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A model poses next to a Chery Riich M1 car at the Shanghai International Auto Show in this file photo. (NIR ELIAS/REUTERS)
A model poses next to a Chery Riich M1 car at the Shanghai International Auto Show in this file photo. (NIR ELIAS/REUTERS)

China’s ‘good-enough’ cars threaten global industry Add to ...

“The problem was our solution compromised the Panda’s NVH,” Mr. Dai says, using the acronym for noise, vibration and harshness, the key attributes of drive feel.

Mr. Dai’s engineers then tweaked the Panda’s suspension, adjusting the so-called rubber bushes, or isolators, to make them softer to better absorb shocks and vibrations.

Despite using cheaper materials and processes, Geely and CH-Auto were able to largely match the performance of the Aygo’s platform in terms of the vehicle handling and NVH, which Mr. Dai says was confirmed by a third-party testing company. More important, by tweaking the design and using cheaper materials and manufacturing processes, Geely and CH-Auto were able to produce a platform for the Panda with “roughly half” the Aygo’s cost, according to Mr. Dai.

Despite the advances in design, safety standards in Chinese-made cars still lag those of U.S. and European manufacturers, in part because its government doesn’t impose as stringent a body of safety requirements.

What’s more, Chinese car makers ignore what they consider minor, non-critical risks, such as using far fewer crash tests with dummies.

“If the client only gives me two-and-a-half years to design a car, then I can only eliminate major risks. And the smaller risks, well, there’s nothing we can do,” says CH-Auto’s president Mr. Wang.

China does have vehicle safety standards, and any auto maker launching a new car needs to meet them. But there is no required number of crash tests.

Geely and CH-Auto do not want to do as much crash-testing as global auto makers because creating prototype cars costs up to 2 million yuan a car ($316,000), CH-Auto’s Mr. Wang said.

A Geely spokesman, Victor Yang, would not say how many crash tests Geely conducted on the Panda. But Mr. Yang noted that the Hangzhou-based auto maker conducted “more than what’s typically performed in China.” For cars being developed today, it routinely conducts more than 70 crash tests, Mr. Yang says.

By contrast, an established global player such as Toyota routinely tests a new car by crashing it a “minimum 120 to 150 times,” according to a Toyota chief engineer who spoke on condition of anonymity. If the car is sold in many different markets around the world, Toyota crashes even more cars, he said.

Nevertheless, the Panda is a watershed product for both Geely and CH-Auto. The car’s stylized exterior – featuring a Panda-eyed grill and tail lamps in the shape of paws – was considered cute and timely when launched in 2008 to coincide with the Beijing Olympics.

The exterior contrasted with the car’s highly utilitarian interior, including exposed screws and a plasticky dashboard. The 1.3-litre, 86-horsepower motor pulls the Panda from a standstill to 100 kilometres an hour in an unthrilling 13.1 seconds. Nor is the Panda, like other no-frills Chinese cars, ready to meet the stringent safety regulations of Europe and America.

But there is one very eye-catching thing about the car: its price. A new Panda starts around 40,000 yuan ($6,400) in China and about 5,000 euros ($7,400) abroad.

After the Panda, CH-Auto’s business began booming. It developed or helped develop a slew of cars and sport-utility vehicles for Changfeng, an auto maker affiliated with Japan’s Mitsubishi Motors. The Changfeng projects then led to deals with Jiangling Motors Co. and Chongqing Changan Automobile Co., as well as Beijing Auto.

One of CH-Auto’s upcoming models is a Beijing Auto vehicle based on technology the company purchased from the now defunct Saab of Sweden.

CH-Auto also has a major contract from Dongfeng Motor Co. – the 50-50 joint venture between Nissan and Dongfeng Motor Group Co. The team will develop a subcompact car based on the Nissan March (known as the Micra in Europe) to buttress a new “indigenous” brand called Venucia launched in China earlier this year.

The advent of the good-enough car is emboldening Chinese auto makers to build up their own product development capabilities to rely less on CH-Auto and other independent engineering houses.

Geely, one of China’s top indigenous car makers, is expected to sell about 370,000 cars in China and 90,000 abroad this year. By 2016 the company forecasts its export volume will hit as high as 300,000 or possibly 400,000.

“My vision,” said Geely Chairman Li Shufu, “is to sell outside China the same number of cars we sell within China.”

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