The membership of Japan's Honda, Nissan and Toyota as part of Guangzhou's automobile family has built up the city's position as one of the nation's leading automobile bases, augmented by the local government's confidence in promoting the industry.

Earlier this month, the second plant of Honda's Guangzhou project, in co-operation between the Guangzhou Automobile Industry Group and Honda Technologies Inc, has broken ground.

Only one month ago, the gigantic Guangzhou Toyota project was jointly launched by Toyota Motor Corp and the Guangzhou Automobile Industry Group Co Ltd.

Guangzhou Honda's second plant is expected to realize the production of 120,000 sedans annually after it begins operation in the second half of 2006.

Guangzhou Toyota is expected to reach a production capacity of 100,000 Toyota's 'Camry' in the initial stage of operation in 2005.

"Hopefully, Guangzhou will be able to produce 130 million passenger vehicles annually by the year 2010, an industrial production output value of 300 billion yuan (US$36.14 billion)," said Zhang Guangning, mayor of Guangzhou, at an automobile industry forum during the 2nd China (Guangzhou) International Automobile Exhibition last week.

The senior official based the blueprint on the current production capacity of passenger vehicle enterprises in Guangzhou, their sales records, as well as the participated capacity of the new car projects.

At present, Guangzhou Honda and Dongfeng Nissan, through co-operation between Dongfeng Motor Corp and Japan-based Nissan Motor Co, are capable of yielding 400,000 passenger vehicles.

The city produced 18.33 million passenger vehicles in 2003, or 9.1 per cent of the nation's total, ranking the third largest auto manufacturing base after Shanghai and Changchun, in northeastern China's Jilin Province.

Guangzhou is willing to forge co-operative ties with any automobile producer worldwide, not limiting itself to Japanese players, he said.

Reliable sources say that the city is negotiating with France-based Renault for a possible joint venture in Guangzhou, though no further details are available.

The sustained market demand in Guangzhou, particularly in the Pearl River Delta, will favour the city's automobile industry, the mayor said.

The Pearl River Delta consumes over 25 per cent of China's passenger vehicles. And its core city of Guangzhou will maintain a year-on-year car sale growth of 17 per cent to reach 1.40 million by the year 2012.

The incredible market potential, comparatively low cost, adequate human resources, abundant development opportunities and improved auto-industrial links all unite to turn Guangzhou into a growlingly hot spot for global automobile giants.

According to Zhang Fangyou, president of Guangzhou Automobile Industry Group Co Ltd, the achievements of Guangzhou's automobile industry can greatly be attributed to the Guangzhou Honda project.

Founded in 1998, the project marked a turning point in the city's automobile industry.

For one thing, said the president, the project has secured over one hundred automobile spare parts enterprises in Guangzhou, now totalling more than 200, helping the automobile industrial chain take shape in the area.

This successful story has been very convincing to Toyota in its final decision to set up its largest manufacturing operation worldwide in Guangzhou, and to Nissan's strategy to relocate its passenger vehicle base, as well as its research and development centre, here.

The president said that the sustained development of the automobile industry has enhanced the general level of related industries including steel and petroleum as well.

Guangzhou's production output of steel and tyres last year was double that of 1998, the year when the Guangzhou Honda project was initiated.

According to Zhang Xiaoyu, vice-chairman of China Mechanical Industry League, Guangzhou represents the most ideal climate for automobile industries to take advantage of the municipal government's ceaseless efforts, in particular improvements in logistics services and industrial links.

The expert proposed that local authorities should do more to hammer out and put into practice policies promoting standardizing the automobile market, management of automobile financial facilities, investment mechanism reform and automobile marketing to keep a healthy development of the industry.

The local government should encourage car enterprises to spend more generously on the research and development of the industry, he added, and also suggested that local automobile enterprises should study the rural market, which, he thinks, in the long term, holds great reserves in the huge market potential.

ISUZU, a famous Japanese car supplier, has also set up a joint venture with Guangzhou Automobile Industry Group, specializing in research and development as well as production of high-end ISUZU coaches.

Other automobile projects in the city include the joint ventures of Guangzhou Yangcheng Automobile Co Ltd supplying light-duty vehicles; Guangzhou Foison Automobile Co Ltd for producing special-purpose vehicles, and Guangzhou Denway Bus Co Ltd in manufacturing large- and medium-sized buses.

Editor: Olivia