Sichuan will develop its automobile industry
In a significant move, General Motors (GM) has announced a strategic acquisition deal with Sichuan-based Tengzhong Heavy Industry Machinery Co., Ltd. (Tengzhong Heavy Industry), under which the Hummer brand will be transferred to the Chinese company. This marks a major shift in the ownership of one of the most iconic luxury off-road vehicle brands. Tengzhong Heavy Industry will not only acquire the brand but also take over all its equity, management teams, and operational structures. The news has drawn widespread attention, as this once lesser-known Sichuan-based firm now stands at the center of a high-profile automotive deal.
Although the acquisition is still pending official approval from relevant government authorities, Tengzhong Heavy Industry has already begun the process and received support from local officials. According to prior agreements, the company plans to invest heavily in establishing a new production line for Hummer in Chengdu's Longquan Economic Development Zone. A dedicated factory has been prepared to welcome the brand, signaling a strong commitment from both the company and local government.
Analysts believe that this acquisition reflects a broader strategy by Tengzhong Heavy Industry to promote the development of the automotive industry in Sichuan. The province is increasingly positioning itself as a key player in the national automotive landscape. In response to the growing importance of the sector, Sichuan is set to release a local "Regulation on the Adjustment and Revitalization of the Automotive Industry," aiming to strengthen its automotive manufacturing base.
The plan includes focusing on low-end car markets, developing medium trucks and large passenger vehicles, integrating automotive resources, building independent parts systems, and creating strong local automotive brands. These efforts are part of Sichuan’s broader industrial restructuring strategy. The regulation is expected to be finalized within two months after being submitted for approval.
Historically, Sichuan's automotive industry suffered a decline after Chongqing, once a major vehicle production hub, was separated. In 2007, Sichuan accounted for just 2% of China's total vehicle output. Despite this, the province currently hosts over 20 automobile manufacturers, 16 agricultural vehicle companies, and more than 600 auto parts firms. While there are still gaps compared to other leading provinces, the scale of Sichuan’s auto industry reached tens of billions of yuan in 2008, with auto parts alone showing strong growth.
Recent years have seen steady progress in Sichuan’s automotive sector. By 2008, the province produced 76,700 vehicles, up 16.2% year-on-year. From January to May of this year, vehicle output surged by 43%. To further boost the industry, Sichuan has long prioritized automotive development, aiming to create an integrated system covering passenger cars, off-road vehicles, trucks, and components.
Looking ahead, the Chengdu Automobile Production Base is expected to attract new projects, focusing on energy-efficient and environmentally friendly vehicles. By 2010, the region aims to produce between 100,000 and 200,000 units annually, while expanding truck and special vehicle production capacities. Additionally, the development of key auto parts like engines and transmissions is a priority.
Sichuan's strategic location in Southwest China, combined with the government’s Western Development Policy, provides a strong foundation for the automotive industry. Its influence extends across Central, South, Southwest, and Northwest China. As a regional hub, Chengdu offers convenient logistics and market access, making it an attractive location for major automakers such as FAW, Toyota, Brilliance, and Geely.
With multiple projects underway in the Chengdu Longquanyi Economic and Technological Development Zone, including FAW-Volkswagen’s 350,000-vehicle production base and Geely’s 100,000-unit facility, the region is rapidly becoming a key automotive center. Surrounding cities like Mianyang and Deyang are also seeing investments in light trucks and SUVs, reinforcing Sichuan’s role as a growing automotive hub.
Local suppliers play a crucial role in supporting these developments. Sichuan boasts a well-established auto parts industry, including molds, welding, and machine tools, which provide essential components for major manufacturers. Combined with a robust domestic market—where private car ownership is rising fast and demand accounts for 4.7% of the national total—Sichuan is well-positioned for sustained growth in the automotive sector.
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