides relationship building the conducting of a performance gap analyses of Chery‘s design, validation and manufacturing capabilities. Chrysler manage-ment now wants to know when Chery is really ready to produce B-segment Best-in-Class cars similar to Toyota Yaris, Honda Fit or Mini Cooper. Chrysler‘s „object of desire“ is the recently launched A1 (compare our test drive report on page 13). Major focus for Chrysler is Chery‘s QM planning instruments and test facilities.

The million car, assembled on Wednesday 22nd August, is the A3 model, which Chery launched at Beijing auto show last year.

At a ceremony yesterday, Chery unveiled its target to double the number of foreign factories to 14 by 2010. Argentina and India are two of the options

Chery is considering to escape foreign tariff barriers, as to China Daily.

Chery joint ventures geared-up

Chery has recently teamed up with different foreign car firms to expand overseas. It announced last week an agreement with Khodro and the Canadian investment firm Solitac to open a factory with maximum annual production capacity of 200,000 in northern Iran.

Another deal was inked earlier this month with Fiat to form a 50-50 joint venture to produce the brands of Chery, Fiat and Alfa Romeo, with an annual capacity of 175,000 units, for both the domestic and overseas markets.

According to the terms of a previous deal, Chery made Chryslers will hit the U.S. and North America markets in about two years with compact cars similar to Chery‘s A1and A3 at around half of the current price of Chrysler’s cheapest model.

Sources: Shanghai Daily, 22.8.2007 ABC Research, Hubert Ross

One million passenger car produced: Bully for Chery

Page 2 HOT TOPIC


Nanjing Auto to evaluate that to industry insiders. The evalu-ation, the first major step in bringing about the deal, is ex-pected to be complete by September 20. “The unity should help consolidate resources for better efficiency, improve research and develop-ment capabilities, expand product mix and lift brand value for a win-win situation, “SAIC said in a statement announcing the deal.

Both SAIC and Nanjing Auto said the agreement does not imply any substantial commitment, and both refused to provide any details on what form the tie-up would take.

Analysts have long expected

SAIC to take over the financially weaker Nanjing Auto, but many still say it could take a great deal of time for them to come to terms on a merger or other form of cooperation. "The co-operation still remains at the intent phase and there is still a long way to

Go, "said ZHANG Xin, an analyst with Shenyin Wanguo Securities Co Ltd.

SAIC lost out to Nanjing Auto in bidding for the bankrupt MG Rover in 2005. It spent US$136.21 million to buy the technology for two Rover models, which helped its listed unit, Shanghai Auto, to unveil its own version of the Rover 75 last year, called Roewe 750.

Meanwhile, Nanjing Auto took

TWO of China’s largest auto makers signed a letter of

intent to form some type of co-operation on Friday, but many questions remain about how the cooperation will manifest and when it will be completed.

Were the two companies priv-ately owned, analysts would probably wonder if the cooperation would ever actually happen, as many hurdles must be overcome?

Both companies, Shanghai Automotive Industry Corp and Yuejin Motor Group (NAC), are state Owned, however, and the central government has made it clear the deal should go ahead. If the central government is pushing the deal, it will happen, analysts agree, but that doesn’t mean it won't take a lot of time and struggle. The deal is part of the central government's efforts to develop the Yangtze River Delta and consolidate China's auto industry to make it more competitive and efficient.

The deal will align SAIC with Yuejin's major subsidy, Nanjing Auto Corp, the two companies that bought the physical assets and intellectual property belonging to British MG Rover Corp, when that famed company found itself facing bankruptcy two years ago.

Word of the deal has shaken the Chinese auto industry not only because they could form the country's biggest auto maker an enterprise strong enough to take on global players - but also because it would bring together two-state-owned companies that currently competing head-tohead with their self-branded models.

Yesterday, a team of experts from SAIC were dispatched to

over the MG brand, complete assembly lines for sedans and sports cars for 50 million pounds. It plans to market the models - starting this month - as part of a US$2-billion investment to revive the historical brand worldwide.

The talks initiated when HU Maoyuan, chairman of SAIC, said in April that the company was always open to cooperating with Nanjing Auto in order to improve the efficiency of state assets. Two months later, WANG Haoliang, president of Nanjing Auto responded with willingness to cooperate but insisted the bottom-line of any partnership should be focused on the MG cars instead SAIC taking over a controlling stake in NAC.

"The cooperation not only fits nicely with government directives but also meets the needs of both companies, "said Zhang. SAIC and Nanjing Auto are expected to share technology, as sembly lines and brands for making MG Rover models in China. "The R&D capability and sharing of auto parts would also help to lower production costs and increase the competitiveness of exports, "Zhang added.

Foreign partners are a major hurdle for the deal .

SAIC has joint ventures with General Motors Corp and Volkswagen AG. Those ventures are two of the country's top car makers, selling a combined 441, 584 units in the first half of

Chinese government intiated SAIC & NAC merger talks

Page 3 HOT TOPIC


on the partnership, profits, resource priority, personal matters and even the economic benefits for two local governments," said a company official who asked not to be named.

With its strong fundamentals, SAIC is pushing for a controlling stake if the two companies were to merge. Last year, it was the top selling car maker in China, with 1.34 million vehicles sold.

Its revenues jumped 25.4 percent to US$18 billion com-pared with 2005, according to Fortune Magazine. As of last year, the company owned assets worth US$17.7 billion.

Nanjing Auto, on the other hand, posted a loss of 35 million Euro for 2005. While more current numbers aren't available, the company claims it has turned its financial situation around thanks to the Iveco model of buses it produces in partnership with Fiat.

The company earlier said it would sell as much as 50 percent stake in Nanjing MG Automobile Co Ltd to outside

2007, which accounts for about 14 percent of China's market.

SAIC listed unit, Shanghai Auto, has previously announced plans to issue up to EUR800 million (US$1.06 billion) in convertible bonds, including EUR200 million to be spent on possible mergers and acquisitions.

Various media outlets have reported that Nanjing Auto is facing difficulties in financing overseas expansion due to the cost of its MG acquisition, which included a factory in Longbridge, England.

Nanjing Auto's president said the MG acquisition involved an investment of at least EUR350 million.

A source from SAIC said the car maker was encouraged by the central government to take control of Nanjing Auto. "Nanjing Auto's unsuccessful lines are not attractive to SAIC so both of them failed to reach a deal on the price issue," the anonymous source said. Officials from Nanjing Auto said the reaching a final deal will be difficult as the two companies disagree on many issues. "Both companies will compete for a bigger voice

investors to help fund expansion after receiving bank loans from the National Development Bank.

"Nanjing Auto has made some concession on the shareholding plan, but it also has a bottom-line such as insisting the revenue should remain in Nanjing," the company source said. Some analysts said the two companies would learn from the merger of DaimlerChrysler, running the two brands independently but sharing technology and procurement. Others disagree.

"It is less likely because Nanjing Auto will account for a small share of holdings in the new company according to its current assets, "said JIA Xinguang, an independent auto analyst in Beijing.

"I think Shanghai Auto would acquire the assets of Nanjing MG for making the self-branded MG models. And both parts would jointly form new ventures to assemble Iveco models while SAIC would replace Nanjing Auto to be the partner of Fiat in a passenger car venture also."

Source: Shanghai Daily, B5, 1.8.2007

Page 4 HOT TOPIC


Fiat and Chery in joint venture talks

ITALY’s Fiat Group

Automo-biles said yester-day that it will set up an equally owned joint venture with China's Chery Automobile Co Ltd to make and market passenger cars. The new company, located in Chery's home city of Wuhu in Anhui Province, will produce Fiats such as Alfa Romeo cars as well as other models that carry the Chery nameplate, a statement from Italy's biggest car maker said.

The JV is expected to manu-facture 175,000 cars a year

when it starts production in 2009. No financial details were released yesterday. The first model to be assembled will be the Alfa Romeo 159 sedan. The second is likely to be the Alfa Romeo 147 five-door model.

The cars are intended for the China market. "The two parties plan to begin immediately the process to discuss the JV contract and obtain relevant authorizations," the statement said.

The announcement dispelled market speculation that the deal might be halted after Fiat's

improved relationship with its other Chinese partner, Nanjing Auto.

Nanjing Auto is holding dis-cussions with Shanghai Auto-motive Industry Corp on a possible tie-up, a move that would increase its financial capability and benefit Fiat through the development of their joint venture.

"Entering the Chinese market at this stage is a key milestone in our plan to revamp and expand the Alfa Romeo business worldwide," said Sergio Marchionne, chief executive

Page 5 HOT TOPICS


Fiat plans to sell 300,000 vehicles in China, the world's second-largest auto market, by 2010, leaping from combined sales of 44,000 Siena, Palio and Perla compact cars last

officer of Fiat Group and Fiat Group Automobiles. "The cooperation with Chery will also further development of the Fiat brand in China."

year.

On Monday, Fiat finalized a deal under which Chery will supply it with 100,000 engines a year.

to resolve the huge differences that would allow Nanjing Fiat to grow to [a sales target of] 300,000 cars a year by 2010," he continued. "All those efforts remain unanswered to this day."

Marchionne said that despite three years of negotiations there was "no agreement on a product portfolio for China". He blamed Nanjing's acquisition of MG Rover as a major cause of the problems: "They have been distracted by other brands that are of no interest to us," he said.

NAC relaunched the MG brand at the recent Shanghai Auto Exhibition. The Chinese company was the surprise winner for the assets of the collapsed UK automaker in 2005.

The Chinese company paid $92m for the MG brand, the design rights to the TF sports car and manufacturing equip-ment from the Longbridge plant.

NAC is China's oldest auto-maker with a history stretching back to 1946. It started pro-duction of the Palio from CKD kits in 2001- just before the automotive industry boom. But sales have struggled against more aggressive rivals, and Fiat has failed to establish a foot-print in China.

Indeed, relations look to have broken down completely. Chi-nese media reported Nanjing chairman WANG Haoling as saying: "I don't think Fiat has a good understanding of the

Fiat looks set to scrap its Chi-nese partnership with Nanjing Automobile Corporation (NAC) in the near future following an extraordinary attack on the Chinese company by Fiat CEO Sergio Marchionne, writes Mark Bursa.

Speaking at the launch of the Fiat Linea sedan, a car that Fiat wants to build in China, Marchi-onne pulled no punches in his criticisms: "I'm fundamentally displeased with the level of interaction with Nanjing on the passenger car project," he said.

Now it looks increasingly like Fiat will exit the Nanjing operation and set up a car pro-duction deal with rival Chinese firm Chery, with which Fiat al-ready has an agreement on en-gine supply. "If we can't get a conclusion with Nanjing we'll look at alternative arrange-ments."

Marchionne said he had made several trips to China over the past three years in a bid to kick-start the struggling Nanjing Fiat project, which built just 31,300 Palio, Siena and Palio Weekend models last year, 13% fewer than in 2005, and well below the venture's current capacity of 100,000.

"I'm not going to China to look at the tourist attractions," said a clearly frustrated Marchionne, who had stonewalled earlier questions about the Chinese project but finally responded when a Chinese journalist put him on the spot.

"I have personally devoted a large amount of time to attempt

Chinese market," and this re-mark is likely to have pushed the relaxed Marchionne to breaking point.

Chery represents a much more ambitious and progressive part-ner. It is a much younger and more entrepreneurial business than Nanjing, and has already demonstrated a willingness to build partnerships with western companies through its deal with DaimlerChraisler, which will see it building the Dodge Hornet small car under contract for supply to the West, in return for technology transfer to allow it to build Chery-brand small cars on the same platform.

And last October, Chery signed a MoU with Fiat to supply 100,000 Chery-designed 1.6and 1.8-litre gasoline engines for Fiat cars built both in and outside China. When he announced the deal, Marchionne praised Chery as "a young and modern company with a solid technical background". Under Chinese Government rules governing the auto industry, local producers can form alliances with up to two foreign carmakers - so Chery would be likely to win approval for a Fiat JV alongside its Daimler Chrysler deal.

Targeted alliances are very much part of Marchionne's strategy: "Fiat is open to the concept of cooperation with everyone," he said. Already talks with Chery have progressed beyond engines - regardless of the outcome of the Nanjing spat, Chery is likely to be chosen to build Alfa-Romeo models in China. "In the relation with Chery we see the potential for a wider cooperation both in powertrains and, eventually, in

Fiat may terminate partnership with NAC

Page 6 HOT TOPICS

© Automotive Business Consulting Ltd.

other automotive sectors," Marchionne said last year.

What Marchionne would like to see is a smooth handover of the Nanjing business to a new in-vestor, and this could bring another option into play - SAIC, which has been at loggerheads with Nanjing since its smaller rival gazumped it for control of Rover's assets. Nanjing owns the intellectual property of the Rover designs and has produced its own versions of the cars under the Roewe badge.

SAIC has far greater industrial clout than Nanjing, which has struggled to raise the funds to complete the MG relaunch. However, its hokey Roewe brand is unusable as an export name-plate - especially with the Rover

nameplate now owned by Ford.

SAIC chairman Hu Maoyan has made no secret of the fact that he'd like the MG brand, and actively courted Nanjing at the recent Shanghai Auto Show: "We are looking forward to co-operation with Nanjing," Hu told the Financial Times. "We need to use state assets more effi-ciently and effectively. We be-lieve the leaders of NAC are smart enough to understand this principle."

An SAIC takeover of Nanjing is one possible option - and that could put the Nanjing-Fiat operation in SAIC's hands. However, SAIC already has JVs with General Motors and Volks-wagen, so this could prove problematic. However, SAIC has

historic links with Chery - it was a shareholder in Chery until GM forced it to sell its stake three years ago after the design piracy dispute, when Chery launched the QQ minicar, a 'lookalike' of GM's Matiz model. So a com-promise solution could be reached.

The smart money is on a Fiat-Chery deal, and sooner rather than later. Marchionne wants to get the Fiat Linea into production in China as quickly as possible, and Chery surely represents the best way to achieve this. And judging from his recent per-formances, what Marchionne wants, Marchionne gets.

Source: just-auto.com 11.5.2007

September 2007

Chinese car brands are expec-ted to take about 40 percent of the domestic market by 2012, according to a report from Global Insight Inc.

"There are a lot of opportunities for Chinese locals in the future. There are low penetration rates in the vehicle market and a trend to shift to the mid-class car segment;' according to John Zeng, senior market analyst from the world's leading auto-motive consulting firm. Favorable policies by national and local government also help promote domestic car brands, he said, as supply structures improve and there is easy access to advanced technology from suppliers.

Last year, more than 982,800 Chinese-branded models were sold, accounting for 25.6 per-cent of the total passenger car market, according to China's Association of Automobile Manufacturers.

The auto industry has expe-rienced average growth of 25

percent over the past five years in China, where only 20 out of 1,000 Chinese people own a car.

Total vehicle sales hit 7.9 mio units with a 25 percent growth last year, while passenger car sales topped five million units. China is transforming from a bicycle kingdom into a car-driven society as people's incomes rise. Chinese car makers have relied heavily on cooperation with overseas partners to gain quick profits over the past 20 years.

Global players such as Japan's Toyota Motor Corp, General Motors Corp, Volkswagen AG and South Korea's Hyundai Motor Corp have set up joint ventures in China and built up their brands. But smaller and private players have seen the potential. They include Chery, Geely, Zhongxing, Chongqing Lifan and BYD.

They can be more flexible in restructuring production and focus on cheaper, smaller

models.

"The fast growth of Chery and Geely was also partly helped by the strict auto policy in 1994, which led to foreign joint ven-tures mainly focused on the medium-to-large car market in the 1990s," said Zeng.

The market expanded quickly after state-owned enterprises such as First Automotive Works Group, Shanghai Automotive Industry Corp and Dongfeng Group were encouraged to build their own independent brands.

China's central government aims to have at least half the nation's car market supplied by Chinese brands by 2012, offering some financial support and indirect tax incentives. Chery Automobile Co Ltd won its most market share, with 8.2 percent for the first quarter of 2007, Global Insight's report said.

The 48 percent sales increase helped it rank among the top three, up from last year's fifth position. Volkswagen has a 16.2

Chinese Brands set rise in five years

Page 7 DISCUSSION


percent share and is the market leader, while Toyota has a 7.5 percent market share. Volkswagen has been a player in the Chinese market since 1985, while Chery only started making cars in 2003.

Local brands still gain sales mostly from cheap subcompact sedans, raising concerns about sustaining development with limited profits. And joint ventures are challenging the market by tapping into the economy car sector, increasing competition and price wars.

"Domestic brands have a better understanding of local con-sumer needs, especially in the economy car market," Zeng said. "They also benefited from government support and a lowcost advantage compared with overseas players."

Chinese car makers are working on offering more higher-end models after the growth in mid-class sedans.

Mid-class models will account for 42 percent market share of the total in 2012, bigger than compact and subcompact models, according to the Global Insight.

Production of Chinese-made mid-class sedans, which are priced between EUR10,000 to EUR20,000, is expected to more than triple, from 500,000 units last year to 1.5 million units by 2012.

More higher-priced models are expected since this year's

launch of several models by Chinese car makers, including Chery FII, Geely GHI and FAW's HQE, which will help boost profits and lift their brand image.

Chinese car makers are also finding a way to quickly narrow their .technology gap with overseas players and gain timing advantage by acquiring assets from overseas players.

SAIC's Roewe model, its first self-branded sedan, has re-ceived more than 6,000 orders in just one month after the company attended the 2007 Shanghai Auto Show in April. The model, which sells between 23,500€ and 27,680€, is based on the Rover 75 after SAIC bought the intellectual property rights from failed British MG Rover Corp for 50 million pounds (US$99 million).

Chery's Acteco engine was developed by AVL with assis-tance from Bosch and Delphi Corp. In addition, the Chinese government is also encouraging the consolidation of Chinese makers to increase competition.

"The biggest three (SAIC, FAW and Dongfeng) are facing increasing pressure to build up independent passenger car brands and a high local R&D capability," Zeng said.

"There will be shake ups among smaller producers, leaving the big three car makers to retain their domination, with seven or eight younger, smaller players."

Strengths and Weaknesses of Domestic Brands (SWOT)

Strengths

• Better understanding of local consumer needs, especially in the economy car market

• Government supports the development of domestic brands

• Low-cost advantage, ability to provide better value for money

• Efficient decision-making process, quick response to market change

Weaknesses

• Lack of independent International perspective

• Low price, low profit, low R&D investment; inconsistent pro-duct quality

• Lack of economies of scale; consolidation is difficult due to local protectionism

• Weak brand image. Focus primarily on low end of mar-ket

Domestic brands have a better understanding of local consumer needs, especially in the economy car market. They also benefited from government support and a low-cost advantage compared with overseas players.

Source: Shanghai Daily, June 20 2007

September 2007

B YD F1 Spyshot Roewe 450 (W262) Spyshot

Page 8 NEW PRODUCTS


ABC got rumors that BYD shall introduce for the very first time the BYD F1 nre city car at the Guangzhou auto show, which shall take place from 20th -26th November in Guangzhou. This A-segment car may arrive at BYD’s dealers in about 2 years.

Comparing the first spy shots, on Internet, ABC editors immedi-ate realized some striking sim-ilarity between the Czech-built Toyota Aygo and the BYD F1.

The BYD F1 shall be equipped with a 0,8 and 1,1l engine.

But it is not the first time that Chinese OEM BYD is looking for “inspiration” from other famous international brands.

The F3 looks very much like a Toyota Corolla, while the hatch-back version of the F3 follows the external shape of the GM-Daewoo Lacetti 5.

The BYD F8 Convertible features

an almost identical Mercedes CLK front-end and Renault Megane CC rear.

There’s no word yet on the mechanical details of the BYD F1, which is expected to be priced at around 2.900 Euro.

This low price may make it one of the cheapest cars in China. The BYD F1 is competing with Chery’s QQ3 and Chang’an Benben city car.

Source: ABC Ltd. Research

September 2007

BYD to introduce new city car F1

NEW MODELS Page 8

Chinese Car launches in 2007 Chery Tiggo 3 SUV

On May 18th, Chery announced Tiggo 3 SUV would go on the market at the same ti,e in Qingdao, Beijing and Shanghai. The Chery Tiggo 3 extend and update the SUV model line with a number of new features.

“Tiggo 3” indicates, that Tiggo line shall grow to an own SUV segment of Chery. Chery intro-duced a new type of Tiggo SUV, equipped with the ACTECO 1.8L high performance engine. Vice President Huang Zhiqiang told press that the Tiggo 3 shall have as lowest price tag of 8.888 Euro( Tiggo 3 Comfort), using an 1.6195.8 thousand RMB.

Tianjin-FAW-Xiali Weizhi C1

FAW’s Weizhi C1 is self-developed car of Tianjin FAW Xiali Automobile Co.,Ltd, a subsidiary of FAW group. The company has invested more than 30 million Euro to setup a complete new production line. More than 200 R&D engineers from both China and abroad spent 30 months for design. The Weizhi is a B1 segment hatchback for the low price segment market. It shall put on the market with a 1.5l engine and a 1.3l engine for the hatchback version. The C1 is based on the Xiali Vela, also know as Xiali 2000.

Its western roots can be found in the late Toyota Echo. As CAM recently learned from test drivers, the C1 has still room for improvements in the powertrain module-engine is a copy of Toyota’s 8A motor- and the suspension is rocking hard. However, design is quite modern and CAM is sure it will attract a number of first-time car buyers in the second-tier cities.

In March this year, China and Russia signed the first export contract for FAW’s Weizhi for 5,000 units. The first batch of 638units Weizhi will export to Russia by VETA Corporation, which is a subsidiary of Russian AVTOPASASH Company. AVTOPASASH is a Russian automobile dealership, Ford, BMW, Land Rover and many other world-renowned brands of products are in its sales list.

Weizhi exporting to Russia indicated Tianjin FAW may also later entering the European

Page 9 NEW MODELS


market soon. Tianjin FAW plans to cooperate with 19 Russian dealerships.

Price shall be around 6.000 Euro. The Weizhi is the first type of car that passed the Chinese authority institution safety test in front, side, back and 40% offset barrier impact and got a three star raring.

Source: Orientauto, July 2007, p. 41,

ABC Research

Haima 3

Haima 3 is designed for family Saloon, which based on H1 platform the first self developed car of Haima. The car body mo-del has been jointly developed by Haima's Shanghai research center and ID.E.A Auto Design Co.,Ltd, Italy. Based on the recent Mazda 323 platform, this C-segment five-door hatch and four-door sedan was formerly produced by Haima under li-cense. The new design (and its name) does not deny its heritance.

Although thematically very sim-ilar to the Mazda 3, its older platform dictates lower, prepedes-trian impact legislation propor-tions, and a pinched grille aperture and slacker surfaces also make the car less modern and less masculine in identity.

The interior of Haima 3 has an instrument panel similar to the Mazda 3, but is otherwise closer to the just-replaced Toyota Corolla. While it uses old Mazda roots， current Mazda design themes and model name, and even the same font as Mazda in the Hai-ma logo, the new Haima 3 is however a unique new car. With a 30 percent lower price than the Mazda 3, Haima is going to leave behind his master and address same consumer segment as Mazda. But CAM is sure, that Haima can create his own reputation and image in Southern China. Dongfeng Liuqi Jingyi

As one of the three automotive industry magnates in China, Dongfeng Group has the large joint venture advan-tage that other enterprises cannot com-pare, but for the item of self-produced brand car, Dongfeng Group always has an implicit quality. And this Dongfeng Liuqi's new major effort- Jingyi, is Dong feng's first self brand two box passenger car. Meanwhile, this means the biggest three domestic automotive groups all enter into the self-produced sedan field. Jingyi makes full use of Dongfeng Group's resource advantage, integrated advanced technology from Germany, Italy and Japan.

Through cooperation with well-known international companies

like EDAG (Germany), Nissan, Dongfeng Group made more effort to produce this new car.

Jingyi indicated the beginning of Dongfeng Liuqi's product stra-tegy overall arrangement, Dongfeng Liuqi will march into family cars market through this two box passenger car Jingyi.

Source: Orientauto, July 2007, p. 50

Geely Vision

Geely's first business class family sedan called Vision held a coming into the market ceremony in Geely's Ningbo base on 28th May.

The core-competitiveness of Version is to embark with a CWT engine JL4G18 which Geely research and develop themselves. Though CVVT is not the newest technology in the World, it is the first time that used in the self-produced cars of China. The displacement of this engine is 1.8L, the maxi-mum power can reach 103kW, the torsional moment can also get 172N.m. Otherwise, Vision's wheelbase is 2602mm, the auto body is 4602mm in length, the space is quite ample in the car. Vision is Geely's tracking key problem type of car, and it's also

September 2007

Page 10 NEW MODELS


the modernest type of car that Geeely produces at present. There are four versions of Geely's vision: Basic for 7.780 Euro, Standard for 8.180 Euro, comfortable version for 8.880 Euro and business version for 10,380 Euro.

Source: Car For You, July, 2007 p.42

Chery A6

The new car A6 is a middle calss vehicle, just like Oriental Son sedan. But oriental son faces to lower-end market, while A6 faces to higher-end market of the middle calss(C2 segment). The original design has been carried out by Bertone. The A6 (B21) is based on an popular European design style; the

figure is very smooth and full of innervations. It upgraded significantly the safety equipment, with up to 8 airbags (DAB, PAB, SAB, KAB), specially reinforced body structure to meet Euro-NCAP specification, and in the luxury version also equipped with HUD screen system.

All these devices shall ensure maximum customer safety. The A6 shall be the top model this year and we expected SOP end of 2005 with about 5.000 units available for Chinese customers.

In 2008 production line shall be ramped up to 30.000 units.

Source: ABC research

Zhonghua Splendor “Coupe”

Brilliance code name for the Roadster is M3 and it is one of the few Chinese self-developed coupes in the market.

The coupe is equipped with the

new 1.8 Turbo engine, gene-rating 170hp and shall hit the market with a four- stage automatic gearbox. It is said that the car needs only 10.3s to speed to 100km, and top speed is about 220km/h.

We estimate that this roadster will roll off production line end

2007 with a sale tag of about 20.000 Euro. This is the first type of Chinese car in the emerging sport car segment and further models shall be launched in China in 2008 and beyond.

Source: China Auto Pictorial, July 07, p.68

Zhonghua Splendor “FRV”

The FRV is another Golf-class car from Giugiaro Design Studio. The front style of head is quite fashion, the figure is smooth and full of innervations. 2.57m wheelbase showed Splendor is

one of the compact vehicle segments.

The interior trim design is more

mature than original Splendor and shall attract younger cu-stomer. The production qua-lity has already reached interna-tional standards. It estimated that the dynamic system should come from a 1.8L engine, ar-range an automatic gearbox with manual model. For assign-ment aspect, it has sun-roof, CD and side airbag (selected). It considered the total price is lower that Splendor for sure, it should be about 8,000 to 10,000 Euro. Compared to its competitors in the same class, such as Ford Focus, HRV and Hyundai Elantra etc. com-petitors, the FRV shall be quite competitive in this segment.

Source: China Auto Pictorial, July, 07 p.69

Chang’an Jiexun CV11 hybrid

As a 7 seats MPV, Jiexun (“outstanding merit”) is 4.4m in length and its wheelbase is 2.71m. It’s quite good in body design and trim arrangement, but the material selected and the quality of craftwork is still not satisfying, and the human engineering has a lot to be improved too. It has wide space in the front two rows, but the third row is comparaticely narrow, nevertheless the seat can fully fold under the floor, The dynamic system comes from a 2.0L engine with 152hp and 4 level automatic gearbox, the price tag of the basic type is about 10.480 Euro in China.

September 2007

Page 11 NEW MODELS


VW and its Chinese joint venture yesterday announced a joint development of a new car aimed at both the North American and the Chinese markets. It will be the first time Shanghai Volkswagen Co.,Ltd will help its parent company develop a model intended for overseas markets.

The car will be in the mid to high class range and will be the successor to the Passat Lingyu, SVW said in Shanghai yesterday. After improving R&D capability on models like Passat Lingyu and Polo in China, SVW will develop the new vehicle body, including major elements of the exterior and interior of the year.

“SVW’s” research and deve-lopment will be integrated step

by step in the worldwide development network of Volkswagen,” the company said.

“Volkswagen is helping SVW to enhance its R&D capability through the cooperation.” As a reward, the German car maker will also gain low-cost R&D support for rolling out new models on the most competitive US market,” Zeng told the Shanghai Daily. R&D capabilities are growing in importance for foreign car makers who want to boost sales in the world’s second largest auto market by meeting local demands.

SVW, a joint venture of Volks-wagen and Shanghai Auto-motive Industry Corp, is one of China’s earliest car makers starting in 1984 and producing

the Santana series and Passat sedans, Polo compact cars, Touran multi purpose vehicles( under the VW brand) as well as Skoda Octavia.The company has spent EUR300 million building an engineering center which includes test facilities, proto-types construction and parts and tools’ trial manufacturing, to develop core parts like engines and chassis.

The R&D center, which opened in 2000, employs more than 1200 engineers and has been involved in the revamp of the Santana, Passat and Polo models for domestic market since 2002.

Source: Shanghai Daily, July 19, 2007

September 2007

NAC plans to ship MG 7 overseas

NANJING Auto-mobile Corp said yesterday it plans

to start exporting its Chinese-made MG 7 series cars as early as the second half of next year, seeking to revive the UK’s most famous car brand globally. The Chinese owner of the bankrupt British car giant MG Rover aims to sell its MG 7 series premier sedans in Malaysia, Russia and Britain, said Tang Yuejin, vice general manager of Nanjing MG Auto-motive Co.,Ltd.

“We are be able to export at any time as we have passed all the technical tests including emis-sion standard from VCA, the designated UK Vehicle Type Approval authority,” said Tang.

But Tang said the company has no plans to build the model in its plant in Britain. Nanjing Auto, China’s oldest car maker with a more than 60-year history, outbid Shanghai Automotive Industry Corp to buy the failed

British MG Rover Group for 53 million pounds (US$103 million) in July, 2005.

The car maker’s plant in Nanjing, which is designed to turn out 200,000 units annually within five years, is also the main auto parts supplier to the former Rover plant at Long-bridge in Birmingham, which just restarted making MG TF sports cars.

“We are confident of market acceptance because British cars have their unique features and are models of art compared with others” said Zhang Xin, general manager of Nanjing MG.

The first Chinese-made MG cars, costing between EUR20,000 (US$ 26,315) and EUR40,000, will go on sale next month. The MG 3 series, a smaller-sized sedan with engine capacity of 1.4liter will hit the market early next year.

Initially there will be 40 dealerships and more will be set up in Shanghai, Guangzhou and other cities, Zhang said. In addition to a US$2 billion investment in reviving the MG brand worldwide, Nanjing Auto also got a US$260million loan from a Chinese policy bank in March as financial aid to expand production and go overseas.

In order to improve operational efficiency, Nanjing Auto is also eying to cooperate with SAIC, China’s largest car maker, on a possible tie-up to develop the MG and Rover models.

Source: Shanghai Daily, June 23-24 07

S-VW to develop new models for Chinese & US markets

Page 12 NEW MODELS


The Weizhi sedan came on the market about half a year later than Weizhi

hatchback did. However, they have a common precursor with the model code of C1 which was exhibited at 2005 Shanghai Auto Exhibition.

Just like Weizhi hatchback, Weizhi sedan is also a new car model developed by Tianjin FAW on the basis of Toyota NBC platform. It is produced on the same production line with Weizi and Vela. After many years of assimilation and absorption, Tianjin FAW has mastered the NBC platform technology, which has laid a solid foundation for the appearance of Weizhi series. It has been proved by Weizhi hatchback's extraordinary performance at the "2007's Top Chinese Car Models". In view of this, we tend to be stricter with Weizhi sedan while evaluating it. After all, the period of half a year is enough for Tianjin FAW to make adequate preparations. From the appearance design, Weizhi sedan completely inherits that of Weizhi hatchback. They almost have no difference before the C-pillar. This method is commonly applied by many auto-makers when they produce sedan version and hatchback version of the same car model. Two headlights of irregular shape are embedded in the front, with a circle of glittering LED high brightness indicator lights inside. Of course, the two cars own the same genes of A pillar, B pillar and sidewin-dows. However, due to different car models, they are obviously different behind C pillar. The roofline of Weizhi sedan extends

after the C-pillar to the end in horizon and makes the car length reach 4245 mm. It is 390 mm longer than Weizhi hatchback and the extra length forms a trunk. The interior trimming of Weizhi sedan also inherits the conciseness and brevity of Weizhi hatchback. The guiding principle is pragmatism and humanity. As environment-friendly and recoverable polymer resin ma-terial is used, when you open the car door, you would not smell the disgusting odor from economical cars. The cockpit is

designed in two colors. The black part is a softened material layer, which will better protect the car passengers. The steering wheel, seats, instruments, etc, are almost similar with those of Weizhi hatchback. The glass-frame riser is also arranged at the console beside the gear lever. In terms of size, Weizhi sedan is the same as Weizhi hatchback in height, wheelbase and width. Although it belongs to a compact car, the interior is not crowded at all. All the passengers sitting in the front or the back will have enough room for their legs and heads. The difference in length forms creates the different proportion of car body and thus creates different visual feeling. In Comparison, Weizhi hatchback is more dynamic while Weizhi sedan radiates more breath of

life. Of course, we do not produce cars for seeing. You have to drive them in person in order to test their real performance. Weizhi sedan is equipped with pre-McPherson independent suspension and rear torsion semi-independent suspension that are also first applied by Weizhi hatchback. The degree of suspension tuning is similar with that of Weizhi hatchback. As a private car, Weizhi sedan ensures the driving safety to the greatest extent rather than seeks dynamic setup. I pay emphasis on the filter of vibration and bump, keeping down the slope of the car body. However, it doesn't mean Weizhi sedan pays no attention to manipulating performance. In fact, no car affords to neglect the manipulating performance. Under urgent situation, the excellent manipulating performance can reduce danger effectively. We have already heard of Weizhi sedan's manipulating performance before the trial driving. The good performance of Weizhi hatchback in "2007 Chinese Top Car Model" has built up the reputation for Weizhi sedan. The judges all praised Weizhi hatchback as "easy to drive". In fact, we are very satisfied with Weizhi sedan in the trail driving. On any kind

of road surface， it can carry out the order of driver faithfully. The steering system with exact

September 2007

FAW Weizhi C1 sedan on sale

Page 13 NEW PRODUCTS at Shanghai motor show


linearity and manual transmission 5 make great contribution to the good manipulating performance. The only flaw is that free stroke of clutch pedal is a little longer and at first the driver may not feel accustomed to it. If the 1.3-liter Toyota 8A engine (87 horsepower) used by Weizhi hatchback is unexpected, then the power system of Weizhi sedan is definitely a "surprise". It can be said that Tianjin FAW intends to get successful by excellent power system. Weizhi sedan is equipped with 1.5-liter four-cylinder liner 16-valve dual overhead camshaft engine. It can reach the maximum power rate of 102 horsepower (75kw) at 6000 revolutions per minute and the torque peak of 130 Nm at 4400 revolutions per minute. The curb weight of Weizhi sedan is less than 1t, so we can describe it as "a small cart pulled by a large horse."

The appearance of 5A+ engine overthrows my first impression of "Weizhi sedan is not dynamic". After all, the statistics tells everything. And A8 engine also performs well on Weizhi hatchback. After step on the accelerator pedal, we marveled at its excellent performance. The strong power was through transmitted to driving wheel through transmission organ. And at this time, you may get the felling that “someone is pushing you forward “. The feeling will last for a long time. When it disappears, you are exceeding the speed limit. It is pity that we had no time to conduct a special test on Weizhi sedan, or the data is more persuasive.

With this 5A+.even the car holds 5 passengers and a full trunk,the power is enough for use.As a family use sedan,Weizhi sedan finds the balance point between oil consumption and power drive with the displacement of

1.5liters and the maximum power rate is 102 horsepower.

In terms of other accessoties, just like Weizhi hatchback, Weizhi sedan is very practical and owns almost every daily accessory. Weizhi sedan retains the MP3 player and the four power windows which cannot be seen in other cars of the same level.

The four power windows can close automatically after you pull out the car key.As to the standard layout,the single disk CD player and remote-control key are added.

Its price will be released at the beginning of April.Besides the 1.5-liter version,the 1.60liter version will also be provided.The prices range from 6,380 EURO to 6,680 EURO.It is really worth the money.

Source: MOTOR TREND May2007,p.93

September 2007

Chery A1 test drive

A1’s competitors, defined by itself, are Peugeot 206,

Citroen C2, Honda Fit, Chevrolet Aveo, Suzuki Swift. In terms of car width, car height and wheel-base, A1 is only similar to Aveo among this group. Taking into account of the gap between A1 and the other cars in this group, as well as the price factor, most of Chinese customers will com-pare A1 with Changan Ben ben.

Striking headlights

The exterior design of A1

embodies styles of both west and east. At first sight A1’s front seems similar to Honda Fit, but after careful observation, its latent European elements can never be neglected, such as no quarter window at A pillar trim. That is mostly because A1’s original design stems from European design companies.

A firm outline, from it you can perceive its sophisticated design technique. Streamline design, dimension quite matching the customers’ definition for micro economy cars, all contribute to its good impression at first glance. In contrast to the exotic thus striking headlights, the flat and straight intake grille between them looks too plain. Tail line is quite steep and straight, a small spoiler skillfully connects the roof line to the rear

naturally at the right angle. Even with the distinctive large taillights, A1’s tail still appears to be a bit dreary. But practically speaking, the spacious rear doors, shall be well recognized.

Small but well-equipped

Sitting in the car and starting to adjust the rearview mirror and

the seat, I find the adjust button of the rearview mirror a bit different – it’s on the side of A pillar trim. It means that you

Page 14 NEW MODELS


need to stretch out and reach for the button if you need to adjust. And you are not able to see into the rearview mirror at the same time. You can see the mirror only when you are seated upon the back. This process repeats several times and is quite annoying.

A1’s interior, especially the design of the dashboard, is very unique compared with other cars of Chery. Three Gauge instruments is rarely used in this kind of economic car. This design reminds me of M6’s style. On the speedometer in the middle, there is one 200km/h mark which, pracivcally shall never be reachable. In the middle of the speedometer, a round white backlit LCD indicates mileage, current fuel consumption, maintenance date and other data.

The LCD shines in prescious white when powered on. Praiseworthily, when you switch on the lights in evening, the cockpit lightings induce a flashy and romantic atmosphere.

Another surprise brought by A1’s interior feature is that the assembling quality has been remarkably improved. Buttons on inner rim of the door, wiper control with light and other parts, demonstrate its good quality with superb assembling craftsmanship. Outer edge of the steering wheel, the lights and the wiper control forks, are all with aluminum and chrome trims, adding to its exqui-siteness and delicacy. Need to mention that compared with A5’s curved airbag cover, that of A1’s in the steering wheel has been remarkably improved.

A1’s cockpit, though not so outstanding, its relatively sharp color combination makes you feel brilliant the moment you get into the car. You have comparatively wide storage room in the front: Apart from door inner panel, glove case, there is also several small hidden storage room and a pair of beverage holder under the steering wheel and on the top of the console.

However, the storage room in the rear, compared with the large space in the front, is much smaller, in which you can merely put in some newspapers.

As the cost and space factor is a limitation, similar to other micro economy cars, A1 fades in terms of its seat feature. However, though the two color sheen is not first-class material, it seems

pretty good visionally. Adding that B pillar trim and the door inner trim panel are also covered with the same sheen, a harmonious light yellow do-minates the interior on the whole, the dark colored plastics now become flavor. What’s more, the steering wheel only provides adjustment in vertical direction, so you need to keep a relatively straight position in order to have an excellent front view. But in the meantime this kind of position compensates for the insufficient leg room brought by short wheelbase.

Adjusting into the right seating position, I obtain an excellent front view and still can have some room for stretching my leg, but the lateral space for my body is obviously limited. When 5th gear is engaged, you may probably tap the leg of assist driver. Compared with Changan Ben-ben, A1’s overall length and wheelbase are both longer than it despite shorter overall width.

This makes A1 much more spacious. With longer wheel-base, the distance between the front the rear seat goes better with passengers of medium build. The interior space feels almost the same as Aveo.

Though small, A1 is well equi-pped, almost with all: ABS+EBD, Reverse sensor, dual airbag system and to the delight of young customers, MP3 con-nection, Brake and Tire Pressure

September 2007

LETTER TO THE EDITORLETTER TO THE EDITOR

„Thank you for your free copy. I would like to subscribe your automotive magazine, please add me to your mailing list“ Dr. Rainer Burkardt, German Attorney-at-Law, BEITEN BURKHARDT, Shanghai, P.R. China

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Page 15 NEW MODELS


Alarm are provided. Among minicars, a wide LCD infor-mation screen in the center console is only found in the configuration of A1. Not only is it compatible as a DVD player, but also as a GPS navigation. Certainly the resolution can not be compared with luxurious cars, it is enough luxurious for a minicar whose focus group is younger consumers.

The current A1 1.3MT has two configuration packages up to choice – A1 standard/A1 high-line. The two differs only in Audio and Video System, with single DVD, 6 loudspeakers and single CD, four loudspeakers to select from. As for electric car window, electric-adjust outside rear-view mirror, and remote control key, standard configurations are adopted.

What needs to be mentioned is that holding long the lock switch of the key will automatically close all the windows. And in addition, A1 possesses also electronic theft device, shutting down engine, albeit unique for a micro economy car. Separated electronic security system, enables the engine to start up only when the password saved in the electronic theft security chip in the key corres-ponds exactly with the code in the ECU.

In terms of tires, Chery A1’s stan-dard configuration is 175/60R14 tire with 7 spoke 14’’ rim. The 175 type tire, a practical match with the car, suits better its body and displacement, and also to some extent contributes to power enhancement and saving fuel. The “Haida” brand tires are not known to most Chinese drivers at

all. After having checked in the Internet, I find the producer: Sichuan Rubber and Tires Com-pany, which normally produces medium-and-low-end tired and cost less than HANKOOK/KUMHO tires.

A1 is equipped with the Acteco 1.3L engine manufactured by Chery itself, with 5-speed manual transmission. The same motor is used in compact car, in the QQ6. The SQR473F engine technically supported by Austria AVL comp-any applies DOHC, 16 valve air

system, outputs a maximum power of 61kw and offers a top torque of 114Nm.

Our test drive includes urban highway and a pretty long twisty mountain road. We don’t feel anything special while testing on urban highway – comparatively high wind noise, road noise and engine noise at high speed as well as a bit electronic throttle lag. Rather satisfying are the properly tuned hydraulic clutch and the steering stability at high speed. Despite the narrow view in the rear-view mirror, the front view is rather excellent, especially that the seemingly chunky A pillar in fact never interfere with the nice view.

Completely different from QQ6, you can hear a deep and lively sound from A1’s engine speeding up at more then 4000 rpm. The acceleration over 120km/h decrease dramatically but I’m deeply impressed by the excellent integral stability, which deserves your approval, -- a steady steering diminishing the instability of cars of the same group.

Getting onto the mountain road, its performance in the curves

brings about some surprises to me, wiping off my fear at the beginning of the incapability of climbing and roll-over particularly owned by this kind of car. Soon I find that it is not that feeble: under high rev at second or third gear it still runs smoothly without a gulp on the way.

Keep in the third gear and you can find the engine outputs enough power at just around 3000 rpm. If you will, third gear is enough for you to cruise in the mountain. According to the intro of the accompanying Chery’s staff, the engine applies variable valve timing technology, enhancing its output at low and medium rev. Roll-over feeling at turning is hardly noticeable. However, minute understeering and indecent steering occur at high speed, which leads to incorrect driving thread and requires more adjustment during turning.

Apart from the above, the most demerit is its poor suspension. Going through some under-road-maintenance mountain passes, the poor road condition is transferred clearly to your body. The tire noise acts also as one of the noise sources.

Even with a relatively soft suspension and regular lateral support, this kind of hard tire still patters stepping on the boundaries. All in all, the tire noise will probably improve a lot when the tires are replaced by softer ones after some time. All things considered, A1 is comfort-oriented car focusing at modern young consumer group. Even for the older group, A1 suits them better than the current QQ.

Source: ABC Research

September 2007

Page 16 FINANCE


BRILLIANCE China Automotive Holdings says it remains confident about an

aggressive export plan and its overall future even as it moves to delist its shares from the New York Stock Exchange.

The board members of Bril-liance, which started trading on the NYSE in 1992 as the first Chinese automotive company, have reached an agreement to leave the US stock market as a result of declining trade volume and rising administrative costs, according to a statement filed with the Hong Kong Stock Exchange on Thursday.

The NYSE has been notified of the company's intention, Bril-liance said in the statement, without providing a timetable for the delisting. The shares will continue to trade on the over-the-counter market. "Our busi-ness will not be affected as most of our shares are traded

on the Hong Kong stock market, where investors have more interest in mainland com-panies," Lisa Ng, vice president of Brilliance China, said in a telephone interview yesterday. Brilliance China raised US$80 million in its initial public off-ering in New York in 1992. It began trading shares on the Hong Kong bourse in 1999. Company shares closed at US$ 27.76 on Friday, after trading as high as US$29.98 in the past year.

"The car maker is generating less money on the NYSE market because of falling volume de-spite a climbing trading price," said Duan Chengwu, an auto analyst from Global Insight Co Ltd in Shanghai. "Overseas investors are less interested in Brilliance China, partly because of its low profitability."

The Chinese partner of BMW AG has lost money over the past two years as a result of inten-

sified market competition and declining car prices. Brilliance reported a loss of EUR 39.8 million last year following a loss of US$85 million in 2005.

But the company indicated that it is well on its way to turning itself around after boosting sales of its self-branded models as well as increasing exports to overseas markets. It has rolled out several passenger cars under its own Zhonghua brand, preparing for sales on the US market as early as 2009 after exporting to the European market last year.

The car maker earlier expects to break even this year after setting a sales target of 300,000 units, an increase of 34 percent from last year. In its five year plan ended by 2010, Brilliance also aims to double sales to at least 500,000 units with a revenue of EUR8 billion.

Source: Shanghai Daily, July 10, 2007

Brilliance delisted from NYSE

September 2007

SAIC‘s shares sky-rocketed

SHANGHAI Automotive Co Ltd shares rose 4.8 percent yesterday after

the company announced plans to issue EUR 800 million worth of convertible bonds to fund product deve-lopment and acquisitions.

The listed unit of China's largest auto maker, SAIC will sell the six-year bonds, along with warrants, to A-share investors, according to a statement filed with the Shanghai Stock Ex-change. Bondholders will be allowed to use the warrants to buy Shanghai Auto's shares at a fixed price, the statement said. It did not provide the issue schedule or the specified warrant price.

The company's stock closed at

EUR2.239 yesterday in Shang-hai. The bond sale will contri-bute to Shanghai Auto's EUR 2.73 billion investment in produ-cing models under its own na-meplate, expanding commercial vehicles and paying debt.

Shanghai Auto said it needs 2.13 billion Euro to develop its own vehicles, including 1.14 Euro billion to be invested within the next five years. The capital will be used to boost annual production capacity from the current 50,000 units to 300,000 by 2012 and broaden the product mix from premier sedans to sport utility vehicles to com pacts. The central govern-ment is encouraging domestic car makers to build self-branded models to improve their innovation capabilities and

compete against international auto giants.Shanghai Auto unveiled the Roewe 750 in March as its first self-owned model. Sales of the premium sedan, based on Rover 75 rights bought by SAIC from failed Rover Corp in 2005, exceeded 7,632 units by June. SAIC is also negotiating with Nanjing Automobile Corp, which ac-quired assets from MG Rover Corp, on a possible alliance that could further improve Shanghai Auto‘s efficiency and speed its develop-ment.

In the commercial vehicle segment, 200 million EURO will be spent on possible mergers and acquisitions within the next three years, the statement said.

Source: Shanghai Daily, July 26, B3

Page 17 FINANCE


Chinese automotive shares perform well THERE is an ongoing debate in the office of Xiao Chen, an engineer for a telecom company, whether to buy a car or invest in auto stocks.

The 25-year-old believes investments in the current bullish stock market, especially in the auto sector, would reap financial dividends and be a better option than throwing away money on a car amid declining car prices.

Behind his decision, buoyant car sales in China have helped listed car makers gain more profit and the sustained momentum has paved the way for future share price hikes. Auto-related stocks remain upbeat against overall market performance for the first half of this year after vehicle sales continued to rise more than 20 percent to 4.37 million units in the world's second-largest auto market. In light of booming car sales, half of the auto makers listed both on the Shanghai Stock Exchange and Shenzhen bourse saw profit increase by more than 50 percent and four of them embraced double growth, according to first half earnings reports released last week.

"In addition to the booming stock market, auto-related stocks are favored because the profitability of car makers was improved for sales pick up and assets optimization, which has more potential for future

growth," said Wang Canbing, an independent industrial analyst. Half-year net income for Shanghai Automotive Co Ltd, the listed unit of China's biggest car maker, Shanghai Automotive Industrial Corp, more than tripled to EUR270 million (US$355 million).

It sold 840,000 units during the period and generated a sales revenue of EUR5.1 billion, an increase of 2,202 percent from a year earlier. Its share price rose 200 percent from EUR0.83 at the start of the year to EUR2.46 at yesterday's close, while earnings per share reached EUR0.0415 for the first half. The strong market performance came after it sold additional shares to investors last year to expand core business from auto parts to car manufacturing by containing assets in its two joint ventures with General Motors Corp and Volkswagen AG.

Beiqi Foton Motor Co Ltd, one of China's biggest light-vehicle producers, reported profits up by six times to EUR23.7 million during January to June from the same period of last year. Its share price rose four times to EUR1.441 at close yesterday. According to the preview for their first three quarters' financial results, revenue is widely expected to grow more than 50 percent, indicating the growth still has room to be sustained. Amid the stock market jumps, institutional

investors recently have raised their expectations on the auto sector. CITIC Securities said in a recent report that vehicles would be in high demand with the existing low market penetration as well as improved road conditions.

It estimated auto sales will rise 25 percent this year, leading to a 35 percent increase in the profitability of the car sector and a 30- percent growth in the whole industry. Li Chunbo, an auto analyst from Citic Securities Co Ltd give a "buy" suggestion on Chang'an Automobile Co Ltd and Haima Investment Group Co Ltd as well as FAW Xiali Automobile Co Ltd while offering "add" advice on FAW Car Corp and Shanghai Auto. "Particular I am optimistic about Chinese-listed car makers like BYD Auto and Brilliance Auto as China's self-owned cars are grabbing a bigger market share," Li added.

However, an other analyst suggested a more conservative attitude on the auto stocks as the market competition, pivotal for all segments in passenger cars and commercial vehicles, would further intensify.

"As more competitors enter, car makers will offer more price discounts and that will dampen total profits," said Xia Ping, an auto analyst from Core Pacific Yamaichi International (HK) Ltd in Shanghai. Source: Page B5, Shanghai Daily, 29.8.07

FIRST-HALF earnings at Anhui Jianghuai Automobile Co fell 19.7 percent despite an increase in total revenue as the firm changed strategy to invest in passenger car production. Net

income declined to EUR22.7 million (US$29.9 million) from January to June, the Anhui Province-based car maker said in its statement to the Shanghai Stock Exchange yesterday. Sales revenue rose 25.12 percent to EUR660 million during the same period from a year earlier.

The car maker, a specialist in making commercial vehicles, attributed the lower profit to its initial investment in the passenger car segment as it aimed to benefit from China's accelerating auto sales with a wider line-up of products. The company raised EUR81.1 million in April through selling additional shares. It plans to invest EUR1.3 billion in a plant to assemble multi-purpose vehicles with an annual output of 60,000 units. Source: Shanghai Daily, August 25, 2007

Page 18 LAWS & REGULATIONS


Beijing's measures for imple-menting the Provisional Re-gulations of the People's Republic of China for Tax on Vehicles and Ships have been approved by the municipality's standing conference. The cluster of measures will be published and enter into force very soon. The vehicle and ship tax can beclassified as a unified pro-perty tax levied on re-gistered vehicles and ships in P.R. China and replaced in June the old vehicle and ship license fee and usage tax.

Comparing the former tax system, which had been applied for 21 years, ABC has identified major changes and simpli-fications in the new policy

• Unified tax system for all type of enterprises

• Change of tax base: from tax on equity to tax on property

• Increase of tax rate

• Reduce tax loopholes and tax exemptions (as for government organizations)

Private car owners have to pay around 3,6 Euro to 66 Euro for vehicle and ship tax, which are levied by Chinese insurance companies.

Under the latest measures, Beijing's annual tax on medium- and small-sized buses will be raised to 48 Euro from recently 20 Euro. Tax on large buses increased the most, doubling to 60Euro.

However, considering that tri-

wheeled and low-speed vehicles are owned mainly by farmers, the yearly tax standard remained unchanged at 6 Euro. Furthermore, the measuring unit was changed to dead weight from net weight, an attempt to relieve farmers' burdens. The truck tax went up to 10 Euro per ton in dead weight from 6 Euro per ton of net weight.

ZHOU Jidong, the director of the Beijing municipal legislative affairs office, su-ggested that the state provi-sional regulations were only a rough outline of taxes on vehicles for reference. For example, the large bus tax could range from 48 Euro to 60 Euro, the medium bus tax from 42 Euro to 66 Euro, and the small tax from 36 Euro to 66 Euro.

Such a wide range promised great flexibility for local governments to tax vehicles in accordance to their own unique situations. Tianjin, Chongqing, as well as Hebei Province had worked out their own methods, while Beijing just learned from others, said Zhou. Generally speaking, though, the current average tax standard doubled

the former one.

Military vehicles and tractors are exempted from tax, according the new regulations. Beijing's government also exempted taxes on the buses used for public transit in both urban and rural areas of the city. Although Beijing is not a coastal city, there were 337 registered and licensed ships at the end of March, totaling over 4,000 tons in net weight. To-gether with more than three million vehicles, Beijing assumed overall taxes of one 100 million Euro from vehicles and ships this year.

Taxis will not be regarded as public transit vehicles and still will not enjoy the tax exemption policy as city buses in Beijing.

In addition, the vehicles owned by governments or parties, public institutes, and people's communities in Beijing will have no exception or privilege in paying taxes.

Source: China Economic Net: http://en.ce.cn/Business/Macro-economic/200708/06/t20070806_12442355.shtml

New vehicle and ship tax in P. R. China

September 2007

Vehicle Types Tax Rate [Euro]

Passenger buses (capacity >= 20 people) 48 – 66 € p.a.

Medium buses (capacity <= 20 people) 42 – 66 € p.a. Passenger cars and mini-buses (capacity <= 9 people)

36 – 66 € p.a.

Truck, trailers and semi-trailers 16 – 20 € p.a. Three-wheel farm vehicles and low speed trucks

2,4 – 12 € p.a.

Motorcycles 3,6 – 18 € p.a.

http://en.ce.cn/Business/Macro-economic/200708/06/t20070806_12442355.shtml�









The China Insurance Regulatory Commission (CIRC) yesterday launched an interim rule on the compulsory vehicle liability insurance, adjusting the floating premium rates to show greater fairness. The rule, an updated version of the draft measures released on June 15, will be put into practice on Sunday.

Compared with the draft measure, the new rule undoes the link between the premium rate and the breach of traffic rules. The rate is now only related to traffic accidents.

"The loosening doesn't mean a breach of traffic rules should not be connected with the pre-mium rate. Rather, there are only seven cities with the shared information system between insurance companies and local traffic management bureaux, so it is difficult to put into practice," Yuan Li, a CIRC spokesman said.

The setting up of a shared information system across the country was a primary task in promoting the compulsory ve-hicle liability insurance.

Shanghai, which introduced floating premium rates on a trial basis, reported a 65.96 percent decrease in traffic accidents and a 9.27-percent decrease in traffic deaths for 2005.

The success is largely attributed to the shared information sys-tem between the Shanghai Insurance Institution and the Shanghai traffic management bureau, Yuan said.

Meanwhile, the new rule also adjusts the range of the floating rate according to the severity and frequency of accidents in which drivers are involved. Those who are accident-free for three years could enjoy a 30-percent discount on their next premium, up from 20 percent in the draft measures.

Also, the punishment for having an accident is lesser with the new rule. Those who have two or more accidents in a year will have to pay a premium rate of 110 percent, down from 115 percent. "Rates for some drivers will increase and for others decline. Drivers with good safety records will pay lower rates. The

measures will serve to protect drivers' benefits while main-taining safe traffic in the city and protecting citizens' security and benefits. The measures will benefit most people", Yuan said.

Many said increasing rates would be like a second punish-ment. They would initially be punished by traffic admin-istrators for violations.

"The change shows the rule's focus on prevention through encouragement," Yuan said. The changes have also been made in response to a number of criticisms of the draft mea-sure when it was made public.

The CIRC received 482 com-plaints via e-mail and seven via fax in five days following the announcement. A number of people said the range for the floating premium rate was unreasonable and would increase the financial burden on drivers.

Source: China Daily, 29.6.2007

Page 19


New regulations in compulsory vehicle liability insurance

LAWS & REGULATIONS

New C-NCAP results: Chinese cars still on a long march

CHINA'S home-brand models are proving more reliable, with enhanced ratings in the latest domestic crash tests. The nation's official vehicle labo-ratory, the China Automotive Technology and Research Center (CATRC), gave four stars to the Besturn sedan, China's first self-branded' model made by First Automotive Works Group.

The announcement was made on Thursday in a statement posted on the CATRC Website. This compared to a two-star assessment, the lowest rating, given to the Free Cruiser sedan,

FAW Besturn got ****

developed by Geely Holdings Group, and three stars to the A5 sedan made by Chery and the F3 sedan made by BYD in the same assessment program last year.

The relative low ratings on

China's self-developed models once caused public concerns over quality issues during a time when national car makers were planning to break into more mature markets in their over-seas ventures. All the test re-sults were subject to the Chi-nese version of the New Car Assessment Program, an inde-pendent vehicle-assessment scheme that is similar to Euro-NCAP.

The national standard, launched last July, gave safety ratings on how passengers are protected after undergoing front, side and

Page 20 C-NCAP


rear-end collisions. "It's quite encouraging that Chinese-branded models are improving their safety standards after increased investment," said JIA Xinguang, an auto expert in Beijing.

Chery A5 only got ****

Zhao Hang, director of the CATRC, said: "Chinese car ma-

kers need more efforts on equipment like airbags com-pared with foreign rivals in the same segment."

Nissan's Teana premier sedan and Ford's Focus economy car achieved the top five-star ra-tings and the institute gave four stars to Honda's Civic.

Zhang said compact cars are still generally short on quality and need further attention.

In the same series of tests, Shanghai-GM-Wuling's Spark subcompact won two stars while Kia's Cerato and Haima Family, developed on a Ma-zda model, achieved three.

Brilliance's Zunchi sedan, which has launched mass exports to Germany, suffered from bad ratings in crash tests in Europe last month. The car maker said the failure was a ruse by rivals to damage its brand image.

The introduction of C-NCAP, which imposes stricter requirements than the existing national crash tests before models are produced, aims to lift the awareness of auto safety and encourage car makers to improve technology.

Source: Shanghai Daily, 28.7.07

Driving right from the exit of the Old Palace at No.22 South Sihuan Zhong Road, Beijng to the sub-road and

go ahead for about 300 meters, there are five franchised stores on a line, respectively Nissan, Renault, Dongfeng Peugeot, FAW Mazda and Hainan Mazda. The more attractive ones, FAW Mazda and Hainan Mazda (Haima) stand by each other. Without the rear symbols, the two brands both using Mazda symbol are often confused by consumers.

It was a day in the middle of August. Although there were still 15 minutes left before opening the store, about 10 customers had already been in the sales area, some of whom came to have a look for the first time, some to pay money and take the car and others to handle all kinds of procedures. “The store in the Asian Sports Meeting Village has moved out, so customers all gather here. It’s prosperous here,” a sales representative told New Auto.

“We have stable sales since the appearance on the market in

2002,” said Han Guanghua, GM of Beijing Shuanglong Bole Automotive Sales Company, a Haima Automotive Franchised store. As a franchised store with the biggest sales in Beijing market, the store sold from 2002 to 2005 respectively 1500, 2500, 2300 and 2400 units. During the first 7 months of this year, it had sold out 1100 units already. “A bit of reduction of the sales could be ascribed to the EU III displacement standard in Beijing market. Currently Haima Automotive only has the model of Family to support sales,” he said.

Another statistics comes from the auto market in Beijing Asian Sports Meeting Village. Since 2002, Family has never been listed out of the first three in this market. “As the leading product of Haima, Family could be one of the most stable products in the market since appearance on the market,” said Tang Si, the director of Haima Marketing Department.

From a view of current situation of domestic automotive companies, products of only two

of them haven’t met violent fluctuations in the market and one is Haima Automotive. Premacy, the pioneer of SMPV subdivided market occupies 80% of the market share. The expected production and sales task of Haima is 80,000 units. Till June, it has already sold out nearly 40,000 units, leaving no suspension for completing the whole-year plan.

However, the story which is a big contrast is that, at the end of 2006, Japan Mazda Company will no longer provide new products to Haima and no longer allow Haima to use the brand of Mazda next year. Starting an enterprise by two models Premacy and Family, how could Haima Automotive open a new page? Owning two production factories, reaching the annual production capability of 150,000 units, how could this small automotive company write on the first new page of its own brand?

So far, except interviews on product and technique level, high-ranking leaders of Haima Automotive always remain low

OEM Haima advance alone

Page 21 OEM PROFILE: Haima


key on critical issues of com-pany future development and self innovation road. Whether on the ceremony of new vehicle rolling off or activities of market promotion, it’s hard to find the figure of Jing Zhu, president of Haima Automotive. According to our knowledge, Jing Zhu re-mains low key and has never accepted any press interview.

Hard struggling for living

Hainan Automotive Punching Factory established in 1988 is the grandpa-generation com-pany of Haima. Although it was said to be a punching factory, actually it was a vehicle manu-factory just like Chery Auto-motive used to be named Anhui Component Project. The newly set up Hainan Province hoped to have its own automotive indus-try in the new hot spot. In 1988, Qin Quanquan and his col-leagues of former Hainan First Mechanism Factory were ordered to go to Philipine in the volatile political situation. Running the risks in the bulletins, they bought the automotive factory, a joint venture of Ford Automotive Company and former president Marcos with the low price of several million US dollars.

The factory was wholly moved to Jinpan Industrial Park, Haikou and reconstructed according to the original one. In 1990, Hainan Automotive Manufactory completed equipment installation adjustment of four punching workshops and welding, painting and assembling equipment.

The factory urgently needed products after establishment. At that time, president of Mazda Automotive was attending a big activity in Hainan and he was sent to Hainan Automotive Punching Factory during the routine visit. He recognized the production line of Ford Auto at the first sight. Mazda and Ford

are strategic partners in many product manufacturing. Mazda was in danger in 1990 and seeking for exterior profit space urgently. Therefore, both sides decided to set up a joint venture to produce Mazda vehicles.

In 1991, Mazda Automotive together with ITOCHU Cor-poration initialed the contract of setting up Hainan Mazda Auto-motive Corporation with Hainan Automotive Punching Factory. The Japanese side held 25% of the shares among which Mazda capitalized with the whole set of moulds and clamps of what was called HMC6470 wagon car. However, the joint venture only lasted for a short term since at that time the central govern-ment hoped to set up an auto-motive joint venture mainly producing business vehicles in the South.

In automotive projects in the South, principal main bodies of Chinese side were Hainan Auto-motive Punching Factory and Guangdong Samsung Auto-motive and the expected foreign partner was American Chrysler Automotive which later became German Mercedes-Benz Auto-motive. The requirement of Benz was that Mazda and Hainan Automotive Punching Factory could not set up the joint ven-ture. After around three years’ negotiation, Benz decided to give up the project. “Benz found that the project wouldn’t make profit. Since it had to inject the capital of 8-10 billion once and the volume of Benz business vehicle project was only 10,000-20,000 units. It gave up since it could not handle it,” someone who knows the inside story told New Auto.

The cooperation with Mazda didn’t last long but that between Hainan Automotive Punching Factory and Japanese part didn’t end. In 1992, it started to take advantage of Mazda technology and knocked-down

components to produce HMC6470 wagon car. In 1993 model of 6440 was produced and 1994 the old model of Mazda 323. Without sedan production permission issued by the government, Mazda vehicles produced couldn’t be sold in the whole country but only in Hainan Province.

In the autumn of 1988, like many people of the same time, Jing ZHU, the graduate major in punching, grand mechanism college of Chongqing University came to Hainan Island which was in the status of big exploration. The young man who used to be a graduate student of China Academy of Social Science, found a new road to dedicate to the motherland. Starting from a technician, Jing Zhu was promoted step by step to workshop director, factory director assistant and Deputy GM. Later. Due to some disagreements of operation with some party leaders, he was appointed to be principal of an auto renting company belonging to the company. Soon he was cannibalized to Hainan Province Automotive Office.

In 1997, old products of Mazda were produced from time to time; altogether there were several hundred units. The factory was greatly in debt and on the verge of bankrupt. In June of that year, the old factory director got retired and Jing Zhu was appointed factory director of Hainan Automotive Manufactory. With his efforts, the government of Hainan Province agreed to affiliate the factory to a state owned big automotive company to obtain the qualification of sedan production and necessary capital. Both SAIC and Second Automotive Industry Corporation had a mind to merger. Geng Shaojie, who led FAW to national merger of automotive companies settled on it first.

September 2007

In November of 1997, FAW Group and Hainan Province Government formally signed “Agreement of Merger of Hainan Automotive Manufactory to es-tablish FAW Hainan Automotive Corporation (Hainan)”. Both sides realized the capital rec-ombination in the method of state owned capital appro-priation without compensation, setting up FAW Hainan Automotive Corporation 100% share controlled by FAW. The company formally started running on 18th January 1998 and Jing Zhu was nominated GM.

Independent in mind and action

However, except a sedan production catalogue, FAW gave no substantial support to Hai-nan either in capital or product technology, which made Hainan quite disappointed to FAW later. Thanks to the catalogue, in May 1999, HMC6470 wagon car with nationalization rate of 85% was put into quantity pro-duction; in 2000, Haima 7130 small car (referred as Mazda 323 ahead) appeared on the market and successfully entered the national market.

Since FAW couldn’t provide FAW Hainan with follow-up products, Hainan started to seek for co-operation with Mazda again. Moreover, since FAW Hainan had not enough capital, its management level asked Hai-nan Province government for help and introduced employees’ shareholding and non-state capital to set up Hainan Automotive Group Corporation headed by Jing Zhu. Then the negotiations of technical and product cooperation with Mazda were operated by Hainan Automotive Group. Meanwhile, Hainan Automotive Group set up Hainan Mazda Sales Company to be in charge of marketing of products of FAW Haian Automotive.

“At that time, Mazda started to resuscitate. It felt that it should enter the China market but had no idea about what to do. Thus, it chose to continue technology cooperation,” said someone knows the inside story. On 18th May 2001, FAW Hainan formally rolled off Premacy in the name of brand Mazda. This was the first small MPV with the sales of over 10,000 units at the end of the year. Ozaki Kiyoshi, special executive employee in charge of China affairs told New Auto, “We had a great loss in 2000, but business in China helped us to turn loss into profit. Profit appeared in 2001.”

Haima H12 Hybrid study

Undoubtedly Mazda has to thank Haima for its success in China since it grasped the China market even ahead of Toyota.

“The reputation Mazda makes in China is even higher than that in its own country, which to much extent owes to Haima,” said a high level leader of Mazda in Beijing International Automotive Exhibition in the summer of 2004. Obviously Mazda has deeply recognized the impor-tance of Haima in China market.

On the day of Premacy’s issue, FAW required to locate the production also in Changchun FAW Company but Hainan didn’t agree. Hainan introduced FAW to Mazda instead. At the be-ginning of 2002, Xu Jianyi, the vice GM of FAW at that time went to visit Japan Mazda Company and took a fancy to Mazda6 at the stage of the end of R&D. Thereafter FAW also rallied with the support of Mazda 6.

In July of 2002, Mazda323 started production in new factories of Hainan Automotive Group in the name of Family. This model belonged to Hainan Automotive. FAW still hoped to produce the car both in Haikou and Changchun, but failed. In that year, thanks to Premacy and Family, Hainan reached the sales quantity of 23,000 units, becoming a black horse in China automotive market at once.

In 2003, the production and sales quantity of Hainan reached 55,000 units. In January, Mazda6 sedans were rolled off in Changchun FAW and pushed to the market in April with great success. With only three models of products, said Ozaki Kiyoshi, “I didn’t expect Mazda could develop so smo-othly in China.” Statistics showed that in 2005 Mazda brand achieved the sales in China 134,000 units with the increasing rate of 51% com-pared with the same period of 2004, exceeding the whole increasing rate of 26% in China passenger vehicle market.

However, at the same time of prosperousness, Mazda was premeditating more profits. As proved by later facts, the co-operation with Haima was only the knock on the door of China market. The strategy decided at that time by Mazda was to sell all products produced in China in the same network. High level leaders of Mazda declared for many times in the public, “Whether we cooperate with FAW Hainan or FAW Sedan, we regard the cooperation as with FAW Group.”

For the sake of long-term stable development of Hainan auto-motive industry, Hainan Auto-motive Group started with FAW to reform Hainan automotive industry on the basis of brand right of Family and part of sales right of Hainan Mazda.



On 29th February 2004, the three parts signed the frame agreement to set up “FAW Hai-ma Automotive Corporation” with registration capital of 1.2 billion yuan. On 18th July, the company was formally estab-lished. After recombination, FAW Group, Hainan Automotive Group and Hainan Province government hold the shares of 49%, 49% and 2% respectively. Zhu Yanfeng was nominated president of FAW Haima, Jing Zhu vice president and se-cretary of the Party committee and Qin Quanquan GM.

It seemed to have solved many history-remained problems. However, Mazda required to give all sales rights of FAW Haima and FAW Sedan to the recombined FAW Mazda Auto-motive Sales Company. Given only a few shares of FAW Mazda Sales Company, FAW Haima was also required to give up rights of purchasing and nationalization.

What were done by FAW and Mazda irritated Hainan. “Actu-ally we were turned to be a production workshop. We wouldn’t agree. Thus the net of Haima was not merged and we lost the follow-up products from Mazda,” said Sun Zhongchun, vice GM of FAW Haima to New Auto, “This was the background of the scandal of Haima’s struggle for independence.” For the issue that Chang’an Ford stopped production after Mazda3 appeared on the market, it was said to belong to the same background.

In March 2005, FAW Mazda Automotive Sales Company was set up by Mazda and FAW, responsible for sales of Mazda6 which had already been on the market and any Mazda brand model produced in China and spare parts, accessories and tools. Till then FAW Haima saved its own sales right, mean-while, its usufruct of Mazda

brand would expire at the end of 2006.

According to the latest news, the share holding structure of FAW Haima was changed again. Hainan Automotive Group and FAW Group hold 50% and 49% respectively and Hainan govern-ment holds 1%.

Haima takes off

On 31st August 2005, the logo of Haima Automotive was publicized. The interior under-standing of it is a roc spreading the wings and flying out of the circle. The logo is similar to the wild goose of Mazda brand. Tang SI, director of marketing department told New Auto, “The logo has actually been the image of the company for many years. Now we just display it together with products.”

What was publicized together with the new logo was Family 2 with displacement of 1.6L. The car inherited the advantages of the old version and gave a competitive price. In August, journalists of New Auto saw in Haima Automotive Factory in Haikou that young workers were assembling tensely but orderly the first model of Haima Automotive own brand product. Family with Mazda brand was also produced there.

Tang Si believes that Family 2 will not lose potential customers because of the different brand since it is different from Mazda Family only in appearance and interior trim and actually it becomes prettier. “Its platform isn’t changed; neither is the production factory or the component suppliers. On the premise of product promotion and quality guarantee, its customers are sure not to change.”

To our knowledge, Haima Auto-motive will introduce a new car model with the code of H1 mainly developed by itself in

2007.

H1 is a new model planned at the end of 2002 and started to R&D at the beginning of 2003

with complete intellectual property and it is a middle-class sedan aiming at family usage. “For Haima, this is really own brand sedan integrated with the efforts of accumulation and innovation learnt from Mazda for many years,” said Sun Jianchun.

“The initial reason of the R&D of this model was the unreliability of cooperation with a foreign partner,” said Tang Si. As the soul of Haima Automotive, Jing Zhu has seen through “temporary prosperousness, fake industry reputation and sweet incompetence” generated from cooperation in automotive industry.

From 1991 till now, Haima Automotive has cooperated with Mazda for 15 years and has produced about seven or eight car models of Mazda. During the cooperation of Premacy and Family, Haima owned brand decision right, nationalization recognition right, purchasing right and whole vehicle sales right and at the same time didn’t pay too much rudiment fee and technology transfer fee. Moreover, Haima also won initiative by bearing exchange rate risk together with the other part.

What is more important is that after learning from Mazda, self R&D capability of Haima was greatly promoted. “These are all cooperation premises that





Chinese craft brothers should stick to. But we find that even if you don’t concede, others will,” said Tang Si.

In 2005 Haima laid out H2, the substitute product of Premacy and the project was started in the middle of 2006. Zhu Honglin, vice director of Haima Automotive Technology Center told New Auto that M1 of A0 level and the product of code R1 would also be started in succession. Meanwhile, Haima develops engine HM483Q on the basis of the advanced Mazda engine FP1.8L by meabs of technology permission. The whole investment of this engine project is 1.25 billion yuan and on 18th April 2006 ignition test manufacture succeeded. The expected annual production quantities are 150,000 units for engines of 1.8L, 1.6L and 2.0L.

Haima has spent a lot to set up R&D centers both in Haikou and Shanghai. It divided its accumulation of R&D capability into three stages. The period before 2000 was the stage of energy storage, the following five years was the stage of win-ning successes and the stage started from 2006 will be the stage of breakthrough. Although some analysts think that own R&D products of Haima de-pends to much extent to exterior forces, Jing Zhu doesn’t advo-cate pretended nation pessimistic mood.

For new vehicle model re-searched and developed by Haima Automotive, it seems not to exceed in the market be-cause it cannot be compared with some domestic automotive companies in quantity and it goes the low-middle end route.

Aiming at this, Jing Zhu thinks that Haima should not pursue too much market occupation rate and concentrate too much on sales bill board. “Scale with-out efficiency will cause damage

sooner or later. Instead, Benz, BMW and Porsche without scale are becoming better and better. Even Mazda doesn’t advocate scale any longer. Why? Stick to own customers, first to be proficient, then to be powerful but not to be large.”

“We pursue brand efficiency, finding out our customer level and doing our best to let them recognize us. We should learn Mazda and follow it to concen-trate on market. First fill in the low-price space left by Mazda and behave well as a minor role. We don’t have too much money or too many people, but we should succeed after good preparations.”

Ready to fly out

Haima S1 prototype

On 10th July 2006, G Jinpan (000572) increased 276 million shares to Hainan Automotive Group to purchase the whole assets of total price 1.3 billion yuan. The assets list included 50% shares of FAW Haima Automotive held by Hainan Auto-motive Group and 100% shares of Shanghai Haima Automotive R&D Corporation held by Hainan Automotive Group. G Jinpan was handled by ST before that. In 2002 it faced bankrupt clear-ance situation because of debts and then was taken over by Haima Investment controlled by the management level including Jing Zhu etc.

Till February 2005, Hainan Automotive Group had trans-ferred 50% shares of Haima Automotive Sales Company to G Jinpan. With the new turn of assets exchange and expected excellent behavior of G Jinpan, Haima Automotive will have a good financing platform to lay the foundation for Haima’s future development. “Nobody making cars doesn’t lack mo-ney,” commented by one observer.

“We feel at ease because our manufacture and OEM supply, network and R&D are no worse than domestic craft brothers,” said Sun Zhongchun. In Haima Automotive, we notice that there are E-NOVA-C (Enhanced New Overall Vehicle-Customer) standards and implementation details in nearly all workshops which are global quality stan-dards of Mazda. Meanwhile, Haima Automotive has a set of system similar to Toyota ALL-FOR-QUALITY.

What is more critical is maybe product quality control of upper reaches suppliers. There are already over 120 suppliers involved in Haima vehicle pro-duction. In order to have objective and fair verifications of suppliers’ qualification, Haima sets up “Accessory Purchasing Committee” and organizes a well qualified team to ensure quality of suppliers (SQA) by control and supervision of daily quality of suppliers.

In this year, Haima Automotive started the annual “2006 Haima Automotive Supplier Development Mutual Help Promotion Association” again. “We want to help and support suppliers to strengthen substantial promotion of whole management level including cost control and quality pro-motion,” Lu Guogang, Haima Automotive Purchasing Director told New Auto, “We will annually enlarge objective supplier circle



of support and help step by step to promote system competence of Haima Automotive suppliers.”

Haima Automotive located on an island used to meet problems of imperfection of accessory supply system and exorbitance of transportation cost because of location restricts. The solution of Haima is to build a Haima Industrial Park in Haikou Free Trade Zone near the factory which is to provide locations and be in charge of attracting suppliers’ investments.

In August 2004, the first stage of Haima Industrial Park was completed and eight accessory factories got located. Till the end of 2006, there will have been 18 accessory suppliers in the second stage of the Industrial Park. Actually, it has formed a large automotive industrial park.

“This is the result of our construction of strengthening strategic partnership suppliers,” said Lu Guogang, “after the completion of the second stage, Haima will have reached the purchasing localization rate of 70% which is good for us to promote quality and lower costs. It’s system cultivation for core competence.”

For Mazda Automotive, it desires most for the refined marketing network of Haima. Since year 2001 of sales of Mazda Premecy, Haima set up

its sales service store system strictly according to 4S store standards.

Haima 3

At that time, except Honda, nobody behaved like this. Tang Si, director of Haima Marketing Department told New Auto, “The tendency of world automotive market is that profits of service must be higher than that of sales in the future.

Thus, we working in sales & service network concentrate a lot on service from the very beginning of setting up the network. We have service brand activities twice a year since 2001.”

In September 2006, Haima pushed out its service brand “Blue Spanner” just after brand transfer. “It’s a plain simple name. What we emphasize on is professional spirit, use which to guard the usage value of vehicles,” explained Sun Zhong-chun to New Auto, “We are different from other brands. They concentrate more on emotion while we concentrate more on profession to ensure vehicle quality which I think is more valuable.”

For the sake of trust in Haima automotive value, there wasn’t too much fluctuation among dealers after Haima stopped using Mazda brand. However, more new dealers want to join in. So far, there have been 130 4S stores of Haima but Haima started to introduce 4S store exit mechanism. “This is the way to better purify dealers’ team. It’s good for Haima’s long-term development;” said Han Guan-ghua, GM of Beijing Shu-anglong Bole Automotive Sales Company, “Haima is mature in protecting dealers.”

In order to fly forward, Jing Zhu has done his best. He commits himself to the cultivation of the talented selected from the front line of production. He regards local talented better than the overseas returned since the local talented won’t apostatize. He emphasizes on innovation of company system.

From 1999 he started to use the company organization form of “limited franchise” in the sales company to avoid the situation of death under management and mess without management. From now on he starts again to advocate business flow, flow stand-ardization and standard legalization.

Nobody knows how far can Haima fly forward, but it is really a company that prefers doing a solid job to publicity.

Source: New Auto September 2006 p.64

Page 26 GO INTERNATIONAL


UNITED States importers have some good advice for Chinese vehicle exporters - it's not necessary to be the cheapest on the market. While most domestic car makers are keen to offer low prices to overseas markets, brand image should be top of their list, said Bill Fisher, executive vice president of newly founded Am Asia International Corp.

"China's low labor cost may give Chinese-made models some competitive edge, but the lower price should never be the only focus," he said.

Fisher is in talks with several domestic car manufacturers to import the first Chinese-made vehicles to the US market. But he is in direct competition with former colleague Malcolm Brick-lin, who heads Visionary Vehicle LLC.

With over 20 years' working experience in Asian and Chinese markets, Fisher is definitely the right person to give advice to domestic vehicle exporters. "The key point is to improve the quality and lift their brand image to maintain a high salvage value," he said.

Chinese car makers focus a lot of attention on price to lure buyers, as most domestic buyers pay cash. But in the US, more than 60 percent of buyers use car loans, while in Europe this figure rises to 80 percent.

So customers there care more about the cost of monthly pay-ments offered by banks and auto finance companies.

For example, Fisher said, monthly payments for a Chery could be higher than those for Honda's Accord sedan if banks think the Chery's salvage value will be less than Accord's, help-ing the banks make more profit

and avoid risks.

"As an importer, we hope to cooperate with domestic car makers to take part in engi-neering, design and distribution from the beginning to build a car of reliable quality that is suitable for the market," Fisher said. This could be a long-term effort, which I forecast will take at least three to four years to build up cooperation."

China's fast-expanding economy has boosted the development of the auto industry. Last year, vehicle sales rose 25 percent to 7.21 million units, helping China become the world's second-largest auto market. This year more than 8.5 million vehicles are expected to be sold. The nation also experienced a rapid rise in vehicle exports, especially for home-grown cars. Intensified market competition with the influx of overseas giants, as well as looming over-capacity, prompted domestic car makers to seek foreign sales.

Chery Automobile Co Ltd, the Hong Kong-listed company, plans to boost its capacity to one million units by 2010, with 30 percent to be sold overseas.

Although Chery pins high hopes on its models, which are one-third cheaper than US brands, to fulfill an ambitious plan to sell 25,000 units overseas this year, the company scrapped co-operation with Visionary for a gradual improvement to quality, according to Visionary's Bricklin.

Landwind, an economy-priced sport utility vehicle made by Jiangling Motor Group, had to pass a second crash test before it could enter the European market after failing one in Ger-many. Most Chinese car makers, inclu-ding Chery, Great Wall Motor Group and Brilliance Automobile Co Ltd, have already

started exporting models.

Brilliance China signed an agreement with HSO Motors Europe at the end of last year to export 158,000 of its cars to Germany over the next five years, becoming the first large-scale car exporter to Europe.

But higher safety and emissions standards prevented them from breaking into the US and west European markets. Current major export destinations are in Russia, Southeast Asia and the Middle East. "Low price may be oversha-dowed on the mature US market because some second-hand models from big companies are also competitive on price," according to Frank Y. Chou, associate partner of Value Partners Management Con-sulting Corp.

Chery A1 soon in Europe?

"Selling the cheapest car is not a shortcut to brand image. Quality problems would ruin car makers, especially newcomers to the market," he added.

The Ministry of Commerce has also stepped up measures to rein in competition for car exports. From March 1, only authorized Chinese car makers, including manufacturers of components, will be allowed to ship vehicles overseas, as part of state measures to ensure a sound development for auto exporters.

Source: Shanghai Daily 31.1.2007 p.B5

Chinese car exporters should focus on quality first

Page 27 GO INTERNATIONAL


China made Chrysler to reach US by 2010

BEIJING (Reuters) - The first Made-in-China Chrysler cars, built by local partner Chery Automo-bile Co., could reach the United States or Europe within 30 months, as ambitious Chinese rivals race to penetrate the world's big auto markets.

Ten-year old Chery, Geely and Brilliance China Automotive Holdings already export to de-veloping markets, but have had little success in mature markets where competition is more intense.

The two partners will develop, manufacture and distribute Chery made small and sub-compact cars in North America, Europe and other major auto-motive markets under Chrysler brands.

The first exports will be a Dodge model, but will not be to the U.S. or Europe.

"The first product within one year, and then into the United States and Western Europe within two to 2-½ years," Chrysler Group Chief Executive Tom LaSorda told reporters on Wednesday at a ceremony marking the strategic alliance. Chrysler needs a partner to help develop small cars because of the cost of designing, making and marketing a vehicle in a seg-ment where prices and margins are small, analysts said.

"I would say there are endless possibilities," said LaSorda. "We are looking at multiple approa-ches," adding that volumes could be "maybe 50,000 or 100,000 and maybe more" depending on the region.

But like the Koreans and Japa-nese before them, the price advantage enjoyed by Chinese exporters is offset by poor qua-lity, outdated design and the lack of brand recognition.

Quality matters

A Brilliance unit said last week the failure of its BS6 sedan to pass a crash test in Germany was only a temporary setback and it still expected to sell 158,000 cars in Europe over the next five years.

Jiangling Motors Group's sport utility vehicle Landwind failed the same test in 2005, fuelling doubts about the reliability of Chinese-made vehicles.

China, the world's second-largest auto market, last year became a net vehicle exporter for the first time, but sales were mostly to South Asia, Africa and the Middle East.

The Chrysler-Chery tie-up was first announced last year but was delayed due to the sale of Chrysler by parent Daimler Chrysler AG to Cerberus Capital Management.

Chery, a medium-sized auto company based in eastern China, has posted fast sales growth at home by offering a line-up of inexpensive vehicles, but must convince European and American consumers it can build safe vehicles. "Quality and safety are our main concerns," said Yin Tongyao, Chery's chief executive.

With the Chery deal, Chrysler sees its sales outside North America doubling over the next 4-5 years, as it branches out from the NAFTA region, its home market.

That development path has helped many local automakers expand rapidly to where they now account for around a quarter of China's car sales -- a market that roared ahead at 30 percent last year -- and could capture a 40 percent share within four years. Price will continue to be a key selling point for Chinese auto-makers.

Zhongxing Automobile is planning to export 50,000 pickups and SUVs to Mexico this year as a springboard to break into the U.S. market within two years. The vehicles will on average be a fifth cheaper than comparably equipped brand-name competitors.

Source: http://www.reuters.com/article/businessNews/idUSPEK1582620070704

Yangzhou (Yizheng) Automotive Industry Park, attractive for supplier

The city of Yizheng in Jiangsu province is a flourishing modern industrial base at the Yangtze River. Nearaby the city the local government has invested into a modern automotive supplier park, the Yangzhou (Yizheng) Automobile Industrial Park (YAIP).

Yizheng, located in the Yangtze River Delta is situated along the Yangtze River, it is the only joint city between Nanjing and Yang-zhou which is called “ A Club for Great Enterprises” by Renmin Daily due to automotive com-panies such SAIC, Huaxing Company, Nanjing Port Co. Ltd

and others. In 2003, a production site location investigation team of German Volkswagen AG examined the investment environment in eight cities such as Beijing, Dalian, Qingdao, Tianjing, Ningbo, Guangzhou, Suzhou, Wuxi and also Yizheng.

Page 28 PROMOTION


The benchmarking of potential production sites took into consideration factors such as logistic infrastructure, labor costs, leading automotive OEM nearby, cost of production, infrastructure setup costs, etc. Finally, VW production planning department came to the con-clusion, that Yizheng area came first and the YAIP is an excellent place for future investment of VW China.

YAIP is located in the northern end of the city, which is adjacent to the city zone, and offers a number of investment advan-tages:

1st advantage: its ideal location

XAIP lies between the city of Nanjing and Yangzhou. To the south is Ning-Tong expressway, to the west Si-Da provincial Road, to the north Ning-Qi Railway. The expressway and the railway connect YAIP with Yangzhou and Nanjing. Besides, in the south, there is a riverside highway connecting No.2 Nanjing Yangtze River Highway Bridge and Run Yang Yangtze River Highway Bridge and a golden waterway, the Yangtze River. It’s just 4 km from the Yizheng Port of Yangtze to the YAIP. It takes only 15 minutes by car from the YAIP to Yangzhou, one hour to Lukou International Airport of Nanjing and three hours to Shanghai. It’s less than 10 km to the transfer station between Lu-Ning Oil Pipe and Ningbo-Shanghai-Nanjing Oil Pipe and the distribution station of West Gas Transporting East Project.

2nd advantage: excellent infrastructure

The core area of the YAIP lies beside the Ning-Tong express-way, covering an area of about 3 km2, whose hilly land has been leveled. Pipes for water supply, water disposal, sewage treat-ment and lines for electricity

and telecommunication have been connected. The main road in the YAIP is 42 m wide, leads straight to Si-Da Road. It’s less than 3 km from the core area to Yizheng Station on Ning-Qi Railway. The special railway from Yizheng Station leads straight to the core area for fast cargo handling. The YAIP operate his own 110 KV power substation. Yizheng Lianzhong Heat and Power Plant provide cheap and ample power and steam (160t/h) for the enterprises in YAIP.

3rd advantage: Main industry focus on automotive

Local government has from the very beginning supported the formation of an automotive supplier park and industry cluster for automobile assem-bling and component pro-duction. Inside YAIP, two major carmakers have established manufacturing and assembling lines: SAIC Yizheng Automotive Co., Ltd and Yizheng Light Car Factory of Shanghai Huizhong Automotive Manufacturing Co., Ltd.

SAIC has regarded Yizheng as its third whole car manufacturing base and independent brand base after Shanghai Volkswagen and Shanghai GM and has invested 300 million Euro. Currently four car assembling lines are operating. The most famous one is the SAIC Roewe 750 line, assembling this entry-level luxury car (D1-segment). Both form a production capacity of 180,000 vehicles per year. The YAIP plans to produce 250,000 vehicles per year 2010 onwards. At present, Yizheng has dozens of auto components plants, mainly producing frame, piston ring, camshaft, cylinder sleeve, bridge, inside ornament for automobile and so on (NPR Auto Parts Manufacturing, Yizheng RunYang mechanical plant, ASIMCO CamShaft, SSANG YONG automobile parts Manufacturing, Saike Auto

Spare Parts Industrial Park and Wanzhong Automobile spare parts)

Not only auto and auto com-ponents, but modern machine manufacturing projects, high-tech projects and some tertiary industry projects like real estate, business trade, commodities circulation and tourism are welcome to our Park.

4th advantage: plenty of skilled human resources

Yizheng enjoys abundant service talent in metal processing, machine building, electronics, chemical industry, chemical fiber, textile industry etc. About thirty thousand technicians live in the YAIP region which accounts for 14% of total population. 4000 professional skilled workers graduate from five colleges and vocational training schools in the region. There are 36 universities and colleges, 137 research institutes in Nanjing, Yangzhou and Zhenjiang, producing 150 thousand graduates anually.

5th advantage: preferential policy

In order develop auto industry, Jiangsu province government permit YAIP to enjoy preferential policy, providing best environ-ment and professional services for investors. Currently, YAIP enjoys perfect infrastructure and plenty of available land, water, gas, power, steam, waste water processing and cheap labor resources.

6th advantage: comfort residential environment

As a modern, international and ecological area, satellite city of big cites such as Shanghai and Nanjing will merge the com-prehensive service functions like commodities circulation, busi-ness trade, finance, tourism and high quality residence. It is considered comfortable for

Page 29 EVENTS 2007—2008


Upcoming Automotive Fairs & Exhibitions

September 1, 2007: The 40th Tokyo Motor Show Makuhari Messe, Makuhari, Chiba Prefecture, Japan, 81-3-3211-8875; http://www.tokyo-motorshow.com/eng/index.html

September 12-14, 2007: The 5th China International Tire Expo (CITEXPO 2007) Shanghai Everbright Convention & Exhibition Center, Shanghai, China, 86-10-85898181 http://www.citexpo.com.cn/index_e.htm

September 26-28, 2007: 2007 Auto Parts Shanghai/Auto Manufactureing Shanghai (ATOP 2007) Shanghai International Exhibition Center, Shanghai, China, +852-28118897 ABC operates a partner booth at ATOP 2007 which you can find here: http://www.abc-shanghai.com/en/media/ATOP-PlanwithABCbooth.jpg

http://www.adsale.com.hk/aes/en/shows/general/infol.asp?eid=3637&order=130

November 20-26, 2007: The 5th China (Guangzhou) International Automobile Exhibition Guangzhou International Convention & Exhibition Center, Guangzhou, Guangdong, China, +86-20-26081663; http://www.autoshow-gz.com

December 17, 2007: ARS-Seminar “Chinese OEM heading for Europe” Vienna, Austria; Download seminar brochure via: http://www.abc-shanghai.com/en/media/ARSChinaAutomotive.pdf

January 1, 2008: Auto Expo 2008 Pragati Maidan, New Delhi, India http://www.trade-india.com/dyn/gdh/alliance/autoexpo

April 2008: 2008 Presidents' Forum/CBU 13th Annual International Conference: Automotive Manufactur-ing in China-OEM & Supplier Strategies in the Next Decade Beijing, China, 86-10-84512511-111 http://www.cbuauto.com

September 2007

living and working in Yizheng.

The YAIP is a potential and ideal place to invest, full of business chances. We wholeheartedly welcome businessmen from all over the world to investigate our Park, negotiate investment with us and initiate business here.

Under the principle of “All for the investors, all for the enterprises”, YAIP management

ensures that the investors will be offered a favorable investment environment, preferential policies and get an excellent repay.

For more information pls. visit YAIP’s English homepage: http://www.yzauto.gov.cn or contact the YAIP Industry park management directly:

Yangzhou Investment Promotion Department

Yangzhou (Yizheng) Automobile Industrial Park Committe

Tel：+86-514-3429300 Fax：+86-514-3429310 Contact: George ZHOU Business Development Manager Mobile: +86-13701440175 e-mail: [email protected]

http://www.tokyo-motorshow.com/eng/index.html�

http://www.citexpo.com.cn/index_e.htm�

http://www.abc-shanghai.com/en/media/ATOP-PlanwithABCbooth.jpg�




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http://www.autoshow-gz.com/�

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http://www.cbuauto.com/�

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Page 30 WHO is WHO


HU Maoyuan, Director, China Association of Automobile Manufacturers, and Chairman of Shanghai Automotive Industry (Group) Corp. (SAIC), was recently appointed the new director of the China Association of Automobile Manufacturers (CAAM). The announcement came at the 6th CAAM Member Representative Conference held in Beijing on April 15-16. Hu replaces Xu Ping, president of Dongfeng Motor Corp., who served as CAAM director over the last year. Hu's company also replaces Dongfeng as this year's directorial company of CAAM.

CAAM's board of directors have a term of one year and major Chinese automakers take turns to serve as directorial companies.

CHEN Hong, President, Shanghai Automotive Co., Ltd. President of SAIC Motor Corp., Ltd., was appointed President of locally-listed Shanghai Automotive Co., Ltd. on May 8.

Chen replaces Zhao Fenggao, who has been assigned to another post in the company. Philip Murtaugh, executive vice president of SAIC Motor in charge of its overseas Ssangyong Motor subsidiary, was appointed Shanghai Automotive's executive vice president by Chen.

Both Chen and Murtaugh remain in their current posts.

With the new appointment Chen has virtually taken full control of SAIC Group, parent company of both SAIC Motor and Shanghai Automotive. Shanghai Automotive has become the largest locally-listed automotive company after acquiring major assets in key vehicle and components joint ventures from SAIC Motor at the end of last year. The SAIC Group now holds an 83.83 percent share in Shanghai Automotive.

Hans Kroeppelt, Manufacturing Senior Vice President, BMW Brilliance Automotive Ltd.

BEIJING - BMW Brilliance Automotive Ltd. has appointed the 49-year-old Hans Kroeppelt as senior vice president for manufacturing, effective May I, 2007.

Kroeppelt has been with the BMW Group for 26 years, assuming managerial positions in various areas of manufacturing and R&D in Germany and overseas. Before joining BMW

Brilliance, he held the position of managing director of BMW Manufacturing Thailand Co., Ltd.

Recent appointments

Page 31 PROFESSIONAL ADVERTISING


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Reach us at our Shanghai Office

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October Outlook • Roewe 750i

Testdrive • F1 in Shanghai • FAW Besturn

dealer visit • Chinese carmaker

at IAA 2007


Readers Coverage 05/07 895 automotive reader, A-segment (CEO, BDM)

Publisher:

Automotive Business Consulting Ltd.

ABC Ltd. uses reasonable efforts to include accu-rate and up-to-date infor-mation on these Newslet-ter . However, ABC Ltd. makes no warranties or representations as to the accuracy of the informa-tion. ABC Ltd. assumes no liability or responsibil-ity for any errors or omis-sions in the contents of this publication.

Latest C-NCAP TEST RESULTS / ADVERTISING

September 2007

Front Impact

Front Impact with 40%

Overlapping

Side Impact

Extra Points

Total Score

CompactSaic-GM-Wuling

SPARK(LZW7080) 7,03 11,95 8,21 0 27,2 2

A segmentDongdfeng Honda CIVIC

(DHW7181) 14,57 15,32 12,65 2 44,5 4

B segmentFAW Haima Familia 2

(HMC7162A) 12 12,14 8,18 0 30,3 3

B segmentChang'an Ford Focus

(CAF7201A) 14,28 15,83 14,27 1 45,4 5

B segmentDongfeng Yueda KIA Cerato

(YQZ7162) 11,26 13,27 8,55 0 33,1 3

C segmentFAW Car Besturn

(CA7204AT2) 12,71 14,5 11,02 2 40,2 4

D segmentDongfeng Nissan Teana

(EQ7230BA) 13,54 15,47 15,08 3 47,1 5

Rating

Test Score

Class Manufacture and Tpye

Documents

C h i n a A u t o m o t i v e M a g a z i n e Subscribe it! · Chery A1 test drive 13 Brilliance delist SAIC share hot 16 New vehicle ship tax in P.R. China 18 C-NCAP: a long march