China Car Forums banner
1 - 10 of 10 Posts

·
Registered
Joined
·
21 Posts
Discussion Starter · #1 ·
Malcolm Bricklin is promising to sell the cheapest Chery at $19,000 MSRP, complete with leather interior, full option, and 10yr/100K warantee. However, a quick breakdown of his numbers reveal that we are going to be getting substandard cars for $19,000, a sum better spent on Japanese or Korean cars.

Let's start with MSRP of $19,000 for entry level Chery.

- Dealer's margin is 15%.
- Malcolm Bricklin's margin is probably 15% too.
- Subtract $700 for Destination
- Subtract $1,500 for Warantee Reserve

So the $19,000 entry-level Chery has a port-exiting price of just $11,100.

- Subtract 2.5 % import duty of $277

Now the port arriving cost is $10,823

- Subtract $1000 for trans-pacific transport.

Now the ex-China port price is $9823

- Chery's located inland, so all cars has to be transported by train, unlike Japanese and Korean auto factories located by seaside with built-in ports. Deduct another $300 for in-China transport.

Now the ex-factory price is $9523

- Chery wants to make at least $500 off its cars.

Now the building cost is $9023.

Now, you are telling me you could build a quality car with luxury interior and V6 engine for $9023? Unless Chery is getting tires for $1 this is not happening; Chery has to cut cost by using cheap parts and outdated technology, like they are currently doing.

In other word, Chery cannot really compete with established Japanese and Korean brands in the US because building a car of equal quality in China is not any lower than in Japan, Korea or even Southern US states. When efficiency is as such that single worker can build 70 cars per year, the average wage+benefits cost is just $1200 per car in the US or Japan, which is actually a pretty small sum when considering other export related expenses.
 

·
Registered
Joined
·
469 Posts
I_Hate_China said:
- Subtract 2.5 % import duty of $277
- Subtract $1000 for trans-pacific transport.
- Deduct another $300 for in-China transport.

Now the building cost is $9023.

In other word, Chery cannot really compete with established Japanese and Korean brands in the US because building a car of equal quality in China is not any lower than in Japan, Korea or even Southern US states.
These costs can be removed by copying the Japanese and opening a factory in the USA :)

Nanjing Automotive already has a factory in Europe - the Chinese Auto manufacturers are coming!
 

·
Registered
Joined
·
111 Posts
I_Hate_China said:
Malcolm Bricklin is promising to sell the cheapest Chery at $19,000 MSRP, complete with leather interior, full option, and 10yr/100K warantee. However, a quick breakdown of his numbers reveal that we are going to be getting substandard cars for $19,000, a sum better spent on Japanese or Korean cars.

Let's start with MSRP of $19,000 for entry level Chery.

- Dealer's margin is 15%.
- Malcolm Bricklin's margin is probably 15% too.
- Subtract $700 for Destination
- Subtract $1,500 for Warantee Reserve

So the $19,000 entry-level Chery has a port-exiting price of just $11,100.

- Subtract 2.5 % import duty of $277

Now the port arriving cost is $10,823

- Subtract $1000 for trans-pacific transport.

Now the ex-China port price is $9823

- Chery's located inland, so all cars has to be transported by train, unlike Japanese and Korean auto factories located by seaside with built-in ports. Deduct another $300 for in-China transport.

Now the ex-factory price is $9523

- Chery wants to make at least $500 off its cars.

Now the building cost is $9023.

Now, you are telling me you could build a quality car with luxury interior and V6 engine for $9023? Unless Chery is getting tires for $1 this is not happening; Chery has to cut cost by using cheap parts and outdated technology, like they are currently doing.

In other word, Chery cannot really compete with established Japanese and Korean brands in the US because building a car of equal quality in China is not any lower than in Japan, Korea or even Southern US states. When efficiency is as such that single worker can build 70 cars per year, the average wage+benefits cost is just $1200 per car in the US or Japan, which is actually a pretty small sum when considering other export related expenses.
19K? Wow. That's steep.
 

·
Registered
Joined
·
111 Posts
Chery (from looking around these forums and doing some research) actually may be decent as chinese cars go, and unlike every other chinese car I've seen, may have import potential. (The designs are original and don't look half bad.) But, 19K for an unproven car with unproven quality from china? That will be a flop. Maybe if they started around 12k, they could work their way into the market. Hey, even BMW was cheap when it first came out in the United States, but as it became proven as an excellent car, it went up dramtically in price, and people were willing to pay it. Now if BMW had entered the United States at a luxury price, it never would have got off the ground.
 

·
Registered
Joined
·
280 Posts
fm.illuminatus said:
Chery (from looking around these forums and doing some research) actually may be decent as chinese cars go, and unlike every other chinese car I've seen, may have import potential. (The designs are original and don't look half bad.) But, 19K for an unproven car with unproven quality from china? That will be a flop. Maybe if they started around 12k, they could work their way into the market. Hey, even BMW was cheap when it first came out in the United States, but as it became proven as an excellent car, it went up dramtically in price, and people were willing to pay it. Now if BMW had entered the United States at a luxury price, it never would have got off the ground.
Agreed. That Malcolm Bricklin sounds like a bullshit spitting salesman. I think he has his heads in the clouds sometimes.
 

·
Registered
Joined
·
772 Posts
Chery needs to stay in China and take market shares against dominant foreigners for another 5 years before even attempting to enter the cutthroat US market.

And set up a direct distribution instead of resorting to con man Malcolm Bricklin.
 

·
Registered
Joined
·
49 Posts
Honestly I would hold off on selling cars in the USA for a while longer. China is still pretty new to the automotive world, and should use Asia to develop better cars before moving to the American market, which will be very hard to break into anyways. They would be better off waiting a few years to build higher quality product and starting with a decent reputation then they would rushing into the market with inferior products, which will hurt them in the long run. Issues like safety and reliability will kill them, especially with cars like the Toyota Yaris coming to America for under $11,000, and thats just for economy cars. Move up the price ladder and you will only find more and more competition.
 

·
Registered
Joined
·
450 Posts
above analysis is bs. most products you buy in the store for X came out the factory for half X or much less, it's normal, you are not getting ripped off, it costs everyone money to buy, store, distribute and sell.

and trying to argue that the labour content of a USA built car is only 1200usd so that's the only bit the chinese can save on is misleading. that 1200 usd is only the direct labour in the car assembly plant, but there is also a ton of indirect wage cost involved, as well as direct and indirect wage costs in the components that go into the vehicle. So the chinese have the potential to save on a lot more than that.

you could apply the same analysis and conclude it would be impossible for the chinese to build and sell you a TV, refrigerator, sports shoe, cellphone etc.
 

·
Registered
Joined
·
772 Posts
above analysis is bs.
It isn't.

that 1200 usd is only the direct labour in the car assembly plant, but there is also a ton of indirect wage cost involved, as well as direct and indirect wage costs in the components that go into the vehicle.
You also save big on logistics and import fees if you assemble in the US. Logistics and customs clearance cost alone can account for $2500 in cost.

Just remember Honda and Hyundai executive's comment that it costs more to assemble an Accord or Sonata in China than in their home country....
 
1 - 10 of 10 Posts
Top