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

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.