In the middle of last year, the "Global Finance Modern Project Complete Suspension" – a story once exclusively reported by *First Financial Daily* – was officially confirmed last week. High-level executives from GAC Group, including Chairman Zhang Fangyou, confirmed that Guangzhou Automobile’s modernization project has been completely stalled. Meanwhile, *First Financial Daily* also learned that Japan’s Isuzu Motors is set to withdraw from its Guangzhou Isuzu car project next week.
Guangzhou Automobile's Modern Project Stalled
Following the end of last year, Guangzhou Automobile Group Co., Ltd. and Toyota Hino Motors Co., Ltd. established GAC Hino Commercial Vehicles, while GAC Group and Hyundai Motor Co., Ltd. had already halted their modernization efforts three years ago. Last week, *First Financial Daily* reported that the land previously reserved for the Guangzhou Automobile Modern Project had been transferred to other companies. During an interview at the opening ceremony of GAC Hino at the end of last year, Zhang Fangyou clearly stated that the Guangzhou Automobile Group’s modern project had been grounded. He attributed this to issues with the foreign partner, Hyundai Motor Co., Ltd., which led to the project being largely put on hold.
The collaboration between Hyundai Motor and Guangzhou Automobile Group began in September 2004 when Hyundai approached Denway Passenger Car under GAC Group to negotiate a full-scale joint venture in commercial vehicles. In June 2005, both parties signed a memorandum of understanding, followed by the “Guangzhou Modern Commercial Vehicle Project Cooperation Foundation Agreement.†At the time, Guangzhou Automobile Group planned to establish the joint venture before the end of 2005, with a total investment of $1.24 billion, aiming to start production in 2007. To focus entirely on this project, Hyundai suspended its long-term cooperation with Jianghuai Automobile Co., Ltd.
By late 2005 and early 2006, site selection for the Guangzhou Automobile Modern Factory was complete, and construction of the Guangzhou Modern Avenue, built specifically for the new factory, started in October 2005. The factory, with a total investment of $1.24 billion, was located in Baoliang Village, Huadong Township, just opposite Dongfeng Nissan Passenger Vehicle Company. Nearby was a large logistics center in Guangzhou, and the Guangzhou Baiyun Airport was only a few kilometers away. The location was chosen due to its status as a key logistics hub. As part of Guangzhou’s automobile industry development, the annual production of 200,000 commercial vehicles was mentioned in the “Eleventh Five-Year Plan†of Guangdong.
However, by the end of 2005, the domestic commercial vehicle market began to decline. Additionally, in early 2006, Hyundai’s CEO, Zheng Mengjiu, faced bribery allegations, leading to the suspension of several projects, including the Guangzhou Modern Project. Although Hyundai resumed negotiations in 2007, the project remained stalled until it was completely abandoned. Zhang Fangyou noted that the large scale of the original plan caused significant losses upon the project’s halt, and the 2010 target of producing 230,000 commercial vehicles will likely be revised.
In GAC’s commercial vehicle strategy, besides Hino and Hyundai, there were also plans for Denway passenger cars and the Guangzhou Isuzu project. Zhang Fangyou indicated that these projects would eventually be integrated.
Isuzu Exits the Scene
Meanwhile, Japanese media reported that Isuzu Motors, Japan’s largest truck manufacturer, is planning to exit its bus joint venture with Guangzhou Automobile Group. Currently, Isuzu is in the final stages of negotiations and plans to sell its 49% stake in Guangzhou Isuzu Bus Company to GAC Group by the end of March.
This decision is linked to GAC Group’s strategic adjustments in commercial vehicles. According to an insider, after reorganizing Hino Motors with Toyota, GAC planned to restructure its passenger car assets, leading to Isuzu’s exit due to conflicts with the Hino project. Even Yangcheng Bus may undergo reorganization.
Isuzu’s withdrawal is partly due to fierce competition in the Chinese market, where low-cost domestic and Korean cars have dominated. This has severely impacted sales of Isuzu’s high-end products. Guangzhou Isuzu Bus, despite a capacity of 1,000 units per year, only produces 150–200 buses annually. After transferring shares, Isuzu will focus on cooperation with Qingling Motors.
Established in March 2000, Guangzhou Isuzu Bus Co., Ltd. was jointly owned by GAC Group (51%) and Isuzu (49%). With a registered capital of $46.8 million and a 100,000 square meter site, the company initially aimed to produce 800 vehicles and 400 chassis. However, actual annual output remains below 200 buses.
The GAC Hino Project was approved by the National Development and Reform Commission on July 30, 2023, with 50% investment from GAC and Hino. It reorganized Guangzhou Yangcheng Automobile and Shenyang Shenfei Hino Motors under the “one project and two bases†model. With a registered capital of 1.5 billion yuan and a total investment of about 3.1 billion yuan, the project aims to produce 20,000 heavy trucks and 30,000 light trucks annually by mid-2009. The Shenyang base will expand to 4,000 passenger cars and 5,000 chassis yearly.
Hino Motors, a major commercial vehicle manufacturer with a 50.2% stake, primarily produces trucks and buses. Its annual sales reach around 100,000 units, with a large portion exported overseas, including 2,000 heavy trucks to China each year. Zhang Fangyou mentioned that Hino has a tradition of producing models for Toyota, leaving open the possibility of GAC Hino operating as an OEM for Toyota. His statement has sparked new speculation about GAC Hino’s future.
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