Chinese cars you could soon see in the U.S.

Discussion in 'General Motoring' started by Jim Higgins, Aug 11, 2008.

  1. Jim Higgins

    Jim Higgins Guest

    Chinese cars you could soon see in the U.S.

    Don't be surprised if your next car has a "Made in China" label on it.

    As the world focuses on the XXIX Summer Olympic Games in Beijing,
    Chinese automakers are looking beyond their borders. They aim to sell
    vehicles in North America, one way or another.

    "It's definitely not a matter of 'if,' but 'when,'" says Lonnie Miller,
    director of industry analysis for the automotive research company R.L.
    Polk and Co. in Southfield, Mich. Miller expects the first Chinese-built
    vehicles to go on sale in the United States by 2010 at the earliest.
    They will most likely be small, fuel efficient and inexpensive, he says.

    Most will come from companies unfamiliar to American consumers. Brands
    like Chery, Changfeng and Great Wall hope to follow in the footsteps of
    established makes from other Asian countries such as Honda, Hyundai and
    Toyota, all of which have thriving businesses in North America.

    We've compiled a list of Chinese vehicles that seem likely candidates
    for export to the United States based on information from industry
    analysts and other sources. See the full list by clicking on the “slide
    show” link below.

    If the first wave of Chinese cars catches on, analysts expect
    manufacturers to expand their exported lineups with midsize cars, sport
    utility vehicles and other models within another two to five years.
    Miller says Chinese automakers could eventually absorb as much as
    one-tenth of the United States' new-car market if they're successful.

    The design of many Chinese cars might seem derivative, but at least
    their names are interesting. Imagine driving around in a Great Wall
    Hover, a midsize SUV.

    Chrysler recently signed a memorandum with Great Wall to explore a
    long-term business relationship. Great Wall is already successful in
    Eastern Europe and South America and is a leader in producing SUVs for
    China, says Sachin Rustagi, editor of China Car Forums.

    The Brilliance BS4 is another model with an inventive name, though it's
    the company's name, not the model moniker, that's noteworthy. Brilliance
    Auto was the first Chinese automaker to set up shop in the United
    Kingdom, initially offering the midsize BS6 sedan and most recently
    adding the compact BS4.

    The company has expressed interest in selling cars in North America
    within "about two years."

    A growing industrial giant
    Auto sales in China have skyrocketed over the last decade, swelling 25
    percent a year since 2002, according to McKinsey and Company, a New
    York-based management consulting firm. China overtook Japan in 2006 to
    become the world's second-largest new-vehicle market, and industry
    insiders believe it might eventually overtake the United States as the
    planet's largest car market.

    Last year 24 domestic Chinese automakers and 38 import brands sold more
    than 5.2 million vehicles in that country, according to J.D. Power and
    Associates in Westlake Village, Calif. The best-sellers are Honda,
    General Motors, Toyota and Volkswagen.

    With a large capital base, low-cost labor and expertise in manufacturing
    and exporting goods to the Western world, China will eventually become a
    leading exporter of cars and trucks, industry observers predict.

    J.D. Power reports China exported nearly 185,000 passenger vehicles last
    year — a 45 percent increase over 2006 — with the majority of them going
    to developing markets like Russia, the Ukraine and Venezuela. Analysts
    suggest Chinese automakers are, in effect, working their way across the
    globe with U.S. shores being viewed as the ultimate beachhead.

    Thus far, efforts of Chinese automakers seeking to enter the American
    market have unraveled before even getting off the ground.

    In 2005, automotive entrepreneur Malcolm Bricklin, the man who helped
    bring Subaru and Yugo to America, formed Visionary Vehicles to import
    low-cost cars from China's Chery Automotive. After a few well-publicized
    auto-show appearances, the partnership dissolved.

    Chery decided to cast its fate with Chrysler to help bring its products
    to the Western Hemisphere. Visionary Vehicles has subsequently filed
    suit against Chery to recover unspecified monetary damages for what it
    claims were fraudulent business practices.

    Similarly, a company called Chamco, which stands for China America
    Cooperative Automotive, made a splash at the most recent Los Angeles and
    Detroit auto shows by displaying two models — a small SUV and pickup
    truck — it planned to import from China's Hebei Zhongxing Automobile
    Company beginning in 2009 and sell through its own dealer network.

    The deal has fallen apart, however. A posting on the company's Web site
    says: "The Board of Directors has temporarily halted most of Chamco
    Auto's operations." Inquiries made to the company were not answered.

    Several other Chinese automakers are reportedly considering entering the
    U.S. market, but industry insiders say the first models will likely be
    imported and sold by third-party automakers under their own nameplates
    to fill gaps in their lineups. "An established brand can carry a new
    entrant in terms of a certain familiarity and comfort among consumers in
    terms of what the vehicles can represent, so it's probably a smart
    choice," says R.L. Polk's Miller.

    East-West alliances
    Chery Automotive is already set to produce a version of its diminutive
    A1 for Chrysler, to be sold in Mexico and South America as the Dodge
    Breeze. There are no plans to bring the Breeze to the United States,
    says David Elshoff, a Chrysler spokesperson. But he does acknowledge
    that Chrysler is working with Chinese partners to fill holes in its
    domestic lineup.

    Chrysler currently lacks small, fuel-efficient cars American consumers
    are turning toward in the midst of high gas prices. A version of the
    Chery A3 sedan is an example of one model Chrysler could potentially
    repackage and sell in the United States.

    "We are eager to begin exporting small cars from China as soon as
    possible that will attract new customers in two segments in which our
    brands are underrepresented: very young buyers and entry-level buyers,"
    Elshoff says. "It's generally understood that the only way to compete in
    the ultra-price-sensitive subcompact market requires the most low-cost
    manufacturing base."

    As logical as it might seem to leverage Chery Automotive's expertise in
    building inexpensive small cars, Chrysler is proceeding cautiously. "We
    will not offer a vehicle until we are 100 percent convinced that it
    meets global standards and requirements," Elshoff says.

    Therein lies one of the biggest challenges.

    According to a 2007 J.D. Power Initial Quality Survey, the Chinese auto
    industry's average problems per hundred vehicles were nearly twice those
    of cars currently sold in the United States. What's more, many Chinese
    models have received dismal scores in well-publicized safety tests
    conducted by independent agencies in Europe and elsewhere.

    "The first challenge for Chinese automakers is that they will have to
    comply with U.S. emissions and safety regulations — this is a big job,"
    says Tim Dunne, J.D. Power and Associates' director of Asia-Pacific
    market intelligence. "Besides the regulatory hurdles, the vehicles will
    have to meet U.S. consumer expectations for quality, dependability and
    availability of service and parts. On top of that, a Chinese-branded
    automaker would have to build its own distribution and dealership
    network in the U.S., which is a monumental undertaking when starting
    from scratch with an unknown brand."

    Chinese automaker Geely Automobile Holdings recently announced plans to
    build a $500 million assembly plant in Mexico with an eye on producing
    300,000 vehicles annually for distribution in North, South and Central

    "This seems to make sense due to what will probably be a lower upfront
    investment, less regulation and traditionally lower labor rates," says
    Dunne. "This strategy also allows manufacturers to sell in these local
    markets more easily — their proximity just makes it easier to operate
    the business."

    There's also the possibility that one or more Chinese companies could
    just buy their way into the United States. General Motors is currently
    shopping its underachieving Hummer brand, and rumors have surfaced that
    Chery, Dongfeng Motors and Shanghai Automotive Industry Corp. have been
    eyeing Ford's Volvo division, though none have been confirmed.

    Acquiring an established brand might be the easiest way for Chinese
    companies to get a foothold with upscale U.S. car buyers, because in
    that segment perception trumps reality, experts say, and even five or 10
    years down the road, the idea of a Chinese-branded luxury car made in
    China might be too tough of a sell with those shoppers.

    "The public will buy most brands that are sold to and managed by other
    companies no matter where they're located, so long as they maintain the
    same 'shape and feel' to the product," R.L. Polk's Miller says. "The
    question here is whether the consumer will look under the hood and see a
    lot of Chinese script on the engine, or are they going to be able to
    tell that it's still a Volvo?"

    Click on the “slide show” link above to see the Chinese vehicles likely
    to hit the United States first.
    Jim Higgins, Aug 11, 2008
  2. Jim Higgins

    miles Guest

    Then they've gotta greatly increase their technology. I've seen a few
    Chinese cars in Mexico (currently no legal to bring them to USA).
    They're JUNK. Open the hood and these new cars look similar to cars
    built in the USA during the 1950's or so. No thanks!
    miles, Aug 11, 2008
  3. Jim Higgins

    Jim Higgins Guest

    But this seems to be what Chrysler plans on doing. Does not bode well
    for Chrysler's "future".
    Jim Higgins, Aug 11, 2008
  4. Jim Higgins

    Count Floyd Guest

    Hey, if it had a flathead 6 and Fluid Drive, I would be interested!
    Proud owner of a 1940 Chrysler Royal.
    Count Floyd, Aug 11, 2008
  5. Jim Higgins

    who Guest

    Chrysler is throwing darts at almost anything, with the hope they hit a
    few winners.
    I feel sorry for those who buy these Chinese cars in the first 10 to 20
    who, Aug 12, 2008
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