Local auto companies: To flex their muscles in independent research and development
Six-Degree-of-Freedom Platform Suzhou Johnson Automation Technology Co., Ltd. , https://www.cn-johnson.com
At present, China's auto market is not in a very optimistic state. Faced with this challenge, private automakers have started to take bold steps. They are pouring significant resources into building "internal strength," enhancing their independent research and development (R&D) capabilities, and aiming for long-term growth. The domestic automotive industry is currently witnessing a clear divide: the rich are getting richer, while the poor are struggling. Global giants like Volkswagen, General Motors, Toyota, and Ford are all actively expanding their presence in China, increasing production capacity, and capturing market share with annual profits reaching billions of yuan.
Meanwhile, multinational corporations are solidifying their positions and advancing their strategies, while private companies remain stuck at the lower end of the market. With limited product variety, subpar quality, and weak R&D capabilities, these private firms are barely surviving in the gaps. However, this is just the beginning, and the real test will come in 2006. Without policy support, how can private enterprises compete with global giants under WTO rules? Rather than waiting for disaster, it's time for them to shift from simply manufacturing cars to upgrading their R&D capabilities. Companies like Chery, Geely, and BYD seem to understand this and are now diving deep into automotive R&D. Once their R&D efforts take off, they can overcome their foundational weaknesses and grow stronger amidst fierce competition.
Geely has taken a bold step forward. Its Vice President Liu Jinliang recently announced that the company will launch four new models in the second half of the year and invest 350 million yuan into a new automobile research institute. This facility is expected to be completed by the end of the year. Since 2000, Geely has already established an independent R&D base, which has designed nine models, including the American Panther sports car and the US-Japan sedan. A major milestone was when Geely developed its own MR479Q engine, breaking away from the reliance on Toyota’s 8A engine. This move marked a turning point in their strategy.
The new research institute will include a rapid prototyping workshop, significantly speeding up the vehicle development cycle. In addition, Geely is setting up four advanced laboratories for basic, electrical, road, and multi-functionality testing. They’ve also upgraded their design process, moving from manual drawings to computer-aided design. To further strengthen their R&D team, Geely hired Shen Fengyu, former deputy president of Daewoo Motor in South Korea. Under his leadership, the mid-size sedan CK-1 will hit the market this year. Geely is clearly learning from successful Korean practices and redefining its own path in R&D.
Chery is also making waves. For a vehicle, the engine is the core component, and Chery is focusing on mastering its own core technologies. It has launched a large-scale engine production plan, building a full range of engines with its own brand. The company established its Automotive Engineering Research Institute in 2003, featuring eight R&D departments covering everything from body design to engines. Chery’s approach is different from others—it collaborates with foreign design companies, allowing more flexibility in development.
In partnership with AVL Austria, Chery developed a 2.0L TCIDGLVVT petrol engine and a 1.9L diesel engine, both set for mass production next year. It is also working with European design firms on entire vehicle projects. Despite low costs, Chery has managed to secure independent intellectual property rights and continues to release new products. On August 28, Chery introduced its CVT model, the Cowin CVT, which uses technology similar to the BMW Mini Cooper. With its 3D software system and strong R&D investment—10% to 15% of sales revenue annually—Chery is proving that self-reliance is possible.
BYD is another player making a name for itself. At the Beijing International Auto Show, it unveiled seven new models, all independently developed, produced, and branded. Among them, the F6, F4, and F2 are fuel-powered, while the ET, ET3, and HYBRID-S are electric or hybrid. The HYBRID-S is competing directly with Toyota’s Prius, but with a focus on low emissions and fuel consumption. Using lithium-ion batteries, it achieves optimal performance with minimal environmental impact.
As a leader in battery technology, BYD is well-positioned to lead the electric vehicle market. Its Shanghai R&D center brings together top international designers and engineers, integrating cutting-edge trends with its advanced battery tech. While there is still a gap between Chinese private companies and global giants in traditional vehicles, in the field of eco-friendly cars, China is on equal footing—and even ahead in some areas. BYD is three years ahead in electric vehicles and may capture a significant market share as EVs become more commercialized.
Independent brands must think ahead. Even though electric vehicles may not be widely commercialized for another five years, the push toward sustainability is inevitable. Private enterprises need to plan early to stay competitive. With the right investments and vision, China’s auto industry could rise to global prominence.