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Chang’an aims to make better cars for China market with help from U.S. engineers

December 15, 2011

In the last decade many foreign automotive manufacturers have set up research, development , and design centers in China.   Now, a Chinese automaker is taking a page from that play book. Chang’an Group, www.globalchana.com  China’s third largest automotive group, has nine research and design centers in five locations around the world. The most recent addition is the Changan U.S. Research and Development Center in Plymouth, Michigan. www.changanus.com

Chang’an (or Chana, as it goes by in some circumstances) isn’t looking to design cars for the U.S. market there, however. At least not yet. It aims to design cars for China that are just as good as the foreign brands that still dominate the Chinese market.

“First Changan will make its own domestic vehicles competitive with joint venture products,”  Su Hong, vice president of Changan’s U.S. R&D center told me.  “Then we can talk about exporting.”

Chana recognizes what many domestic Chinese automakers refuse to admit—it lacks the fundamental knowledge needed to make a really good car.  Partnering with foreign automakers was supposed to remedy that situation. Chana has joint ventures with Suzuki, Ford, and Mazda. But while those partnerships have given Chana a lot of manufacturing knowledge, they haven’t taught Chana enough about how to design and engineer really good cars, says Su.

“There is a huge gap in the performance and quality because the foreign products are designed by foreign company and they didn’t give Chana the design and engineering know how,” he says.  “Particularly how to design performance.”

Performance seems to be Su’s mantra, and that make sense. Chana’s U.S. R&D Center will focus on the chassis, which certainly has a huge impact on performance.  That includes chassis design and control, brakes, steering, suspension, and tuning and testing, says Su.  It will concentrate on SUVs/CUVs and D-segment, or premium, sedans.

“Changan already has small vehicles in production,”  says Su. “It needs D segment and SUVs.  (Its engineers) don’t have this kind of design experience. Also we have to improve the quality, and enhance performance.”

The U.S. r&d center will also work with Tier One suppliers on motors, batteries, and engines for electric vehicles, says Su.  But he doesn’t see the EV segment blossoming anytime soon.  “There are two issues,” says Su, “battery and cost. We are still looking for a breakthrough in technology for larger market acceptance. There is still a long ways to go.”

The Chang’an  Automobile Group is China’s fourth largest auto group. According to LMC Automotive Inc.,   www.lmc-auto.com in the first eleven months of 2011 it sold 705,551 light vehicles, down 21% on-year and 672,112 light commercial vehicles, down 29%. Chana’s passenger vehicles include Ford and Mazda-badged cars as well as a handful of Chana-badged cars.

The Group acquired two other Chinese brands, Hafei and Changhe, in 2009 as part of the central government’s industry consolidation strategy.  http://www.chinadaily.com.cn/business/2009-11/11/content_8947483.htm  Integrating those brands into its operations apparently took a lot of the Group’s time and energy. According to LMC’s November China report, “Chang’an found little time to improve its products and sales channel. This is why the company’s performance of passenger vehicles and light commercial vehicles performed poorly.”

That’s too bad because Chang’an has invested a lot in setting up a global R&D footprint.  “Changan has an unique strategy for its global product development system,” says Su.  “It has product development centers in five countries. “

In China, Chana has r&d branches in Chongqing,  Shanghai, Beijing, Harbin, and Jiangxi.  It also has four overseas centers.  Six years ago, Chana established a center in Torino, Italy focused on interior design, says Su; four years ago it opened its Yokohama, Japan center focused on interior trim and modeling; a year and a half ago, it opened the Nottingham, U.K. center focused on powertrain and transmission. Almost exactly one year ago, the U.S. center opened in Michigan.

Why Michigan? Chana did its homework. Of the seven largest automakers globally, six have tech centers in Michigan, says Su. Many top Tier One and Tier Two suppliers also have tech centers here, he says. So there is plenty of engineering talent (such as Su). Also, are many specialized service firms that can do chassis testing and transporting, as well as proving grounds. “If you want to do vehicle development, Detroit is the place,” says Su.

So what has the new Center accomplished in its first year? Mainly hiring, says Su.  He was one of the first hires.  Su, who has a PhD in vehicle dynamics from a Canadian university and worked for years in the U.S. for Ford and Visteon, shares the vice presidential duties with another VP who is from China.  “I am the local hire,” says Su. The Center has hired more than 20 engineers so far; it aims to grow its staff to 150 within five years. Nationality is not a consideration, expertise is, he says.

Chana’s strategy—drawing on international design and engineering talent—certainly has merit.  `The real challenge for Chana, however, will be to take those designs and translate them into a world-class vehicles.  That requires attention to process technology and quality control in the manufacturing process that many Chinese  companies have had trouble achieving.  Su says Chana’s foreign partners have passed manufacturing knowhow onto Chana.  The proof will be in the vehicles Chana produces in the next five years.

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4 Comments leave one →
  1. Lawrence permalink
    December 29, 2011 4:12 pm

    Great article. Chana does deserve a lot of credit for branching out globally. It has taken the vanguard initiative to produce its own product designs, being one of the first to venture abroad to Turin, Italy. Its global exposure will no doubt pay off over time.
    In that respect if stands in sharp contrast to highly subsidized giant FAW, which depends on the foreigners (VW,Toyota, Mazda) to come to its turf.
    But despite the advantages gleaned from research and development in faraway places, the “quality” at Chang’an will only come if the mind of the employee doing the assembly in China is reformed.

  2. December 29, 2011 8:50 pm

    Hi Lawrence,
    Yes, the old process technology issue. I agree that Changan talks a great game and seems to be making good moves, in spite of the fact that it, too, is a giant SOE. But that talk and action needs to extend all the way down to every manager and assembly line worker in the plants or it won’t matter.

    Happy New Year!
    Alysha

  3. Bill Fisher permalink
    January 20, 2012 5:47 am

    I believe the assembly workers in China can bolt together a fine automobile. ChangAn has done what any smart Chinese auto maker must do to succeed if they intend on making their mark in the Western World. The Chinese auto market has far different needs than we in the U.S. Our needs for acceleration, handling and spot on fit and finish are only the beginning. This is a society that has been automotive driven for the better part of 80 years. China’s average driver has been behind the wheel of a car for only a few short years. Where this really begins to matter is at the engineering stage. How can a Chinese engineer who may well have ridden a bicycle to work be expected to understand what we look for when we open the door to our car in the morning. Beyond that there is the issue of materials. As Alysha has pointed out, this is a country where they cheat on things like baby formula to save a few bucks. Rubber seals, vinyl and leather components in Chinese automobiles are all suspect compared to Western designed and built autos. There are a lot of hurdles to be jumped in making the move into our market. It will take a serious effort and the willingness of the Chinese to follow each step of the process with the careful guidance of Western help or they will be subject to eventual failure. The lack of a Western engineering center, most preferably in the Detroit area, is what has held Chery back all these years. I say good luck to ChangAn and I applaud that they have taken a very important step into reaching for the global market. Terrific article Alysha and Happy New Year to you. By the way, Ivce relocated back to Newport Beach and hope to meet with you soon.

    • January 20, 2012 6:29 pm

      Hi Bill. Thanks for your comment and welcome to SoCal! Look forward to seeing you in the Year of the Dragon.

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