The Chinese are coming to the U.S.
Actually, they are already here.
Pooh-pooh all you want. You aren't alone. Many in Detroit and the auto industry, in general, doubt the Chinese will make it or, if they arrive on our shores, won't cut it in the States. Of course, some of these same folks pooh-poohed the prospects of the Japanese and later the Koreans, and now look who is eating their market-share lunch.
The fact is Chinese car companies are coming to the U.S. (and Europe as well) in some fashion, likely sooner rather than later. In fact, they're here; they just entered the back door quietly.
They're following the same successful path pioneered by the Japanese and copied by the Koreans: establish a beachhead with small, inexpensive cars and sport-utilities, which is their specialty, and work their way up.
The larger Chinese car companies that currently have no giant foreign auto partners — Chery, Geely and Great Wall, specifically — will pave the way. Then those with partners will join in, and even the partners themselves will import low-priced, Chinese-made vehicles to the U.S. as their entry-level models much as they did with their Japanese and then Korean partners.
Look what American apple-pie Chevrolet has done to see what's ahead. It first tapped its Japanese affiliates for its small, entry-level models.
Remember Chevrolet's Geo division? It was stocked with models from General Motors' joint venture with Toyota and its partner Suzuki. Chevy now has turned to GM's newly acquired Korean arm, Daewoo, for its entry-level Aveo. Meantime, in Texas, GM has quietly begun importing and selling — for under $10,000 — Chinese mini-trucks that can only be used off-road.
And then there are the parts in its vehicles. Pop the hood of the Chevrolet Equinox (and the upcoming Pontiac Torrent), and you'll find a made-in-China engine. Ford engineers report the automaker is looking to source engine components in China as well, and its partner, Changan Automobile Group, has its sights set on the U.S. for vehicle sales.
More proof; the Auto Shanghai 2005, which opened the end of April, attracted every major automaker, every major auto supplier and the top brass from all of those companies this year. DaimlerChrysler just announced it's looking to build Chryslers in China and send them to the U.S.
The naysayers point to a number of reasons why the Chinese car companies won't make it in the U.S.
First of all, they say, look at the trouble they're having at home. Indeed, the go-go sales days in China are gone, thanks to government intervention a year ago to purposely slow the overheated economy. The fallout of that action was that car sales dipped from astronomical rates, vehicle inventories bloated, and automakers, to move the metal, resorted to hefty price cuts.
Still, China's car sales for 2005 are expected to be 10-percent higher than in 2004, which were up 15 percent from 2003 despite China's "troubles."
And long term, the importance of China on the international landscape cannot be denied. Virtually every expert in the world believes China will be the No. 1 market in terms of sales and auto production; the only debate is how soon. Certainly, it will occur within the next decade or so.
However, the doubting Thomases point out, the Chinese are hooking up with partners with less-than-stellar track records. The loudest among them is Malcolm Bricklin, who had little success after helping to launch Subaru with his own Bricklin brand and Yugo. Bricklin has outrageously ambitious plans for his partner, Chery, which he says will arrive in the U.S. in January 2007, introduce a new model every two months for three years, and sell 250,000 vehicles a year as the "new Toyota."
Already, Bricklin has been forced to scale back his grandiose plans for dealerships that were to sell Chery vehicles exclusively — they now may be paired with other brands. Indeed, it is difficult to understand some of the partner selections, but no doubt the Chinese, known as shrewd business people and negotiators, will figure it out.
And what of Chinese vehicle quality? For sure, it is currently not up to snuff across the board with what Americans expect. However, quality guru J.D. Power and Associates, which has been doing quality studies in China since 2000 and just went public with its first one, reports initial quality is dramatically improving with every new model introduced. And remember, the quality of the early Japanese and Korean cars that came to the U.S. was nothing to write home about, and yet now they top the quality charts.Yet another recent study showed the U.S., a land of immigrants, would welcome — and buy — Chinese-made cars without hesitation. Chinese automakers further have a built-in market with millions of immigrants from China living in the U.S.
Naysayers underestimate the resolve of the Chinese government, which has declared the auto industry as one of the main pillars of its growing economy. Frequent visitors to China say that new skyscrapers and highways appear seemingly overnight. And this is the country, after all, that leapfrogged traditional telephones, moving straight to the newest cell phone technology.
The same leapfrogging could occur in the auto industry. The Chinese government has not fully committed to an auto industry that relies just on petroleum, which has to be imported. Recently, the government announced construction of 40 new power plants that could power transportation and substantial research into alternative fuels is ongoing in China. In fact, one of China's automakers is also among the world's largest producers of lithium batteries. With such high levels of motivation, resources and brainpower, China may well become the world leader in hybrids and hydrogen fuel cells.
Actually, they are already here.
Pooh-pooh all you want. You aren't alone. Many in Detroit and the auto industry, in general, doubt the Chinese will make it or, if they arrive on our shores, won't cut it in the States. Of course, some of these same folks pooh-poohed the prospects of the Japanese and later the Koreans, and now look who is eating their market-share lunch.
The fact is Chinese car companies are coming to the U.S. (and Europe as well) in some fashion, likely sooner rather than later. In fact, they're here; they just entered the back door quietly.
They're following the same successful path pioneered by the Japanese and copied by the Koreans: establish a beachhead with small, inexpensive cars and sport-utilities, which is their specialty, and work their way up.
The larger Chinese car companies that currently have no giant foreign auto partners — Chery, Geely and Great Wall, specifically — will pave the way. Then those with partners will join in, and even the partners themselves will import low-priced, Chinese-made vehicles to the U.S. as their entry-level models much as they did with their Japanese and then Korean partners.
Look what American apple-pie Chevrolet has done to see what's ahead. It first tapped its Japanese affiliates for its small, entry-level models.
Remember Chevrolet's Geo division? It was stocked with models from General Motors' joint venture with Toyota and its partner Suzuki. Chevy now has turned to GM's newly acquired Korean arm, Daewoo, for its entry-level Aveo. Meantime, in Texas, GM has quietly begun importing and selling — for under $10,000 — Chinese mini-trucks that can only be used off-road.
And then there are the parts in its vehicles. Pop the hood of the Chevrolet Equinox (and the upcoming Pontiac Torrent), and you'll find a made-in-China engine. Ford engineers report the automaker is looking to source engine components in China as well, and its partner, Changan Automobile Group, has its sights set on the U.S. for vehicle sales.
More proof; the Auto Shanghai 2005, which opened the end of April, attracted every major automaker, every major auto supplier and the top brass from all of those companies this year. DaimlerChrysler just announced it's looking to build Chryslers in China and send them to the U.S.
The naysayers point to a number of reasons why the Chinese car companies won't make it in the U.S.
First of all, they say, look at the trouble they're having at home. Indeed, the go-go sales days in China are gone, thanks to government intervention a year ago to purposely slow the overheated economy. The fallout of that action was that car sales dipped from astronomical rates, vehicle inventories bloated, and automakers, to move the metal, resorted to hefty price cuts.
Still, China's car sales for 2005 are expected to be 10-percent higher than in 2004, which were up 15 percent from 2003 despite China's "troubles."
And long term, the importance of China on the international landscape cannot be denied. Virtually every expert in the world believes China will be the No. 1 market in terms of sales and auto production; the only debate is how soon. Certainly, it will occur within the next decade or so.
However, the doubting Thomases point out, the Chinese are hooking up with partners with less-than-stellar track records. The loudest among them is Malcolm Bricklin, who had little success after helping to launch Subaru with his own Bricklin brand and Yugo. Bricklin has outrageously ambitious plans for his partner, Chery, which he says will arrive in the U.S. in January 2007, introduce a new model every two months for three years, and sell 250,000 vehicles a year as the "new Toyota."
Already, Bricklin has been forced to scale back his grandiose plans for dealerships that were to sell Chery vehicles exclusively — they now may be paired with other brands. Indeed, it is difficult to understand some of the partner selections, but no doubt the Chinese, known as shrewd business people and negotiators, will figure it out.
And what of Chinese vehicle quality? For sure, it is currently not up to snuff across the board with what Americans expect. However, quality guru J.D. Power and Associates, which has been doing quality studies in China since 2000 and just went public with its first one, reports initial quality is dramatically improving with every new model introduced. And remember, the quality of the early Japanese and Korean cars that came to the U.S. was nothing to write home about, and yet now they top the quality charts.Yet another recent study showed the U.S., a land of immigrants, would welcome — and buy — Chinese-made cars without hesitation. Chinese automakers further have a built-in market with millions of immigrants from China living in the U.S.
Naysayers underestimate the resolve of the Chinese government, which has declared the auto industry as one of the main pillars of its growing economy. Frequent visitors to China say that new skyscrapers and highways appear seemingly overnight. And this is the country, after all, that leapfrogged traditional telephones, moving straight to the newest cell phone technology.
The same leapfrogging could occur in the auto industry. The Chinese government has not fully committed to an auto industry that relies just on petroleum, which has to be imported. Recently, the government announced construction of 40 new power plants that could power transportation and substantial research into alternative fuels is ongoing in China. In fact, one of China's automakers is also among the world's largest producers of lithium batteries. With such high levels of motivation, resources and brainpower, China may well become the world leader in hybrids and hydrogen fuel cells.
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