Road to success
International names and mainland giants, such as Geely, are driving the sector's development in the global market.
As China has roared into position as the world's largest car market, Hangzhou's production and components markets have gone along for the ride.
With light-vehicle sales on the mainland surging from 5.3 million in 2005 to 17.9 million last year, Hangzhou's car industry is more potent than ever, according to Tim Dunne, director of global automotive operations for market research company JD Power.
Today, the region hosts a mix of local companies and joint ventures, with international names, such as Nissan, Iveco and Johnson Controls, establishing facilities in the area.
Local output is staggering. With a global headquarters and production facility in Hangzhou, Geely's sales topped 400,000 vehicles in 2010. Hangzhou Engine produces 60,000 diesel engines per year, while Dongfeng Nissan Diesel plans to produce 50,000 trucks annually and Ji'ao Auto intends to manufacture 250,000 minibuses per year.
The local market started with medium and heavy trucks and, as the infrastructure developed, expanded to mini-cars and fuel-efficient vehicles, says Kevin Tynan, senior automotive analyst for Bloomberg Industries.
Because many of the firms service the entry-level market, margins tend to be tight. "It behooves companies to be there and grow with the market. They can afford to lose margin in the beginning until they get established," Tynan says.