On the afternoon of September 4, the 2009 China Automotive Industry Development International Forum officially kicked off in the Tianjin Binhai New Area. At the three-day forum, there will be more than 600 government officials, industry leaders, corporate executives, and elites from the automotive industry at home and abroad. Gathered together, in order to solve the financial crisis, the development trend of China's auto industry is accompanied by a "thought feast."
On the morning of September 5, the reporter interviewed Wang Hongjie, vice chairman of Cummins China, and Cao Side, vice president of Cummins Corporation at the forum. The following is an on-site interview record.
Reporter: What I am more concerned with is the preparation of our fifth phase. What preparations have we made for Cummins? Especially with the Beiqi Futian project, do we have any specific measures?
Cao Side: Thank you for this question. If you have just attended this group of meetings on traditional energy vehicles, you may have heard that the national 5 standard in our country has not yet been set, because the country IV has not yet been set, and the country V is even less clear. However, Cummins's technical preparation for the country V is all there. Basically, the technical route and standards are relatively many references to European standards. Our Cummins factory in the UK has produced Euro V engines, starting last year. Our domestic passenger car industry must be exported to Western Europe. For example, Italy, including Spain and Western European countries, have begun to install Euro 5 engines. Cummins' engines are the technical preparation for Euro V, from 6.7 liters, 8.5 liters, and 11 liters of medium-horsepower. These have already started production abroad, that is to say, technically not a problem for us. The two light engines for Beiqi Foton now mainly produce Euro 3 and Euro IV. We have started the development of Euro V. We signed a technology transfer agreement for the joint venture company in June and developed Euro V. Therefore, the development of the Euro 5 technology for these two machines has already been carried out. That is 2.8 liters and 3.8 liters.
Reporter: We have noticed that Cummins has often cooperated with powerful OEMs in China. I would like to ask: What scale does it take to build this factory to build a cooperative environment?
Cao Side: We must look at heavy, medium, and light, all of which are not the same. You know that our Foton Cummins has a light engine production capacity of 400,000 units, and medium-sized Dongfeng Cummins has a production capacity of 200,000 units. Xi'an Cummins does not need so much. There can not be so many. However, the demand in many countries is not so many. For example, in Vietnam, they told us that we hope to build an engine plant. However, there are only 10,000 units, which is uneconomical. There is no way to do this. This is not fixed. Must look at the economy is not economical.
Reporter: Today, Mr. Cao’s Chinese words speak so well and many Chinese guests and media are touched. In the course of your speech, we applauded. Cummins has a history of 90 years as an engine. In China, whether it is heavy trucks, light trucks or trucks, Cummins has more engines. The 7.9-liter engine we worked with Dongfeng did in the western market of our country. Many people bought Dongfeng Windmill. He did not say that I bought the Dongfeng Windmill. He said that I bought Cummins. This proves that Cummins really has many characteristics to attract. For our customers. Cao from the advantages of our product technology to interpret the characteristics of our product.
Wang Hongjie: We must talk about history. Since Cummins’s 90-year history has been in China for more than 30 years, our earliest machines were sold in 1975. The earliest use of engines in China was in 1941, when the Second World War, the United States because it was China All the allies are fighting Japan and some military vehicles are coming. However, it is 75 years that it is a formal sale machine. This car is especially in the west, starting from Qinghai and going to Xinjiang, Tibet, and Gansu. Why is this car called a Cummins car? This was Cummings's move to the east wind in 1986. At that time, we were still a young man and Yale just graduated. This item. We transferred our Cummins supercharged engine. At that time, the domestic companies basically naturally inhaled, without supercharged. At that time, the number of gasoline engines was also high, and the Dongfeng technology was transferred. The Dongfeng cab was replaced with a car with a long nose. The flat-headed, eight-pronged demolition, that is Nissan's cab, was built on the Cummins six-walled engine. Why? Most of the cars do not work when they reach an altitude of 3,000 meters above sea level. Cars pulled goods, they can not climb the Himalayas, can not pass the Tanggula Pass, only the Cummins vehicle can really carry the goods in the past, that piece of customers and the people remember, this car is smoke, but can go The Other cars can't climb when they smoke. They remember Cummins' car, so they remember what happened in 1990 and 1991. Many of us have followed the team. It was such an impression. Because there are few oxygens at altitudes of four kilometers and five kilometers, the engine has very little oxygen from the air, and it is difficult to burn fully, if naturally aspirated. Cummins's engine is a supercharger. After you burn it out, you burn it through the supercharger, so he can burn it fully and be able to work. History is formed in this way.
Cao Side: But we have even more strange formations. In the generator set, for example, the building has a spare generator set. If there is a power outage, use spare ones. This Cummins engine is very much loaded. It was the generator set that sold Cummins's generators, but the generators were not Cummins but they also used our name.
Reporter: Shaanxi Auto, when I came to the market to interview users, they responded that the car is fuel efficient and moving. The customer's buying psychology.
Cao Side: This we are very clear, my guests also know my opinion, I think our parts prices are too high. So we must meet customer requirements. The idea is completely different in foreign countries. Spare parts, whether it is cars or trucks, are particularly expensive. Therefore, the habits are not the same here. The parts of the market for after-sales service are very low, so it is strange that the strategy is complete. Not the same, so we must adjust. So I know very well.
Reporter: The development of Cummins in China has also driven the development of an industry. I would like to invite you to combine your own feelings and make an assessment of the Chinese engine industry. What do you think is the most challenging place in the Chinese engine industry? what?
Cao Side: Recently, in the United States, once every three or four years, the environmental protection requirements have become more and more stringent. In the United States, our biggest competitor has never broken through, that is, Carter is selling engines in North America. Stopped in 2010, he is two or three years, the United States called EPA standards, in addition to Carter, in addition to Carter, where other countries have an engine company to compete with us, basically, other engines are few, no. Buss owns trucks and also has engines. It does not compete directly. Volvo has engines and trucks. It does not compete directly. However, in China, there are several relatively clever ones. We respect them very much, such as Weichai, Yuchai, Xichai, etc. They are also very good. If you look at the situation, they meet the environmental protection standards of Europe, Europe, and Europe, and Europe. Our experience It's richer because we've done it in North America and Europe. They don't have this opportunity, so this is the first time they have passed Euro III, Euro IV, and Euro 5. We are technically stronger because we have experience elsewhere.
However, I think that this is our biggest challenge. For example, Weichai and Yuchai, their after-sales service is very strong, customers have requirements, and the response is very fast. We think that it is faster than other countries and it is very frank. If customers have requirements in other countries, we are very slow to meet the requirements and are here immediately. So we think I respect our competitors here.
Reporter: What was the most successful and most proud success in China?
Cao Side: I think it is our joint venture partner. I don't think there are very few such companies in our industry or in other industries. The partners are so successful. For example, we are in China and we have four engine companies. Some partners have been more than twenty years old. I started negotiating with Dongfeng in 86 years and now it has been more than two decades. Dongfeng is also very strong, Shaanxi Automobile is also. In 1981, there was a partner. In our industry, other diesel engine companies came to a joint venture here and stopped. In other countries as well, we have a very strong partner in India, his company. Russia has Camas, Komori, and Cummins's partners. Basically these were formerly my partners in support. Kamas was the one I negotiated, and Komori was the one I negotiated. But obviously we think that our partners are very important in our strategy. Without partners, we cannot live. So our joint venture is half and half, 50%. Because we think that our partners are as strong, I should not lead, they should not lead, it is equally strong. They are not producing engines. They are producing trucks or construction machinery. However, their value, our value is very strong and very important. We all need joint ventures, so we are very careful about how we work together and what our long-term plans are. We believe that in China this is our greatest success. I am also very happy and very honored to be their partner.
Reporter: Your factory in China, Cummins' performance in the market, the world knows, in the economic crisis, how did we spend?
Cao Side: I mean, a long time ago, when I used Chairman Mao’s words, when we were eating together in China, there were a lot of people who told me that their waiters here were too young and they didn’t know what Chairman Mao said. I said that my surname is Cao and Zhang Side. I think Zhang Side sounds a little like my name. My name is Steven. I think Zhang Side represents a very good spirit, serves the people and serves customers, so I am very Glad to use his name. Looking back at the economic crisis, we believe that the U.S. market is now at its lowest point, and then, after about a year, it will slowly pick up. In the fourth season of our Cummings this year, the situation should be a bit better, because the environmental protection requirements on January 1 next year will be more stringent and change to another level. So many people in the fourth quarter have to buy engines in advance, so we will be better in the fourth quarter. The U.S. economy needs to pick up. China is already well and India is already well. This year's business is one-half lower than last year's business. Kamas, my partner on the other side was greatly affected. The situation in China is basically the most normal.
Reporter: Do we have any new plans?
Cao Side: Of course we have, we have a project that has not been completed, for example, Beijing Automotive Industry Co., Ltd., Beijing Automobile Cummins, we have not produced a lot of production, this year's June put into operation, our 3.8-liter engine, 2.8 liters by the end of October put into operation. We also had a 13-liter engine with Dongfeng Cummins and started production this month. This is a lot of production that must be done later. We also have turbochargers and clutches besides the engine. Another is our environmental protection technology. This is not yet fully born. It has just begun.
Reporter: When it comes to competitors, you mentioned that domestic Weichai and Yuchai are relatively strong. In the past two years, how much potential do you think it will have?
Cao Side: First, I do not criticize my competitors. They produce in Dalian if they can park in our Shanghai. For trucks, I estimate that the number of diesel engines is not necessarily very large. We used to have joint ventures with Iveco.
Reporter: We are the engine, we are in diesel, natural gas engine, gasoline engine oil?
Cao Side: We have compressed natural gas engines. We have engines. There are more than 3,000 buses in Beijing.
Reporter: This kind of engine is in Chinese cars, except for CNG and LPG.
Wang Hongjie: LPG is called liquefied natural gas.
Reporter: The prospect of gas engine development in the market?
Cao Side: As I said today, the problem is that natural gas engines are more expensive to buy than diesel. But in the future it will take several years to amortize the high prices. So natural gas is better. There are also very expensive and very specialized equipment. Therefore, many cities do not pay much attention to natural gas, but China has materials. Therefore, I think the government should have some policies that it hopes to use. So I think there is prospect. Now I can't say that the prospects are large, just a part.
Reporter: According to our situation in the Chinese market, do you think that we have a large number of first-tier cities and that there are only a few second and third-tier cities? Do we have to help customers build support based on the market?
Wang Hongjie: Natural gas, the engine of Cummins selling CNG began in 1998. The foundation of the entire gas station was built. We gave the Beijing Public Transport Group, and we also involved urban construction. We organized organizations to go abroad to watch because we did not. This is how it was built, including the current urea-added urea station. This is from Europe. Gas stations are from the Americas, Canada and California. When you asked about this gas, China now has a total of 400,000 gas. Most of them are domestically produced. Especially Sichuan and Chongqing. We have three prospects, look at resources, and have always said that China's natural gas resources are relatively abundant. However, the vehicles that are required to develop natural gas power are currently in cities, and there are more urban public transportation because of the filling stations just mentioned. Now it's natural gas on trucks, but it involves a big problem. How do we make gas filling station in the country? Because we have to build gas stations, our investment is very high, which is more expensive than gas stations. Because he has a lot of security considerations.
Cao Side: Usually need a team, bus, Beijing bus has a large fleet, so there is a twirling. There is a refueling car behind. Some garbage trucks also use this.
Wang Hongjie: Now we are exploring how to use natural gas in trucks. But encountered a big bottleneck.
Cao Side: Every country's government sometimes has a price policy. For example, diesel and compressed natural gas, prices are sometimes stable by the government. Not only China, but also other countries. How much is petrol, how much is diesel, and how much is natural gas, and sometimes the government adjusts it because it has a percentage of each and how much it costs. Looking at end users, they think it is cost-effective to make a big adjustment in one year.
Reporter: Now that our Cummins engine is a large-displacement engine, we now have a lot of preferential policies for passenger cars with small displacements in the development of the international automobile market. Did Cummins have any thought of developing this area in China? The second question, now I notice that many foreign auto companies have developed a small-displacement turbocharged engine in China. Has this Cummins engine developed and evaluated in this respect?
Wang Hongjie: Our Cummins 1.4, 2.8, 3.3, 3.8, 4.5, 6.7, 8.9, 11, 12, 15 liters, the next 16 liters of vehicles, we have the entire series. As for the two-liter or less, 1.5 liters and 1.6 liters of engines for passenger cars, Cummins does not currently do. The analysis of this project is very important. Why are we still analyzing? Is that you want to engage in 1.5, 1.2, 2L, 2.5, diesel engines specifically for gasoline vehicles, we must find a big partner, that is, the economic scale, if the passenger car engine At least 500,000 cars will be produced annually. Then you can do this product technically better, including green, fuel economy is better. But also to the price, relatively speaking, the price is appropriate. Cummins China will also have some partners in the future. Just now I met one outside and said that if we can jointly develop a diesel-powered car-oil engine. I said yes. But why did Cummins do these joint ventures? Why do we have partners? Our own position is very clear, our independent engine development, supply, and manufacturing projects, if we say we want to do a new project, there must be a market demand No, the market needs to find your partner. Cummins is very strong. Even why we insist that vehicle companies account for 50% of the engine company's share. We account for 50% of our production of our products and provide that mature set of management and quality control. Technically there is no problem, Cummins can do, I can do 2.8, can do 2.5, can also do 2 liters, and now there are 1.4 industrial use, I can also do cars.
Reporter: The second question I have just mentioned is what do you think of the small displacement turbocharged engine?
Wang Hongjie: I don't know what you said about turbo. Our engines are supercharged, and I don't know what you're talking about turbocharging. That we did not, no aviation. We often say that we don't provide power in the sky-flying and underground passenger cars. We provide them except this one. Whether it is light, medium, heavy trucks, passenger cars, ships, tanks, mine cars, workers' machinery, or forklifts, all of which we can provide, except passenger cars, 2.8 liters. After the production of Shahe in Beijing, I also hope to sell it on a SUV, a jeep.
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