"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 the most fitting witness to the development of Guangzhou's automotive industry. No one could have predicted that a once-quiet and struggling factory would eventually produce a highly sought-after 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 the industrial transformation of the entire city. Soon after, FENGSUN Bluebird emerged unexpectedly, and Toyota extended an olive branch to Guangzhou. A comprehensive automotive landscape began to take shape: the east was defined by Guangzhou Honda, the north by Dongfeng-Nissan cooperation, and the south by Guangzhou Toyota. Around these joint ventures, large auto parts clusters developed, including the Guangzhou Economic and Technological Development Zone, Huadu, and Zengcheng Yonghe. A thriving automotive cluster centered around GAC was rapidly forming. On June 28 this year, just a week after the merger with South Korea’s Hyundai, GAC Group Co., Ltd. officially launched after three years of operation. The previously low-key GAC suddenly made a strong entrance, becoming one of the most active players in the industry. Previously, GAC and Hyundai signed an agreement to produce commercial vehicles, establishing a new Guangzhou Hyundai Commercial Vehicle Base in Huadu. The first phase involved $430 million in investment, with annual production reaching 200,000 units by 2011, and total investment of $1.24 billion. Industry experts believe that the launch of the Guangzhou Hyundai Commercial Vehicle Project will help GAC complete its automotive layout and enhance its product range. It will fill gaps in heavy-duty models and revitalize the commercial vehicle segment. At this stage, GAC has matured significantly, covering passenger cars (mainly Guangzhou Honda and Guangzhou Toyota), commercial vehicles (Guangzhou Hyundai), passenger cars (Guangzhou Denway and Guangzhou Isuzu), as well as parts, light trucks, motorcycles, and service trade. Zeng Qinghong emphasized that Guangzhou Honda aims to achieve a production capacity of 300,000 units annually. Clustering benefits from nearby suppliers are evident, and with increased scale, the advantages of industrial clusters will become more visible. According to reports, GAC Group, especially Guangzhou Honda, has become one of China’s most competitive automakers, attracting many international parts 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),” it is expected that by 2005, Guangdong’s automobile production capacity will reach 650,000 units, and by 2010, the total output value of the province’s automotive industry will reach 360 billion yuan, with an average annual growth of 25%. By 2010, Guangdong’s auto production capacity is expected to reach 1.6 million units, with a domestic market share exceeding 15% and auto exports accounting for over 10% of the total. Behind these ambitious goals lies strong technological and sales support, as well as a story of transformation—“from sparrows to phoenixes.” From the start, Guangzhou Honda adopted the philosophy of “less input, faster output, and rolling development.” Within nine months of transforming the original factory, it achieved an annual production capacity of 30,000 vehicles. By 2001, it reached 50,000 units in four years, and in February this year, it advanced its 240,000-unit annual capacity target. With the expansion of production, Guangzhou Honda’s sales performance has been impressive. With only Accord, Fit, and Odyssey models, it sold 16,936 vehicles in October, accounting for 7.6% of the passenger vehicle market. From January to October this year, its cumulative sales reached 189,000 units, up 22.3% compared to the same period last year, ranking fifth in the industry. The success of Guangzhou Honda became known as the “Accord Myth,” directly prompting Toyota and Nissan to settle in Guangzhou. At the Guangzhou Auto Show, Japanese companies based in Guangzhou demonstrated rapid development. New models such as 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 officially launched in 2006, with a planned annual production of 100,000 units. Construction of a new factory has already begun. Guangzhou Automobile Engine Company, which produces the Camry engine, has an annual capacity of 300,000 units and serves as Toyota’s first engine export base in China. Clearly, Toyota wants to strengthen its strategic position in the Pearl River Delta, with GAC Toyota being a key bet. For Nissan, Guangzhou has proven to be a lucky place. In 2001, Fengshen Automobile moved to Huadu and began direct investment by Dongfeng in Guangzhou. In June of last year, Dongfeng Motor Co., Ltd., a joint venture with a total investment of 8.35 billion yuan, was formally established by Dongfeng and Nissan. The cooperation period is 50 years, with a planned production capacity of 380,000 units. Although the road to success had some twists, 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 performance increased by 169% compared to the same period last year, creating another miracle in the Chinese auto industry. Meanwhile, around the three major Japanese vehicle companies, Hitachi, Denso, Tiens, Stanley, and others have also invested in factories in Guangzhou, making the auto parts industry a hotspot for foreign investment. Lin Yuanhe, Executive Deputy Mayor of Guangzhou, stated, “Guangzhou has a solid industrial foundation, talent pool, and investment environment, making it the ideal location for major auto parts.” As the economic, cultural, scientific, and technological hub of South China, Guangzhou plays a central role in regional influence. Its economic radiating power extends to the Pearl River Delta, the southeast coastal areas, Hong Kong, Macao, and Southeast Asia—regions with concentrated foreign investment, high economic development, and strong purchasing power. This makes Guangzhou a key supplier for international commercial vehicle bases and global parts. Zhang Fangyou, Chairman of GAC Group, told reporters that Guangdong currently has the highest number of cars in the country, with the Pearl River Delta accounting for one-third of national sales. “With the rapid rise 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 believes that industrial clusters thrive through geographical proximity, promoting division of labor and reducing transaction costs and long-distance transport expenses. Industrial clusters offer clear advantages, such as increasing specialization, lowering costs, extending the industrial chain, enhancing ripple effects, and boosting competitiveness and regional brand recognition. In most countries, the automotive industry is accelerating through the model of industrial clusters.

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