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Top 10 Auto News in 2004

The People's Daily and China Auto News recently picked their top 10 automobile industry news stories from 2004:

1. Auto industry development policy issued

The policy aimed to be people-centered, to encourage comprehensive and sustainable development and to balance market forces with macroeconomic controls. It strove to increase the number of private buyers by protecting their interests and improving the driving environment.

2. Auto sales slow down, prices slashed

Auto sales grew 15 percent in 2004, 60 percentage points less than the previous year. Sales of some leading carmakers slowed down, while stocks increased. Prices were slashed in an attempt to reverse this trend. There were four large-scale price cuts in the past year, and prices were lowered 10 percent overall. The frequently changed price worsened consumer expectations and the market remained stagnant.

3. China signed global auto technical standard

On November 18, the first unified auto technical standard in the world, the Global Technical Standard on Holding Components of Car Locks and Doors, was passed. China, a signatory nation, participated from the beginning and the agreement meant that its auto technical standards began to be integrated with international practice.

4. Auto recall system unveiled

The auto recall system, publicized on March 1, officially took effect on October 1. From then, Chinese car buyers enjoyed the same quality guarantee and after-sales service as elsewhere. Guangzhou Honda, First Automobile Workshop (FAW), Chang'an Suzuki and Shanghai GM had recalled defective cars too early or late. The auto recall system and the "three guarantees" (of repair, exchange and return services), which will be implemented soon, are important tools for automakers to improve the quality of their products.

5. SAIC acquired Ssangyong Motors

On October 28, Shanghai Automobile Industry Corporation (SAIC) signed a contract acquiring a 48.9 percent share of Ssangyong Motors of South Korea, despite opposition from South Korean trade unions and competition from China's Bluestar Group. The deal indicated that China's "go-out strategy" now extends from car export to capital investment. It also provided a new solution for Chinese automakers to forge independent brands. However, SAIC faces the huge financial risks involved in transnational mergers and acquisitions. It also needs to blend different corporate cultures and tap the potential of R&D and acquired brands.

6. FAW reported annual sales of 1 million

Car sales of FAW exceeded 1 million, 50 percent of which were own brands. The 1-million-sale mark was long awaited. After passing it, FAW entered a new level of development. The auto giant set a goal of "1-million car sales, digital management and international operations." It also showed that auto scale production in China had advanced another step.

7. Hafei, Changhe regrouped, SAIC joint-stock firm debuted

China Aviation Industry Corporation II (AVIC II), the parent firm of Hafei Motor and Changhe Motor, debuted the biggest M&A in China's mini car sector. The senior executives of the two carmakers were moved. Hafei Motor was listed on the stock exchange in the name of Dong'an Engine. At the end of last year, Chang'an Group, another economic carmaker, got the holding shares of Jiangling Motor. SAIC also launched a joint-stock company. All these events indicated a new pace of reshuffle and reform.

8. Foreign-funded auto financing firms began operation

Volkswagen, General Motor, Ford and Toyota set up auto financing companies one after another after the promulgation of new regulations on auto financing companies. However, the government retained a cautious approach overall. After commercial banks tightened their lending requirements in the latter part of the year, auto-financing companies didn't play as big a role as had been expected.

9. Auto giants expanded investment in China

On September 6, Guangzhou Toyota, which was co-invested by Guangzhou Automobile Group Company and Toyota, was officially established. Three months later, the new Beijing Benz-DaimlerChrysler plant broke ground. Both were symbolic of multinational automakers' investment in China. They also indicated that multinationals were confident in China's auto market as well as its economy.

10. Aowei truck appeared on the market

Jiefang Aowei truck went on the market on August 15. One Aowei heavy-duty four-cylinder diesel engine, a main component of the truck, was the first to be independently developed in China. Aowei engines, many of which were co-developed with the AVL company of Austria, equaled and even surpassed international standards. FAW emphasized the improvement of its development process, making it easier to develop follow-up products independently. This was a breakthrough for China's independent auto R&D.

(China.org.cn by Tang Fuchun, February 6, 2005)

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