A New Domestic Policy

Phil Murtaugh, chairman and CEO, GM China Group, says that one word can be used to characterize China’s automotive industry over the past few years. That word is “growth.”

The showroom at Yah Dong Buick in Shanghai features (from left to right) the Regal, a pair of Excelles, a GL8 van and Sail (far right under the banner).

2003 saw vehicle sales growing by 36 percent or about 4.56 million units. That followed a year in which sales grew by 40 percent. China has now passed Germany as the world’s third largest vehicle market and could pass the U.S. by 2025, becoming the world’s largest car market.

“What I think is most impressive,” Murtaugh says, “is the fact that sales of domestically built passenger cars have risen 80 percent and 60 percent over the past two years, respectively.”

Through its seven joint ventures with Shanghai Automotive Industry Corporation Group (SAIC), GM currently builds a range of Buick products for the Chinese market including the Regal full-size sedan, Excelle mid-size sedan, Sail small car, GL8 van, Chevrolet Spark mini car and Wuling micro vans and minicommercial vehicles. GM is also importing the Saab 9-3 Sport Sedan and convertible and the Opel Vectra 3.2 V-6.

The company’s market share in China rose by one percentage point to 8.5 percent in 2003 and is tracking at 10.1 percent in the first eight months of 2004.

Cadillac has also joined the line-up. The imported CTS went on sale in August followed by the SRX in November. The XLR will be available sometime in the first half of 2005.

“We decided to market Cadillac because the premium and luxury segments of the market have been the fastest growing segments for the last three years running,” Murtaugh says.

The initial CTS and SRX models will be built at GM’s Lansing Grand River assembly plant in Michigan. The next phase will see U.S.-built vehicles imported as kits, assembled in China with the long-term goal being to build the cars locally if volumes reach the mid five-figure mark. “We think that the volumes of the SRX and the CTS will be enough to justify localizing it,” says Murtaugh.

Chinese car buyers don’t just shop price but also consider the dealership’s service after the sale. Yah Dong’s service department is open 24 hours a day, 365 days a year.

The company expects to double its vehicle assembly capacity from 650,000 to 1.3 million units by 2007.

While Murtaugh says that GM will continue to leverage its global portfolio to bring new vehicles to the Chinese market, that will not be enough.

“It’s not good enough to simply offer our Chinese customers what are essentially copies of GM products from North America and Europe or GM Daewoo products from Korea,” Murtaugh says. “Chinese vehicle buyers have their own unique tastes and preferences.”

Murtaugh cites GM’s strong relationship with joint-partner SAIC as one of the company’s biggest assets.

“Besides providing us with some great resources and helping us navigate China’s challenging bureaucracy,” Murtaugh says, “working with SAIC also gives us invaluable insight into what local customers are looking for in a vehicle.”

To create these vehicles for China, GM announced in June that it is investing $250 million to upgrade its Shanghai-based Pan Asia Technical Automotive Center (PATAC).

PATAC is an independent company with a separate board of directors, chartered in 1997 as a 50/50 joint venture between GM and SAIC, focusing on the areas of interior, exterior, powertrain calibration and chassis tuning. The facility was expanded in 2000 to broaden its focus on the entire vehicle. PATAC currently has 775 employees but expects that to grow to 820 by the end of the year.

“By 2010, our goal is for PATAC to be a selfcontained automotive development organization,” Murtaugh says.

GM began importing the Cadillac CTS this year. This CTS is one of several development vehicles used for suspension and engine calibration. Sitting among the clapped out and disguised Excelles, Regals and Buick vans are four Pontiac Grand Prixs, which are not sold in China. The Grand Prix, however, is built on the same platform that supports the new Buick LaCrosse, which replaces the Regal in North America.

PATAC has already opened a new prototype lab and Euro III and VI emission test lab with two emissions test cells running two shifts per day. The climate-controlled cell has a temperature variance from -20 to +50 degrees C. Emissions testing is very important because of the low-quality fuel in China which has a high sulphur and olefin content.

“We have a powertrain lab in place,” says PATAC President, Ray Bierzinski, “however we’re going to take that to the next level with additional dynamometers, measurement and teardown facilities and a temperature controlled dynamometer.”

A virtual reality design studio will come online at the end of the year. On the list of future improvements are an NVH testing lab with a semianechoic chamber and squeak and rattle component shaker and a kinematics and compliance lab that will eventually allow engineers to do virtual suspension testing. There are also plans for complete body-in-white welding and general assembly cells and a safety-impact testing lab.

The biggest addition will be a 4.3 sq. mi. proving ground that will feature straightaways, a ride and handling track, a dynamics pad, low-coefficient straightaways, a highspeed bowl and a durability road system.

Bierzinski says that the proving ground will be within a three-hour radius of PATAC. The site selection is still under negotiation. The new proving ground will allow GM to greatly expand its vehicle development capabilities. PATAC’s current road test facility is a 400 by 30 meter three-lane stretch, which is a condensed version of China’s roads.

A Different Look

PATAC’s design studio is one of 10 global studios that make up the GM global design community. James Shyr, PATAC director of design, supervises 62 designers who are charged with design, ideation and modeling, exclusively focused on the China market. The design center is capable of doing everything from initial sketches to full-scale clay models. There is a rapid prototyping studio, a color and trim studio, paint booth and a modeling studio.

“It’s a typical studio setup in a smaller package,” Shyr says.

A technician prepares a Regal for testing in one of PATAC’s two environmental test cells.

So far, designers have been charged with freshening up existing GM products for the Chinese market, adding new front and rear fascias, grilles, headlamps and taillamps to Buick Regals and Daewoo Lacettis. But that could change as China’s market grows.

Shyr’s crew designed the Kunpeng CAV (compact activity vehicle) concept that made its debut at the 2004 North American International Auto Show, one of two full-size vehicles selected to appear at the Michelin Challenge Design exhibit. The Kunpeng CAV is the second concept vehicle to be developed in China for the Chinese market.

Shyr’s group is currently in the process of adapting the styling of the concept to the existing production platform of the Wulang Sunshine micro van. The current Sunshine van is built by SAIC-GM-Wuling at a plant in western China.

Shyr says that the Sunshine Van is used by a lot of people in second and third tier cities. The small engine is fuel efficient and the flexibility of the vehicle can transform from a family van to a work truck.

“We are proposing the next generation of this car,” Shyr says, “and we are using (the Kenpung concept) as the inspiration.”

The Kunpeng CAV (compact activity vehicle) concept was one of two full-size vehicles that were a part of the Michelin Design Challenge at the 2004 North American International Auto Show in Detroit, Mich. Built by the design team at GM’s PATAC design center, the team is currently adapting the concept’s design to a production platform.