"Without Guangzhou Honda, there would be no Guangzhou Motor City today," said Zeng Qinghong, Vice Chairman and General Manager of GAC Group. This local-born leader has become one of the most fitting witnesses to the evolution of Guangzhou’s automotive industry. No one could have predicted that a struggling factory on the brink of collapse would eventually produce a highly popular car that remained in short supply for years. Moreover, Guangzhou Honda has become Honda's most profitable subsidiary globally. The success of Guangzhou Honda accelerated industrial development across the city. Soon after, FENGSUN Bluebird emerged, and Toyota extended its hand with an olive branch. The big picture of Guangzhou’s automobile industry began to take shape: the east was dominated by Guangzhou-Honda, the north by Dongfeng-Nissan, and the south by Guangzhou-Toyota. Around these joint ventures, large auto parts clusters formed, including the Guangzhou Economic and Technological Development Zone, Huadu, and Zengcheng Yonghe. A thriving Guangzhou automotive cluster centered around GAC is rapidly taking shape. On June 28 this year, just a week after the merger with South Korea’s Hyundai, GAC Group Co., Ltd. was officially established. Known for being low-key, GAC suddenly became a major player in the industry. Previously, GAC and Hyundai agreed to co-produce commercial vehicles, forming a new Guangzhou Hyundai Commercial Vehicle Base in Huadu. With a first-phase investment of $430 million, the plant aimed to produce 200,000 units annually by 2011, with a total investment of $1.24 billion. Industry experts believe that the launch of the Guangzhou Hyundai Commercial Vehicle Project will complete GAC’s product lineup, filling gaps in heavy-duty models and revitalizing its commercial vehicle business. At this stage, GAC’s development is quite mature, covering segments like Guangzhou Honda and Toyota for passenger cars, Guangzhou Hyundai for commercial vehicles, and Guangzhou Denway and Isuzu for other models. Alongside parts, light trucks, motorcycles, and service trade, the company is building a solid foundation. Zeng Qinghong noted that with a production capacity of 300,000 units at Guangzhou Honda, nearby supporting companies would generate clustering benefits. As the automotive industry scales up, the advantages of industrial clusters become more evident. It is reported that GAC, especially Guangzhou Honda, has become one of China’s most competitive automakers, attracting numerous international suppliers—mainly Japanese companies investing in Guangdong. In the Guangzhou Economic and Technological Development Zone alone, nearly 40 parts manufacturers have invested over $500 million. According to the Guangdong Provincial Government’s "Nine Major Industries Development Plan (2005–2010)," Guangdong aimed to reach 650,000 car production capacity in 2005, growing to 1.6 million by 2010. The industry's output value was expected to hit 360 billion yuan, with a 25% annual growth rate. Guangdong’s domestic market share would exceed 15%, and car exports would account for over 10% of total exports. Behind this ambitious plan lies strong technological and sales support, along with the legend of "sparrows turning into phoenixes." From the start, Guangzhou Honda followed a model of "less input, faster output, and rolling development." Within nine months of transforming the old factory, it achieved a 30,000-unit annual capacity. By 2001, it reached 50,000 units in four years, and by early 2006, it advanced its 240,000-unit capacity target. With expanding production, Guangzhou Honda also saw impressive sales. With only Accord, Fit, and Odyssey models, it sold 16,936 units in October, accounting for 7.6% of the passenger vehicle market. From January to October, cumulative sales reached 189,000, a 22.3% increase from the previous year, ranking fifth in the industry. Guangzhou Honda’s success gave rise to the “Accord Mythology,” prompting Toyota and Nissan to establish themselves in Guangzhou. At the Guangzhou Auto Show, Japanese companies showed remarkable growth. New models like the 2006 Accord, GAC Toyota New Camry, Nissan Teana, and Tiida are set to impact the Chinese market next year. According to Rocky Rock, General Manager of Toyota (China), the new Camry will be launched in 2006, producing 100,000 units annually. Construction of a new factory has already begun. Meanwhile, Guangzhou Automobile Engine Company, which produces Camry engines, has an annual capacity of 300,000 units, serving as Toyota’s first engine export base in China. Clearly, Toyota is strengthening its position in the Pearl River Delta, with GAC Toyota as a key bet. For Nissan, Guangzhou has been a lucky ground. In 2001, Fengshen Automobile moved to Huadu and started direct investment by Dongfeng. In June last year, Dongfeng Motor Co., Ltd., with a total investment of 8.35 billion yuan, was established by Dongfeng and Nissan, with a planned capacity of 380,000 units. Although the road was not smooth, Dongfeng Nissan quickly achieved a "double harvest." The introduction of Scorpio, Tiida, and Tiida brought it into the fast lane. In the first ten months of this year, its sales increased by 169% compared to the same period last year, creating another miracle in the Chinese auto industry. Around the three major Japanese vehicle companies, Hitachi, Denso, Tiens, Stanley, and others have also set up factories in Guangzhou, making the auto parts industry a hotspot for foreign investment. Lin Yuanhe, Executive Deputy Mayor of Guangzhou, stated, "Guangzhou has a strong industrial base, talent pool, and investment environment, making it ideal for auto parts manufacturing." As the economic, cultural, scientific, and information hub of South China, Guangzhou’s regional influence is key to becoming the automotive center of the region. Its economic radiation includes the Pearl River Delta, southeast coastal areas, Hong Kong and Macao, and Southeast Asia—areas with high concentrations of foreign enterprises, developed economies, and strong purchasing power. This makes Guangzhou a crucial supplier for international commercial vehicle bases and global parts. Zhang Fangyou, Chairman of GAC Group, told reporters that Guangdong now has the highest number of cars in the country, with the Pearl River Delta accounting for one-third of national sales. "With the rapid growth of the auto industry, Guangdong has become the largest automotive production base in South China, laying a solid foundation for the development of the Guangzhou automotive cluster," he said. He believes that industrial clusters promote efficiency through geographical proximity, reduce transaction costs, and enhance competitiveness. In most countries, the automotive industry is advancing through industrial clusters.

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