Local auto companies: To flex their muscles in independent research and development
Suzhou Johnson Automation Technology Co., Ltd. , https://www.cn-johnson.com
The Chinese auto market is currently facing significant challenges, with private automakers stepping up to respond. In an effort to strengthen their positions, these companies are investing heavily in internal development, aiming to enhance their independent research and development (R&D) capabilities for long-term growth. Meanwhile, the domestic industry is witnessing a growing divide—while global giants like Volkswagen, General Motors, Toyota, and Ford continue to expand their presence and profits, private enterprises remain stuck at the lower end of the market. Their struggles stem from limited product variety, subpar quality, and weak R&D capacities.
However, this is just the beginning. The real test will come in 2006, as private companies face the challenge of competing under WTO rules without sufficient policy support. Rather than being overwhelmed, they must focus on upgrading their R&D capabilities. Companies like Chery, Geely, and BYD have already recognized this necessity and are moving into the automotive R&D space. Once their R&D efforts take off, they can overcome their foundational weaknesses and grow stronger amid fierce competition.
Geely, for instance, has made significant strides. After launching four new models this year, the company announced a major investment of 350 million yuan to establish a new Automobile Research Institute. This facility aims to accelerate vehicle development by over 90% and includes advanced laboratories for basic, electrical, and multi-functional testing. The institute also brings in top talent, such as former Daewoo executive Shen Fengyu, who is leading the development of Geely’s mid-size sedan. This move marks a strategic shift toward self-reliance and innovation.
Chery has also taken a unique approach, focusing on core technologies and leveraging international partnerships. Its Automotive Engineering Research Institute, established in 2003, supports comprehensive R&D across multiple departments. Chery's collaboration with AVL Austria has led to the development of advanced engines and CVT technology, which it plans to mass-produce soon. By maintaining a strong R&D budget of 10-15% of sales revenue, Chery continues to push forward, proving that independent brand development is not about isolation but smart integration of global resources.
BYD, another rising player, has entered the auto market with seven new independently developed models. Focusing on eco-friendly vehicles, including hybrid and electric options, BYD is positioning itself for the future. Its HYBRID-S model competes directly with Toyota’s Prius, using lithium-ion batteries to achieve low emissions and fuel consumption. As a leader in battery technology, BYD is well-positioned to lead in the electric vehicle market, potentially capturing a large share once commercialization takes off.
In conclusion, while Chinese private automakers still face a long way to go in competing with global giants, their commitment to R&D and innovation shows promise. By focusing on long-term strategies and embracing cutting-edge technologies, they are laying the foundation for a stronger, more sustainable automotive industry in China.