(Yicai) June 25 -- The Chinese city of Chongqing pulled ahead of Guangzhou in January to May to become the country’s largest auto manufacturing center, setting it up to reclaim the annual top spot after eight years.

Chongqing produced 997,100 vehicles in the five months ended May 31, up 16 percent from a year earlier, according to data from the National Bureau of Statistics. Guangzhou’s output fell 20 percent to 947,300 units.

Chongqing topped China’s auto production in 2014, turning out more than 2.6 million cars that year. After peaking at nearly 3.2 million in 2016, output fell sharply but began to pick up again at the start of 2019. Last year, the city made 2.3 million autos, coming behind Guangzhou.

Chongqing will probably overtake Guangzhou this year, according to Feng Lei, deputy dean of the Hangzhou Huoshi Creation Data Industry Research Institute, told Yicai. This is because Guangzhou relies heavily on joint venture carmakers, as it is the main production hub in the country for Toyota, Honda, and Nissan, and Japanese car sales in the Chinese market are sinking.

In recent years, Chongqing-based carmakers have also expanded their market presence and refreshed their brand images, Feng said, while local new energy vehicle brands such as Avatr Technology, Deepal, and Aito have entered the market, focusing on innovation, the needs of younger drivers, and luxury. They have gradually replaced the demand for JV-made cars, and their strong product lineup has driven new growth, he added.

At the same time, Chongqing has been investing in developing new technologies, riding the wave of the new energy industry, Feng said. The city is pioneering and experimenting with smart connected vehicles, having built up in-depth technical expertise in range extension, battery swapping, and hydrogen fuel cell technologies.

Chongqing’s auto industry has also shaken up its product catalog in recent years, Yi Xiaoguang, a researcher at the Chongqing Comprehensive Economic Research Institute, told Yicai previously. It leaned toward low-to-mid-end models, but is transitioning to mid-to-high-end models now, he noted.

But Guangzhou remains a auto production powerhouse, making a similar number to Chongqing, Feng pointed out. In fact, Guangzhou has what it takes to continue defending its leading position, he said.

Editor: Futura Costaglione