JAC Motors: A Big Deal for Cars
Kostanay, a small border city in northwest Kazakhstan with a population of about 200,000, attracted great attention from the top leadership of both China and Kazakhstan in 2016. In September, President Nazarbayev made a special visit. In November, the city was a major topic of discussion during the third regular meeting of the premiers from both sides. All the interest was over an automobile project, one of the earliest China-kazakhstan joint ventures under the framework of the Belt and Road Initiative proposed in 2013 by Chinese President Xi Jinping.
Smart Layout
Kostanay, Kazakhstan’s “motown,” produces half of the automobiles in the country. Not long ago, some Chinese journalists visited Salaaka factory under Aruhr Group, an auto production base in Kazakhstan specializing in assembling foreign brands, when it welcomed Anhui Jianghuai Automobile Co., Ltd. (JAC) from China as its newest partner. Photos of JAC products can be found throughout the factory. It is incredibly orderly: Components and finished products are arranged neatly in endless lines as the crew bustle about on the assembly line.
To help implement the government’s Belt and Road Initiative, JAC has increased its trajectory towards “going global” with the opportunity to engage in “China-kazakhstan capacity cooperation” and target the Kazakh market in the Commonwealth of Independent States.
Wang Suihua, sales director of JAC’S Russian region for cooperative partner Aruhr Group, provided figures on the great potential of Kazakhstan’s market for new vehicles: “There are some 4 million automobiles in the country now. Every year, the number of new vehicles and imported used cars increases by 350,000, leaving huge space for new domestically-assembled vehicles due to growing limitations on imports. Moreover, countries including Russia, Belarus and Kazakhstan have established a customs union. According to their agreement, domestic automobiles can enter the other countries without paying tariffs. Opening the door to Kazakhstan means getting access to the markets of other countries such as Russia and Belarus.
“JAC identified the huge business opportunity and immediately contacted local auto makers to strike deals to perform assembly and marketing,” notes Wang. By the end of 2015, the first batch of cars rolled off the assembly line and onto the streets of big cities across Kazakhstan, reaching 15th in brand sales volume. In 2016, JAC’S S3 type vehicle was cited as a “Brand of the People” by the Kazakh government, the only recipient of such an honor.
Big Deal
Since the moment in March 2015 when the licensing agreement was signed between JAC and Aruhr, the milestone project has drawn great attention from the leaders of both countries.
According to Wu Yunfan, head of Aruhr’s marketing and public relations, Kazakh President Nazarbayev heaped praise on the IEV6S full electric vehicle, the first of its kind produced domestically, after driving the vehicle in September 2016. He expressed hope that the company would take full advantage of Autoworld Astana 2017 to boost the popularity of new-energy automobiles. In 2016, then Kazakh Prime Minister Karim Masimov also inspected the factory and test drove this vehicle.
In November 2016, the inaugural ceremony for the JAC Automobile Factory in Kostanay was attended by the Chinese Premier and Kazakh Prime Minister, who personally congratulated the factory’s employees.
Today, JAC is positioned as the only auto foreign partner to qualify for benefits under Kazakhstan’s program to revive 32 industries. “The Kazakh government offers preferential policies including tax relief, government procurement, leases, and financial support,” Wang illustrates. “I think this project will set an example for the SinoKazakh cooperation that could explode the popularity of such agreements.”
Market Favor
Ultimately, the market determines the sales of products. As announced by the president of Aruhr Group, in 2016, the sales volume of JAC’S automobiles made in Kazakhstan increased by 500 percent year-on-year, a rare feat for a one-year-old brand. “In 2017, JAC will undoubtedly double its sales in our country,” the president proclaimed with confidence.
Despite competing with mighty rivals, JAC has become a fan favorite. How did it win over customers so quickly?
We met a couple of owners of JAC S3 vehicles at the franchise store in Alma-ata.
“It’s safe, comfortable and configured sophisticatedly,” commented Yuri Ahna. “It’s spacious,” noted the other buyer, Altur. “I was impressed by its excellent performance in both urban areas and the countryside.”
Positive driving experiences are born of the quality of the vehicle. “Both the S3 and S5 enjoy a great word-of-mouth reputation,” remarks Ren Qijie, manager of JAC’S Eurasian Customer Service Department. “Our company offers the most reliable product. It has been successful because it perfectly caters to local conditions, geographically and climatically.”
“We have plans to introduce our most popular products in the future,” explains Yu Yang from JAC’S international markets department. “The JAC IEV6S was made with six-generation techniques for electric automobiles, the most state-of-the-art technology on the planet. We are working on the seventh generation, which we’ll introduce to Kazakhstan immediately once it’s tested to make sure that market enjoys the latest technology and top-shelf products.”
The motto of the company hangs over the most prominent place at the entrance of the office building of Saller Akko, testifying to the mission of the enterprise: “Standing as a manufacturer of modern automobiles and farm machinery; Serving as an innovation base for domestic automakers; Striving to meet the market demands of both Kazakhstan and the Commonwealth of Independent States with core technologies.”
The motto is more explicit than succinct: But the plan is clear on how greater cooperation and input from all sides promotes productivity that can benefit people of both countries.