The "Special Report on the 70th Anniversary of China's Automobile Industry" previously reviewed the glory and dreams of China's automobile industry over the past 70 years. From FAW overcoming difficulties to lay the foundation for China's automobile industry, to SAIC Volkswagen opening the curtain of joint ventures after the reform and opening up, to the surging of "new forces in car manufacturing" in recent years, China's automobile industry has made indelible achievements.

    Over the past 70 years, China's automobile industry has been thriving. During this glorious period, there have been many important milestones that have played a critical role. Today, let's review the five most important milestones in the past 70 years.

    Beginning: FAW was founded in 1953

    On July 15, 1953, the groundbreaking ceremony of the First Automobile Works (the predecessor of China First Automobile Group Co., Ltd.) was held in Changchun, marking the beginning of China's automobile industry. Less than three years later, on July 13, 1956, the first domestically produced Jiefang brand car rolled off the assembly line at FAW. The First Automobile Works deservedly became the "cradle of the new China's automobile industry."

    The following year, the First Machinery Industry Ministry of the State Council gave FAW the task of producing sedans. FAW began designing and producing sedans in the second half of 1957, and selected the French Simca Vedette sedan as a prototype. Despite the lack of resources and many difficulties at the time, even the entire sedan body was completed by hand, it took less than a year. On April 21, 1958, the Dongfeng sedan code-named "CA71" was successfully trial-produced in the machine repair workshop. The car has a streamlined body, silver-gray on the upper part and purple-red on the lower part. The engine has a maximum power of 70 horsepower and a maximum speed of 128 kilometers.

    It took only 33 days to successfully produce the first Hongqi prototype, codenamed CA72-1E, in August 1958. In the five years from 1959 to 1964, a total of 206 Hongqi sedans were produced, which were frequently used in state and foreign affairs activities and became a business card of the new China's industry.

    At the same time, some auto repair shops and parts factories in some provinces and cities started to manufacture cars, producing more than 200 kinds of cars, including the Phoenix brand sedan manufactured by SAIC and the Changjiang brand jeep manufactured by Changan. After years of development and adjustment, four relatively powerful automobile production bases were formed in Nanjing, Shanghai, Jinan and Beijing. At the end of 1965, the number of civilian cars in the country was nearly 290,000, of which 170,000 were domestically produced. FAW alone had produced a total of 150,000. In 1969, the Second Automobile Works, located in Shiyan, Hebei, laid the foundation. China's automobile industry started from this point and laid a solid foundation for its subsequent development.

    New life: the wave of joint ventures in the 1980s

    Although China's automobile industry had made great progress after more than 20 years of development by the mid-to-late 1970s, it was still small in scale and low in modernization compared with the world's first-class level.

    In October 1978, a Chinese machinery delegation visited Europe and began to negotiate with Volkswagen Group on the establishment of a joint venture for sedans, marking the beginning of Sino-German cooperation. After six years and more than 60 "marathon" negotiations, China and Germany signed a joint venture contract at the Great Hall of the People in Beijing in October 1984, and Shanghai Volkswagen Automotive Co., Ltd. (later renamed SAIC Volkswagen) was officially established. As a bridge for Sino-German cooperation and a pioneer in the domestic automobile industry, SAIC Volkswagen introduced advanced manufacturing technology and a complete quality management system into China, thus launching a new pattern of China's automobile industry using foreign capital, introducing technology, and accelerating development.

    In the spring of 1983, the first Santana was successfully assembled through CKD, marking the beginning of a new era for China's automobile industry. The real mass production of Santana began in 1985. In the history of SAIC Volkswagen, the name Santana cannot be bypassed in any way. As the first model of SAIC Volkswagen, "With Santana, you are not afraid to travel around the world" was a household name at that time.

    The cooperation between SAIC and Volkswagen was actually quite accidental. At that time, China sent many delegations to Europe, Japan, the United States and other regions, but foreign automakers such as General Motors, Renault, Citroen, Nissan, Toyota and others declined China's invitation to cooperate. If they had not underestimated the influence of the Chinese market, the first Chinese joint venture car might not be Santana, but Toyota Corolla or Citroen GS.

    However, few people know that Santana also faced a huge dilemma. After several years of mass production, the localization rate of Santana was still less than 4%, and localization of parts became a top priority. In 1987, the Shanghai Municipal Government listed the automobile industry as the first pillar industry in Shanghai and established the "Support Shanghai Volkswagen Construction Group" and the "Santana Localization Office". In that year, the factory produced more than 10,000 "Shanghai Santana" cars, and the localization rate reached 30%.

    In 1989, the most advanced car assembly line in China was put into production at SAIC Volkswagen. The production line is 585 meters long and can assemble 90 Santana cars at the same time, with one car assembled every 7 and a half minutes. In 1990, the localization rate of Santana had risen to 60.09%. Through the joint efforts of the Chinese and German members, the localization rate of Santana continued to increase, reaching 90% in 1996, and its upgraded version Santana 2000 was also born...

    The significance of SAIC Volkswagen and Santana is more than just a joint venture car company and a car model. SAIC Volkswagen has changed China's perception of automobile production, and has driven the technological progress of a large number of supporting industries and the revitalization of China's car parts industry, playing an irreplaceable role in the vigorous development of China's car industry - in the process of increasing the localization rate of Santana, hundreds of parts supporting enterprises have been formed, and China's automobile industry has since formed a relatively complete supply chain system.

    At the same time, batches of technical and sales talents have emerged, supporting the overall situation of China's automobile industry and driving the technological transformation of complete vehicle and parts companies in the Chinese automobile market. A new pattern of accelerated development of China's automobile industry has thus begun.

    Qualitative: The first industrial policy was released in 1994

    From the establishment of FAW to the cooperation between SAIC and Volkswagen, it is closely related to the foresight of the first and second generation leaders of New China. Looking at the history of the development of the world's automobile industry, industrial policies have played an important role in the development of the automobile industry.

   When the wheel of history rolled to the 1990s, a policy played a crucial role in the next thirty years of China's automobile industry - on July 3, 1994, the State Council officially promulgated the "Automotive Industry Industrial Policy", which was my country's first automobile industry policy. It put forward the guidelines and major measures for China's automobile industry in the 20th century and even for a longer period of time, marking that my country's automobile industry has entered a new historical stage.

    Before 1978, China's automobile industry had taken shape, but it was "lacking heavy vehicles and lacking light vehicles". After the reform and opening up, the state listed the automobile industry as a pillar industry for the development of the national economy. In the following decade, the automobile industry set off a wave of joint ventures and cooperation. While expanding and renovating the original bases, improving quality and increasing production capacity, my country planned and deployed the construction of new bases for heavy vehicles, light vehicles, and "three big and three small" cars, which promoted the rapid development of the automobile industry.

    However, during this period, the problems of scattered, duplicated and low-level automobile industry also became increasingly prominent. At that time, there were 125 automobile factories in China, the most in the world, but the total output was only 1 million vehicles. At the same time, the parts, related industries and rear-end foundations were weak, the performance of products was poor and the level was low, and the contradiction between supply and demand of cars was prominent. At the same time, China was facing "re-entry" (restoring the status of a contracting party to the General Agreement on Tariffs and Trade. In 1995, the World Trade Organization (WTO) replaced the General Agreement on Tariffs and Trade), and it was urgent to establish a modern car industry and develop an automobile society.

    After many rounds of discussions and revisions, and more than a year later, the "Automotive Industry Policy" was promulgated and implemented on July 3, 1994. The policy has 13 chapters and 61 articles, mainly involving the following main contents: policy objectives, product development priorities, product certification, industrial organization, industrial technology, capital raising, import and export management, localization and other policies, as well as consumer policies related to supporting the development of the automotive industry, related industries, social development, etc. It is particularly worth mentioning that the policy also encourages the automotive industry to use foreign capital, clarifies the bottom line of the automotive industry's opening-up shareholding ratio, and boldly relaxes restrictions on joint ventures and cooperation in automotive parts.

    The Automotive Industry Policy also proposed to "gradually change the consumption structure of public funds purchasing and using cars, which is mainly administrative agencies, groups, institutions and state-owned enterprises" and "the state encourages individuals to buy cars, and will formulate specific policies in due course according to the development of the automobile industry and changes in the market structure." For the first time, "private cars" in China had policy support, which provided strong support for the development of China's automobile society.

    At the end of that year, at the "Contemporary International Car Industry Development and China Car Industry Development Strategy Technology Exchange Seminar and Exhibition" held in Beijing, 20 of the world's top car manufacturers were invited to participate in the "China Family Car Project". The plan requires manufacturers to design an environmentally friendly, cheap, 5-seater family car, and the winning bidder can jointly produce this model in China. From Porsche, Mercedes-Benz to Toyota and Nissan, the world's major car manufacturers have brought out their own unique skills. Although none of these models, except Volkswagen's "Urban Golf", will be able to enter the Chinese market in the end, this exhibition still has great significance for the subsequent development of China's automobile industry.

    Soaring: Joining the WTO in 2001 boosted the auto market

    Based on the first three historical nodes, China's automobile industry accelerated its development, and the national automobile production and sales exceeded 2 million in 2000. However, the focus of the Chinese automobile market at that time was still the "old three" (Santana, Jetta and Fukang) and a few models such as Xiali and Alto. These models were not only old and expensive, but also worse, the after-sales system was always criticized by consumers.

    On December 11, 2001, China's automobile industry ushered in another key point - China officially joined the WTO. Subsequently, foreign giants flocked to enter the Chinese market, including FAW Toyota, Dongfeng Yueda Kia, Beijing Hyundai, Dongfeng Peugeot, Brilliance BMW, SAIC-GM-Wuling, Dongfeng Nissan, Dongfeng Honda, GAC Toyota, Beijing Benz, Changan Ford, etc. In the same year of joining the WTO, SAIC-GM launched the Sail brand, which was the first joint venture brand to directly promote the "family car" banner.

    On the other hand, my country's automobile import tariffs have been gradually lowered since 2002. By 2010, China had basically fulfilled its WTO tariff reduction commitments, and the overall tariff level was further reduced from 15.3% before joining the WTO to 9.8%. Since 2018, the tariff on complete vehicles has been reduced from 25% and 20% to 15%. The reduction in automobile tariffs and the large number of imported cars have impacted the young Chinese automobile industry and posed a huge threat to companies in the entire industry chain.

    While people were crying "wolf is coming", joining the WTO also brought unprecedented opportunities for the independent development of China's automobile industry. Li Shufu once said: "Please allow private entrepreneurs to dream of cars. If you fail, please give me a chance to fail." In the 1990s, the automobile industry was not open to private enterprises. As China's entry into the WTO approached, the signal of opening up became more and more obvious. In November 2001, before my country joined the World Trade Organization, Geely became the first private enterprise in China to obtain the qualification to produce cars. Without this start, there would be no possibility for Geely to acquire Volvo and invest in Daimler in the future and become a first-class Chinese and world-renowned automobile company.

    After joining the WTO, the automobile market expanded rapidly, and more foreign brands entered the Chinese market, resulting in more intense market competition. This also encouraged the rise and development of domestic brands. Private enterprises represented by Geely and independent car companies represented by Chery also had the opportunity to catch up with multinational giants. The Chinese automobile industry eventually learned from the fierce competition and game, not only rapidly improving production technology, but also becoming more mature in the parts supply system. The rapid expansion and upgrading of the consumer market also promoted the comprehensive rise of independent brands such as Great Wall, Changan, and BYD, and made core technologies no longer subject to others.

    The diversity of automobile products and the surge in private car consumption have led to a spurt in the scale of China's automobile market. The production and sales of automobiles have quickly exceeded the 5 million and 10 million mark from the scale of 1 million in 2000. By 2009, China's automobile production and sales reached 13.791 million and 13.6448 million respectively, surpassing the United States for the first time to become the world's largest automobile producer and seller.

    Beyond: The formulation of new energy planning

    Lays the foundation for today's "overtaking on the curve"

    Ten years after joining the WTO, China's automobile industry has entered the fast lane, but the construction of the industrial chain is still at the stage of "big but not strong". It was not until the 2010s that two new policies and plans laid the foundation for China's automobile industry to achieve "overtaking on the curve"

    On June 1, 2010, referring to the financial subsidies in the "Ten Cities, Thousand Vehicles Project", the Ministry of Finance promulgated the "Interim Measures for the Management of Financial Subsidies for the Pilot Program of Private Purchase of New Energy Vehicles" for the first time, selecting five cities, namely Shanghai, Shenzhen, Hangzhou, Changchun and Hefei, as pilot cities, and later adding Beijing. For the first time, subsidies were determined for private purchases of new energy vehicles (plug-in hybrid vehicles and pure electric vehicles), as well as infrastructure such as power batteries and charging stations.

    In 2012, the Chinese government issued the "Energy-saving and New Energy Vehicle Industry Development Plan (2012-2020)", which pointed out the direction for the development of new energy vehicles. In the past ten years, the country has pressed the "fast forward button" for the development of new energy vehicles by building more charging infrastructure, increasing subsidies for consumers to buy cars, breaking through key technical bottlenecks such as electric motors, power batteries, and electronic control systems.

    After more than a decade of development, Chinese new energy vehicle companies have become the world's leading enterprises. BYD's sales have surpassed Tesla's, becoming the global champion of the new energy vehicle market. In the process of the development of new energy vehicles, a group of new car-making forces have emerged in the Chinese market. Around 2014, new car-making forces began to rise, and new car-making forces such as Weilai, Xiaopeng, and Ideal continued to grow. Now they are not only favored in the capital market, but also have monthly sales exceeding 10,000 vehicles, achieving initial independent operation.

    With the rapid development of the new energy vehicle industry, China's automobile industry has completely surpassed other countries. In the era of new energy vehicles, the development of traditional foreign brands is relatively slow, and they have been left behind by Chinese new energy vehicle companies. Although international auto giants have begun to accelerate the pace of transformation, the old pattern of joint ventures overwhelming independent automakers in the Chinese auto market has been completely broken.

    As a new species in the automotive industry, new energy vehicles have ushered in a revolution in the industrial chain of the global automotive industry. The comprehensive rise of China's new energy vehicles has also led to the upgrading of a huge industrial system. As of now, 90% of China's new energy vehicles have been localized, and have also spawned industry giants such as BYD and CATL - from the upstream development and refining of mineral resources, to core components such as batteries, motors and electronic controls, to the innovation and application of intelligent technology, the powerful trend of change formed by the upstream and downstream of the industrial chain has made the new energy vehicle industry run at the "Chinese speed". Especially in the core "three-electric" technology field of electric vehicles, China is not only at the same level as the world's powers, but even has achieved partial leadership.

    New energy has overtaken the competition, allowing China, whose automobile industry has only a 70-year history, to stand on the same starting line as Europe and the United States, which have a history of more than 100 years, and even have a certain first-mover advantage. In the future, there will be a place for "Made in China" in the world's automobile industry.