China's war of engines

Shanghai. August 22 (Gasgoo.com) ---Earlier this month, Guangzhou Honda, has obtained approval from Chinese government to set up a new engine plant, when Dongfeng Honda, Honda’s another joint venture in China could not meet Honda’s  growing engine demands.

China has 20 joint ventures set up by international automakers like GM and Toyota, and 16 home-grown auto manufacturers that can produce car engines. China’s home-grown automakers, like Chery and Geely, are vying to win the war of engines .

The engine is the heart of the car. An automaker must be able to win the war of engines before it could win the war of cars. Therefore both foreign and local automakers in China are trying to win the war of engines.

Last month, SAIC-GM-Wuling Automobile's new engine plant ran into operation, which is a minicab JV in China owned by GM, SAIC and Wuling Auto. SAIC-GM-Wuling's also the largest engine maker in China, whose production hit 460,000 units last year.

In this April, Tianjin FAW Toyota, Toyota's local business started making ZR engine with variable valve timing (VVTi), which is equipped on a new model of Corolla. This is first time the Japanese automaker put this type of engines into overseas production.

Besides the three, there are many foreign automakers seeking to expand the engine business, but most of them still keep key technology from their Chinese partners. A study made by SERI China, an industry research organization shows that most engine components of high-grade cars still have to be imported in CKD kits---there are 502,000 engines being assembled in China with the imported kits last year.

Along with the foreign automakers making profit in the engine market, the home-grown Chinese automakers are catching up. Before 2006, the six largest indigenous automaker including Chery, Geely, Brilliance, BYD, all used Mitsubishi engines. But now, things have changed.
 
On 6th August, Fiat and Chery completed an engine purchase deal, under which Chery will supply more than 100,000 1.6- and 1.8-liter petrol engines annually for Fiat cars assembled globally. All these engines are developed by Chery under the name "ACTECO", which is also the first Chinese local engine brand.

Chery's "ACTECO" engine 

Another local automaker Geely Auto launched its hybrid vehicle engine project last month. According to Geely and its partner's plan, the new engine will debut at the end of this year and targets for an annual output of 200,000 units.

The home-grown automakers are trying to squeeze into the high-grade auto market with their self-developed engines which threaten the foreign automakers' engine business. The Chinese-brand and foreign-brand engine makers’ war will escalate as China’s market demand for engines keeps growing.