| 07-11-2007
Allison
Transmission, the world's automatic transmission manufacturer, holds 95 per cent
of the heavy-duty transmission market for commercial vehicles in China. But the
company is now facing a dilemma as it tries to localize manufacturing. Localization
is essential to dealing with high freight transport costs. "We must reduce
the cost and price of our transmissions to promote sales of our products in China,"
says Larry Dewey, president of Allison Transmission. Not
so long ago, the company signed a contract with Beijing Pubic Transport Holdings
Co Ltd to provide 2,205 units of T-series transmissions for China's largest public
transport company. In Beijing there are now over 4,000 public buses using Allison
transmissions. Public transportation systems in 28 Chinese cities also use the
company's transmissions. Allison now produces transmissions for 26 Chinese passenger
train and bus makers, including First Automotive Works Corp, Dongfeng Motor, Yutong
Bus, and Huaian Auto, among others. Sales of T-series transmissions in China take
up 75 per cent of its total global sales. Although
China makes up a large portion of Allison's total sales, the company has not had
a manufacturing base on the mainland until now, according to Dewey. Allison mainly
lets its Chinese distributor, Shenzhen Foreign Trade Tongda Industrial Co Ltd,
handle its business on the mainland. Industry analysts say investments in China's
auto parts market and the construction of local manufacturing bases can significantly
improve sales and profitability, but there are also huge risks. Allison
has already started its localization strategy, however, through the construction
of a reform center. It established its One Reform Center in Shanghai to focus
exclusively on the reformation of Allison transmissions for the Chinese market.
The center will support manufacturing efforts as local customers become more familiar
with Allison's innovative ideas. Allison
Transmission leads the world in the design, production and sales of medium- and
heavy-duty automatic transmissions. Founded in 1915, the company has produced
and sold nearly four million transmissions.
Editor:Frederick
Wei from Chinabuses.com
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