Five big lessons China has taught Toyota, GM and Ford, from the BYD Shark 6 to saving Volvo

Last year, China was the world’s largest manufacturer of, and market for, new vehicles.

Its relentless growth with emerging brands has reshaped the automotive landscape, driven by willing consumers drawn to accessible pricing, ready availability and, crucially, appealing (if rarely class-topping) product.

The reaction from legacy manufacturers like General Motors, Toyota and Ford has shifted, from arrogant indifference to palpable anxiety.

Fresh from calling China an “existential threat” earlier last year, the latter’s CEO, Jim Farley, even admitted to “not wanting to give it up” after driving a Xiaomi SU7 electric vehicle (EV) that Ford flew to Detroit for evaluation.

While China’s ascension has not been without significant issues and controversy, it’s meant that product, strategies and even management have changed across the industry, as carmakers respond to a new world order.

Here, then, are some of the big lessons the old guard can learn from China. Let’s go.

To take bold risks with design

China had been slowly and cautiously nurturing its vehicle manufacturing industry prior to 2020, gleaning experience from international carmakers in government-mandated 50:50 partnerships.

These earlier models were often either downright copycat designs and even reverse-engineered rip-offs (2015 Landwind X7, anyone?), or conservative and dull alternatives to what middle-market mainstream brands were offering at the time.

But it was electrification that opened up the doors of opportunity, allowing younger designers free from tradition or consumer expectation to try something different and daring.

The BYD Atto 3 was the first real evidence of this from an Australian perspective, paving the way for scores of other Chinese manufacturers. This is only the beginning.

The lesson here: take risks.

Learning from software-defined vehicle knowhow

Software-defined vehicles (SDV) or architectures (SDA) are common buzzwords associated with Chinese start-up car brands. These refer to over-the-air update capability rather than hardware tech as well as computer-aided engineering that includes virtual testing to slash design and development times, among other things, by more than half of the five years or so that it often takes legacy manufacturers to bring an all-new model to market from scratch.

While this has resulted in some woefully-tuned Chinese cars with inadequate driver-assist operations, subsequent models have largely improved.

The lesson here? If legacy brands combine their engineering expertise with SDV methodologies, this may mean less-expensive and more competitive future models that (mostly) drive right the first time out. Case in point: the Smart #3, a co-op between Mercedes and China’s Geely.

How to build quality vehicles inexpensively

Critics of the Chinese industry often point to reportedly low wages, long hours and terrible conditions as reasons why vehicles from China have been so cheap, underscored by substantial state-funded assistance to help keep prices down.

Along with cases of claimed reliability and durability issues, these have been legitimate reasons to think twice before purchasing a Chinese vehicle. That said, the public relations spin speaks of improving conditions and better engineering.

This is likely one reason why many Chinese models are no longer quite as low-priced as they used to be, but even the better ones remain less expensive than most of the legacy brands’ equivalents.

The lesson for the non-Chinese establishment is that most are no longer the affordable choice. Peoples’ car-ownership journeys are less likely to be a $32K drive-away base Toyota Yaris or $60K Ford Everest.

How to pivot quickly to changing market demands

Chinese cars used to be poorly-conceived facsimiles of established international models.

But as the 2020s dawned and COVID-19 took hold, many Chinese brands took control of supply chains as they shifted their focus to electrification, effectively sidestepping component and production shortages that profoundly affected most other carmakers internationally in subsequent years.

Meanwhile, thanks to SDV practices and their dramatically shortened development times, they can respond to downturns or upswings in consumer demand faster with models that buyers actually want.

A clear example of this is BYD, which offers cheaper vehicles in hybrid as well as EV powertrains.

And just as GWM’ Cannon Alpha ute is the first-ever hybrid ute in Australia, BYD’s Shark 6 crossed the line ahead of everybody else with plug-in hybrid tech, beating the Ranger PHEV to market by many months. The lesson is to listen and then be leaner, faster and more agile.

How to support and not stymie acquired car brands

Geely bought Volvo Cars from Ford in 2010, partly because of the massive losses the American giant was suffering in the aftermath of the global financial crisis.

Since then, Volvo has flourished with an expanding and successful model portfolio, backed by a sustained level of product investment that it could never enjoy under Ford ownership. Geely is now also doing the same with Lotus and Proton.

At least Volvo has survived; GM let the other major Swedish automotive concern, Saab, languish since taking a significant financial stake in the late 1980s and then full control in 2000, starving the brand of development funds whilst diluting the vehicles’ character and uniqueness.

The lesson? These are examples of China showing the legacy carmakers how a takeover of a marque should be conducted. Nurture, not neuter.