Shanghai could become China’s Detroit under a new five-year plan which proposes the construction of an international auto centre.

The Shanghai People’s Congress has approved the plan which calls for the city to invest Rmb35 billion (US$4.23 billion) to develop its automotive sector, considered as one of six ‘pillars of industry’ by the city’s government.

The proposed international auto centre would be the biggest Chinese production base for sedans, the largest car parts producer in Shanghai and the east China region, and the largest used car market, aftersales service centre and automotive exhibition centre in the country.

Shanghai hopes to raise the production value of its automotive industry to Rmb150 billion (US$18 billion) by 2005, assuming an annual 18 percent growth rate over the next four years is maintained. This would account for 14 percent of the value of Shanghai’s projected industrial output.

If the plan, which is largely dependent on the expansion of existing joint ventures with Volkswagen AG and General Motors, goes ahead, car production would be at least 750,000 units in 2005.

Six component groups will be established, covering air conditioning, electric and electronic equipment, chassis, transmission, forging and casting, and car body accessories.

The proposal expects local producers to reduce production costs by five to 10 percent per year with efficiency gains, to create new spare parts subsidiaries, develop their research capabilities and to generate substantial export earnings.

Preliminary planning for the automotive centre is already under way and it will be located in the Shanghai district of Anting. Construction should begin in the second half of this year.

To view related research reports, please follow the links below:-

Automobiles in China: A Market Analysis

Volkswagen Strategic Review