Wuhan's automotive sector employs more than a million people. File photo: Volvo
Wuhan's automotive sector employs more than a million people. File photo: Volvo

This is China’s motor city

By Yao Yuan and Wu Zhi Time of article published May 16, 2016

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Wuhan, China - Jiangxia District in central China's Wuhan City takes pride in its young car culture: streets here are named after Chevrolet, Buick and Cadillac.

People introduce their hometown as “China's Motor City,” and many young people expect to work in the automotive industry when they leave school or college. The district is home to a General Motors plant that opened in 2015 and assembles 1300 Buick Excelles a day, at full tilt, supporting an ecosystem of dozens of component suppliers.

Just across the Yangtze River is a new Dongfeng Renault plant that opened in February, a joint venture with an planned eventual capacity of 300 000 cars a year. The riverfront is at the heart of the city's ambitions. Wuhan attracts foreign investment partly through ease of water transport and proximity to the inland market.

The city was founded on steel and the car industry is seen as a way of weaning the city off over-reliance on a declining industry. Once China's biggest steel maker and pride of the city, Wuhan Iron and Steel is now under pressure to cut excess capacity like many others. Board chairman Ma Guoqiang has said that as many as 50 000 workers “will need to find another job.”

Thankfully for those about to be laid off, Wuhan is home to nine car plants, including joint ventures with Renault, Peugeot Citroen and Honda, plus dozens of component makers. The auto industry now supplies 20 percent of the city's industrial output and employs more than a million residents.

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A personnel manager with Dongfeng Peugeot Citroen Automobile said the number of assembly workers was actually falling as robots take their jobs, but more jobs are opening up among component suppliers and at vehicle storage facilities. In the eyes of local people, the car industry is where the action is.

Kang Mansheng, 35, who works at a component factory in Jiangxia, said: “Wuhan is becoming a city of cars, attracting billion-dollar projects, and many smaller plants. I came back because I saw the potential here.”

Kang spent eight years as a driver and mechanic in east China but came back in 2015 with his wife and many colleagues as local salaries improved.

“Many people have had similar experiences,” he said. “They have worked in car businesses in other cities and returned to Wuhan with experience and skills. They have faith in the future of the city.”

Apart from picking up the employment slack left by steel mills, the auto industry is a major customer of steel producers, and the city sees it as a stimulus to upgrading the steel industry. Wuhan Iron and Steel now supplies steel panels to local car plants, including 70 percent of Dongfeng Peugeot Citroen Automobile's panels, as well as pressings for Volkswagen and Land Rover.

Dongfeng Peugeot Citroen technical centre director Li Minghuan said Wuhan Iron and Steel began supplying simple pressings in 2000 and is now a strategic supplier for Dongfeng Peugeot Citroen - the two companies even have a joint R&D lab.

“Our cooperation is growing,’ Li said, “and the collaboration of two heavyweights can raise the industrial and technical levels of the whole city.”

A Wuhan Iron and Steel slaes department spokesperson siad it sold steel to dozens of carmakers in an around Wuhan, helped by low-cost water transport on the Yangtze.

Auto fever

Wuhan is not the only Chinese city switching to car production. Upstream on the Yangtze, Chongqing has similar ambitions. Home to Changan Automobile and a new Beijing Hyundai plant, the southwestern city is working toward an annual capacity of four million cars by 2017.

Other cities producing more than a million cars annually include Shanghai, Beijing, Changchun and Guangzhou, but overcapacity concerns are rising as the car market becomes saturated. China sold more than 24.5 million cars in 2015, up 4.7 percent year-on-year, but that rate was down by 2.2 percentage points on 2014.

Yet there are still positive signs. Dong Yang, executive vice chairman of the China Association of Automobile Manufacturers, cited low car ownership (only about 30 percent of Chinese families have a car) and anticipated future economic growth as mitigating factors against oversupply.

Industry analyst Jia Xinguang also saw great potential in western cities, where the market remains unsaturated and unfettered by purchase limits, but warned of the pitfalls inherent in any attempt to emulate the United States' Detroit, a city now virtually bankrupt through over-reliance on one industry.


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