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Gao Feichang, a reporter from Economic Observer Headquartered in Changzhi City, Shanxi Province, Chenggong Automobile is a light commercial vehicle company that specializes in the production of light trucks and minivans. Although it has been engaged in automobile manufacturing for 15 years, it has not been well known to the outside world. On July 31, Chenggong Automobile held a "Chenggong Car Manufacturing Co-creation Conference" in Changzhi, with the participation of many dealers and users. At the conference, Wang Jingyu, deputy general manager of Chenggong Group's automotive business department, announced a "super wealth creation plan" - "send 7 minivans for free a week" to users and fans in order to quickly expand the brand's recognition among users.

Wang Jingyu, Deputy General Manager of the Automotive Division of Chenggong Automobile Group

"One of the difficulties in brand development at present is expanding channels. In the process of establishing sales channels, some investors do not understand Chenggong Auto and sometimes mistakenly believe that we are an agent that sells cars, but in fact we are a complete vehicle manufacturer that builds and sells cars." A person in charge of Chenggong Group told Economic Observer.

Compared with well-known companies in the industry such as SAIC-GM-Wuling, Dongfeng Xiaokang, Jiangling Motors, Foton Motor, JAC Motors, and Changan Kaicheng, Chenggong Auto is not a "newcomer" in terms of industry qualifications, but it has not been able to develop and expand its automotive business for a long time. Data shows that Chenggong Auto currently produces and sells about 20,000 vehicles a year.

Through this "Car Manufacturing Co-creation Conference", Chenggong Auto intends to open up the automotive market. In addition, combined with Chenggong Group's multi-field business structure, Chenggong Auto also hopes to find its own new development path in the era of new energy and intelligence.

Backed by the 10 billion group

According to the official website of Chenggong Group, the group was established in 1998 and has developed from a single coal trade to a multi-industry comprehensive private enterprise in coal mining and shipping, automobile engine and vehicle manufacturing, general aviation services, real estate, petrochemicals, etc. Currently, it has more than 5,000 employees, total assets of 11.435 billion yuan, and net assets of 6.672 billion yuan. In 2023, it will achieve sales revenue of 3.85 billion yuan and pay 548 million yuan in taxes and fees throughout the year.

The Success Group defines its main business as "one body and two wings". The "one body" refers to the energy sector with coal as the core, and the "two wings" refer to the general aviation service sector and the automobile sector. The energy sector is the current core business guarantee of the Success Group, and general aviation services and automobiles are two sectors that are constantly developing.

In terms of energy, Liansheng Company, a subsidiary of Chenggong Group, owns 7 modern coal mines with a coal production capacity of 8.7 million tons; Chenggong Coal owns K18 self-owned vehicles, 3 railway coal collection and transportation stations, and has a shipping capacity of 16 million tons. It is mainly engaged in road and rail sales of coal, and its business covers the fields of electricity, chemical, steel, etc.

In the general aviation sector, Chenggong General Aviation entered the general aviation service field in 2022. Shanxi Chenggong General Aviation Co., Ltd. was established in February 2010 and listed on the "New Third Board" in 2015, becoming the first fixed-wing general aviation company on the "New Third Board" in China. At present, it has a CCAR-145 maintenance unit, a Guangzhou branch and a wholly-owned subsidiary. It has CCAR-135 and CCAR-91 operating qualifications, and manages a total of 36 aircraft of various types. It mainly engages in artificial weather modification, emergency rescue, short-distance transportation, aviation forest protection/fire fighting, business aircraft agency/trusteeship, private driver license training, atmospheric physics detection, aerial photography and aerial survey, aviation tourism and ground service agency and other businesses.

In the automobile sector, Chenggong Automobile has a full industrial chain including R&D, production, sales and after-sales service, and has two independent vehicle production bases in Changzhi and Zunyi. Among them, the Changzhi Automobile Manufacturing Plant has an annual production capacity of 300,000 vehicles, with 120,000 vehicles put into production in the first phase; the Guizhou Automobile Manufacturing Plant has an automobile production capacity of 200,000 vehicles. Chenggong Automobile's products include traditional fuel vehicles, methanol vehicles, CNG vehicles, pure electric logistics vehicles and other microvans and mini trucks, which are mainly used in urban logistics, rural-urban logistics, and passenger transportation.

"Chenggong Automobile is the only automobile company in Shanxi Province that has full production qualifications for commercial vehicles and passenger vehicles." The above-mentioned person in charge of Chenggong Group emphasized.

15 years of car manufacturing

Chenggong Group entered the automobile industry in May 2006, when it reorganized Huaihai Engine Co., Ltd. Huaihai Engine Co., Ltd. was one of the earliest companies in China engaged in the manufacture of micro-car engines. According to the above-mentioned person in charge of Chenggong Automobile, Huaihai Engine had provided "technical support" to other domestic micro-car engine manufacturers such as Dong'an Power and Dongfeng Xiaokang in the early days.

In June 2009, Chenggong Automobile Manufacturing Co., Ltd. was formally established. In April 2010, Chenggong Automobile Manufacturing Co., Ltd. acquired Guizhou Aerospace Yuantong Automobile Manufacturing Co., Ltd. and renamed it Guizhou Aerospace Chenggong Automobile Manufacturing Co., Ltd. In August 2010, the first mini car of Aerospace Chenggong Automobile, "Chenggong No. 1", was launched in Hailar. In June 2014, the first batch of export vehicles of Chenggong Automobile was shipped to Egypt, Peru and other countries. In June 2016, Chenggong Automobile released new energy electric products.

In the past 15 years, Chenggong Auto has mainly developed in the field of light commercial vehicles. In terms of business strategy, Chenggong Auto has developed domestic and overseas markets. In July 2006, Chenggong Group established Chenggong Yichi Technology Co., Ltd. in Beijing, which mainly engages in the import and export of engines and automobiles. At present, Chenggong Auto's products have been sold to 46 countries and regions, including Asia, the Middle East, North Africa, and South America. For example, overseas factories have been built in Brazil and Myanmar, and qualifications and certifications have been obtained in 23 countries and regions around the world.

The person in charge of overseas market business development at Chenggong Auto said that Chenggong Auto's overseas sales will reach 4,000 vehicles in 2023, and the goal this year is to double it to 8,000 vehicles.

Over the past decade, China's micro-commercial vehicle market has experienced a fierce elimination competition. Many companies have already declined in the competition. For example, Hafei Automobile and Changhe Automobile have gone bankrupt. Changan Commercial Vehicle, Dongfeng Xiaokang, SAIC-GM-Wuling and others have also made major product adjustments in recent years due to the shrinking micro-commercial vehicle market.

From a horizontal comparison of the industry, Chenggong Automobile has not been able to gain an advantage in the light commercial vehicle market in the past decade, but this has also allowed it to avoid the drastic elimination process to a certain extent. In the current light commercial vehicle market, consumers have high requirements for product quality and reliability, and it is no longer the "low quality and low price" development stage of more than ten years ago.

In order to improve product technology and quality, Chenggong Automobile has introduced advanced manufacturing technology and production lines from Germany, Japan, Italy and other countries, including stamping, welding, painting and assembly. The factory uses domestically advanced automated intelligent stamping lines, robot welding production lines, German DURR fully automatic painting production lines and modern assembly production lines. These "high configurations" ensure that Chenggong Automobile's product quality and production efficiency are at the top level of the industry.

From commercial vehicles to new energy

From the perspective of brand positioning, Chenggong Automobile focuses on "national wealth-creating vehicles" and its target users are the vast number of urban and rural wealth creators. The products launched by Chenggong Automobile include the heavy-duty mini truck Chenggong Zebra (price range: 36,600-61,800 yuan), the rear double-wheeled large mini truck Chenggong Wildebeest (price range: 57,800-61,800 yuan), and the electric logistics vehicle Chenggong Camel (price range: 119,800-124,800 yuan). Compared with other competing products of the same level on the market, Chenggong Automobile products have obvious cost-effectiveness advantages.

At present, urban and rural logistics are booming. Chenggong Automobile has focused its product development on the upgrading and innovation of logistics vehicles, creating products for different logistics scenarios, such as fruit and vegetable cold chain transport vehicles, building materials and home transport vehicles, mobile stall vehicles, etc. These vehicles can also take into account commuting. Chenggong Automobile has launched as many as 33 models based on the above three models. Among them, 22 models are mainly supplied to the domestic market, and are optimized and designed in combination with local characteristics and actual use environment; the other 11 models are aimed at overseas markets and are transformed in accordance with the needs of overseas market users.

While continuing to expand the fuel vehicle market, Chenggong Auto is also promoting the research and development and production of new energy vehicles. In the field of technology research and development, Chenggong Auto said that it has mastered the core technologies of "three electrics" including batteries, motors, and electric drives. In addition, it is actively exploring multiple research projects such as VCU vehicle control system, hydrogen fuel cell platform, and BMS power battery management system.

In terms of R&D investment, Chenggong Auto has established cooperative relationships with many well-known domestic universities such as Taiyuan University of Technology, Beijing Institute of Technology, Tianjin University of Technology, and Tianjin University, and has carried out multiple R&D projects such as pure electric vehicle R&D and power battery safety system R&D. Chenggong Auto also cooperated with Central South University to build a Chenggong Auto Doctoral Workstation, and has built a Shanxi Postdoctoral Innovation and Practice Base. Scientific research funds are increasing year by year, and R&D investment in 2023 will exceed 70 million yuan.

In addition to producing commercial vehicles, Chenggong Automobile also has the qualifications to produce passenger vehicles. Looking to the future, Chenggong Automobile intends to test the waters of passenger vehicle development. It is understood that Chenggong Automobile has developed new models such as pickup trucks that are more inclined to the riding experience of passenger vehicles. In addition, due to Chenggong Group's many years of experience in general aviation services, Chenggong Automobile is also actively developing new products such as low-altitude manned aircraft in order to get a share of the boom in the development of the "low-altitude economy".

For Chenggong Auto, the most important thing at the moment is to do a good job in its main business of light commercial vehicles. A person in charge of Chenggong Auto said that the short-term and medium-term goal of the automobile sector is to achieve an annual production and sales of 60,000 vehicles. Only by reaching this level can it achieve a break-even point and get rid of its dependence on the group's "blood transfusion".

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Gao Feichang, Department Director of Economic Observer

Editor-in-Chief, Automotive and Mobility News Center
He has been paying close attention to the development of automobiles and travel, including industry policies, new energy vehicles, autonomous driving, travel and technology, capital markets, and the automotive aftermarket. He has unique insights into the strategic changes of related companies and new products on the market.