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 Unless Chery is getting tires for $1 this is not happening; Chery has to cut cost by using cheap parts and outdated technology, like they are currently doing.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.