When will the global automotive giants fully commit to China? The process has only just begun. Last week, Volkswagen FAW Group Co., Ltd. announced a joint venture between Changchun Volkswagen and FAW Group in Changchun, aimed at supplying components for the PQ35 platform for both FAW-Volkswagen and Shanghai Volkswagen. At the same time, Honda invested $8.18 million to establish a new company in Guangzhou, providing production support and metal molds for the launch of new models at its domestic manufacturing base. In addition, construction is set to begin on a new engine plant by the Volkswagen-FAW joint venture. The establishment of these auxiliary companies marks a shift in the domestic joint ventures, moving from simple assembly plants to full-fledged automotive enterprises. Key components are now being produced locally, and with GM, Volkswagen, and other foreign automakers accelerating their presence in China, international capital is entering the market from upstream parts production to vehicle manufacturing and finally to downstream sales and credit services. Setting up local parts manufacturing plants makes sense for several reasons. It increases the localization rate, reduces procurement costs, and aligns with the new "Automotive Industry Development Policy," which imposes stricter requirements on local content. This means foreign automakers are now forced to source more parts domestically. Notably, in these newly established component companies, foreign investors hold controlling stakes. For example, the newly formed "Volkswagen FAW Platform Parts Company" has a 60% foreign ownership stake. This suggests that in the future, foreign capital will maintain strong control over the spare parts industry as well. Volkswagen is actively expanding its local supply chain. In the first half of the year, the company produced 306,000 vehicles in China, surpassing GM's 259,000 units (including SAIC-GM-Wuling). The gap is narrowing. Meanwhile, domestic players like FAW and SAIC are also pushing hard. According to data from the China Association of Automobile Manufacturers, SAIC overtook FAW to become the largest auto group in the country this year. What’s even more surprising is that Dongfeng Motor dropped from third to fifth place, falling behind Changan and Beijing Automotive. Hainan Mazda and Shanghai GM are also fighting fiercely for market share. Recently, car dealers reported price cuts: the Excelle saw a reduction of 9,500 yuan, the M6 was promoted by 12,000 yuan, and the Laoya City model dropped by 6,600–8,800 yuan. While price cuts are good news for consumers, the statistics from the Ministry of Transport tell a different story. In the first half of the year, nearly 50,000 people died in traffic accidents nationwide—an increase of 2.4% compared to the same period last year. This highlights the urgent need for stricter enforcement of the new "Traffic Law" and harsher penalties for traffic violations. Meanwhile, the temporary relocation of Laoya City has become a topic of concern for several families. On Saturday, the city suddenly announced it would not relocate again, which is bad news for operators of other cities like Dongfang Foundation and Oudebao.

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