Car: Disparity between the two sides of the ocean

"Standing on the hillside of Mount Tai, we were presented with a comprehensive scientific report on the current state, future trends, and challenges facing the global automotive industry. This report was deeply insightful for us, serving as a springboard for further understanding and participation in this dynamic field. We must not only grasp the big picture but also get involved at every level—literally, take off a few layers of skin to truly engage in the process," said Dean Wu Jianong, deputy mayor of Chongqing’s delegation. One major gap we identified is that our industrial chain still lags behind Detroit's. The automotive industry is not just about manufacturing cars—it's a highly integrated ecosystem involving production, R&D, trade, logistics, services, and finance. In Detroit, everything revolves around the automobile. For over a century, the city has thrived on this industry, supporting the livelihoods and aspirations of its people. Major car manufacturers like GM, Ford, and Chrysler are household names, with annual sales reaching billions of dollars. Around them, companies such as Delphi, Lear, and Visteon provide cutting-edge research, development, and support for vehicles worldwide. Their annual revenue runs into tens of billions, and their supply chains stretch across hundreds of cities, forming a vast network of interdependent players. At the Ford Michigan Truck Factory, which produces 300,000 vehicles annually, Chongqing entrepreneurs were amazed by both the advanced equipment and the precision of the logistics system. The factory operates multiple models simultaneously, with parts arriving exactly when needed, synchronized perfectly with the assembly line. There's no delay or bottleneck—everything moves seamlessly. Ford has invested heavily in custom logistics software, ensuring suppliers know exactly when parts should be delivered. This level of coordination is key to their success. Another gap lies in R&D. We lack the depth and integration seen in Detroit, where high-tech innovations are seamlessly embedded into vehicles. During a visit to Visteon, a leading auto parts supplier, the Chongqing delegation witnessed the full scope of automotive R&D. With over 4,000 patents and $18 billion in assets, Visteon partners with global automakers and operates 120 facilities worldwide. “Chongqing’s auto industry is still in its infancy,” said Ling Zemin, chief engineer at Chongqing Chaoli High-tech. “Our R&D investment pales in comparison to Visteon’s. Their maturity is reflected in every detail of the vehicle. Auto parts aren’t just products—they’re crafts.” At the SAE exhibition, the delegation saw large-scale testing equipment that Chongqing lacks. Currently, product testing involves moving between departments and centers, which is inefficient. Yin Dexin, general manager of Chongqing Shenye Electronics, noted that competition in the auto market is driven by technological innovation. Detroit’s major automakers are continuously upgrading their entire development, production, and service processes using high-tech and IT solutions. The speed and efficiency of adopting new technologies, materials, and energy sources determine a product’s success in the market. Safety, environmental protection, and energy efficiency have become central to the industry. A third gap is the separation between parts suppliers and vehicle manufacturers, a trend that has boosted efficiency and reduced costs. After Delphi and Visteon split from GM and Ford, they became independent entities, driving global procurement chains forward. This shift has led to closer collaboration between vehicle and parts companies, turning them into strategic partners. As of 2003, Chongqing had 17 vehicle manufacturers, producing 400,000 mini-vehicles, 200,000 cars, 70,000 light trucks, and 20,000 heavy trucks. However, under the planned economy model, the focus was on整车 (complete vehicles) rather than parts. Despite having over 17,000 units of production equipment, the technology was outdated compared to national leaders. Most parts companies lacked serialization, had low R&D capabilities, and couldn't support整车 manufacturers effectively. The supply system was fragmented, with limited ability to meet the demand for modular and integrated systems. Currently, no local company can produce high-end components like ABS, airbags, or power steering. According to data, Chang’an Automobile has 271 suppliers, but only 47% are local. Qingling Automobile has 193 suppliers, with just 38% local. CNHTC has 23%, and Chang’an Ford only 20%. Moreover, Chongqing’s auto parts industry struggles to produce key components, and very few local firms can even enter the national or global supply chains. This highlights the urgent need for improvement in the region’s automotive ecosystem."

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