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Autos at 170 MPH Replace China Rice Paddies at GM Tracks: Cars

October 21, 2013

Autos at 170 MPH Replace China Rice Paddies at GM Tracks: Cars

A woman rides past a luxury Cadillac SUV at a dealership in Beijing. Photographer: Mark Ralston/AFP via Getty Images

About 2 1/2 hours’ drive west of Shanghai, the patchwork of paddy fields and small factories gives way to a giant oval embankment, partly shielded by a metal fence and clumps of trees.

The gatehouse is the first of several barriers to keep prying eyes from restricted areas; uniformed guards roam the compound’s 37 miles (60 kilometers) of roads; guests are handed black plastic stickers to cover their mobile-phone lenses.

This is General Motors Co. (GM:US)’s 1.6 billion yuan ($261 million) proving ground in Guangde county, a corner of Anhui province hemmed in by mountains that’s better known for its chestnuts. While test tracks have been part of vehicle development for decades, the new GM facility and others are another sign of the growing importance of China to global automakers.

Global carmakers are building bigger, more comprehensive testing facilities in the world’s largest auto market to develop models tailored for local tastes, such as bolder grilles and comfier back seats with added legroom. Volkswagen AG (VOW), vying with GM to sell 3 million units in China this year, is to open an even bigger proving ground next year.

“This is something which basically makes a statement: I believe this market is going to be one of the most -- if not the most -- important for the next 10 years,” said Ivo Naumann, the Shanghai-based managing director of advisory firm AlixPartners LLP. “Therefore, I need to fully cater to the demands and requirements of this market, and that means I have more and more product development inside China.”

Time Constraints

In a rapidly changing and growing market such as China, being able to respond nimbly to shifts in consumer trends also gives carmakers an edge, according to AlixPartners.

GM in April announced plans to spend $11 billion through 2016 on expanding in China. Four new assembly plants will, when completed, boost annual capacity to 5 million vehicles -- double the number of cars it sold in the U.S. last year.

Volkswagen, Europe’s largest automaker, opened a factory in southern Guangdong province last month, part of a 9.8-billion euro ($13.4 billion) commitment to build and develop more models in China by 2018. The Wolfsburg, Germany-based company plans to boost its line-up of offerings for Chinese customers to 90 cars, sport utility vehicles, vans and heavy trucks by 2015 from 70 now.

Stress Test

About 500 employees work at the year-old Guangde center, putting locally made Buicks, Chevrolets and Cadillacs through tests to mirror driving conditions in China, which overtook the U.S. in 2010 as the Detroit-based automaker’s top market.

“When you own the facility you can do what you need, and if you need the engineers to do something different you can test it out right then and there,” said Mark LaBaere, president of Pan Asia Technical Automotive Center Co., the research and development venture between GM and Chinese partner SAIC Motor Corp. (600104) “When you share a facility, sometimes a secured area is not so secure.”

Security is important in this slice of the business. Car-enthusaist websites and publications routinely try to be the first to show pictures of new models, which leads to spy-versus-spy intrigue, like cars disguised by patterned wraps or even temporary external bodies.

On a trip to Guangde last month, engineers put cars in black-and-white camouflage through repeated rounds on the 5.6-mile banked track, hitting speeds of more than 170 miles per hour. Vehicles were doused with salt water to test for corrosion; others ran through the gears driving up and down a custom-built bridge; sections of bumpy, cracked and pot-holed road stressed suspensions and durability.

The results are recorded, analyzed and improvements made at GM’s research center in Shanghai, where it also operates factories with SAIC Motor.

Testing Home

GM’s models built in China -- including the Buick LaCrosse and Chevrolet Cruze hatchback introduced this year -- are tested at Guangde. Before, engineers had to decamp from Shanghai to a rented government-owned center in Beijing. Or ship cars to GM tracks overseas, delaying the process.

The Guangde investment has also proved a boon for some local businesses, such as the restaurant and hotel run by Sun Xiaoqin.

“Roads around here have improved,” said Sun, 45, who farms the vegetables and chickens she serves to diners. “It’s good that GM chose our town. More people come through now, and I have more customers.”

To contact Bloomberg News staff for this story: Alexandra Ho in Shanghai at aho113@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net


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