Hyundai to challenge Chery in China with a 30,000 Yuan car

Real_I_Hate_China said:

All Hyundai/Kias until now were designed to be fully US and EU regulation compliant. This one is not.

This new 30,000 Yuan Hyundai is for China and other developing country markets only. Since it has heavy Chinese parts content, Hyundai will reduce the warranty to not get killed by the warranty cost accordingly.

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Hyundai not get killed by warranty cost...

That speaks for the built quality for the high warranty cars, huh?

Real_I_Hate_China said:

This is the biggest difference between Toyota and Hyundai. WHile Toyota would not sacrifice its quality to reach the Chery price level, Hyundai is willing to.

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Right.

All auto makers source huge amount of their parts from china. btw if you think getting some cheap parts will bring the cost of a car down that much, that speaks volume for your ignorance on manufacturing industry.

Real_I_Hate_China said:

Although finished cars won't be exported, Chinese parts industry supplying this model does get to enjoy the benefits of CKD parts export as this model will also be produced local plants.

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Whatever.

Real_I_Hate_China said:

Unfortunately for lazy Chinese workers, they met the militant labor union's drill sergeants, most of whom are ex-marines or some shit like that. Hyundai's happy that their Beijing line outputs 72 cars/hour.

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In your wildest dreams buddy, if you think making a car plant work efficiently involves drill sergeants, you are under emotional and mental age of 21.

the very act of going join venture with Beijing Auto shows how Stupid Hyaundai is and how dependent on politics hyaundai is. Basically it is a political bone thrown to Hyanudai.

Mandarin_orange said:

Hyundai not get killed by warranty cost...

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Hyundai knows about the consequence of using cheap parts better than anyone else.

That speaks for the built quality for the high warranty cars, huh?

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Exactly. It was the 100K warranty that forced Hyundai to go above Toyota quality in the US.

All auto makers source huge amount of their parts from china.

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US ones, yes. Japanese and Korean ones, no.

btw if you think getting some cheap parts will bring the cost of a car down that much, that speaks volume for your ignorance on manufacturing industry.

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Actually it shows your own ignorance. This is not some airplane manufacturing with high overhead costs. These Japanese and Korean auto manufacturers are as lean as it gets.

In your wildest dreams buddy, if you think making a car plant work efficiently involves drill sergeants, you are under emotional and mental age of 21.

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So you have no idea how Hyundai runs its plants.

the very act of going join venture with Beijing Auto shows how Stupid Hyaundai is

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You can blame the Chinese communist party for that.

Because Chery basically can lower their price for the current models even further.

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Chery's average profit per QQ is $50. This means they are losing money on basic models while making some in higher end models. Yes, even Chery has hit the limit of price cutting. 2006 Price cutting has hurt Chery's quality really badly, now the second worst in China after Geely.

If their quality is that bad, no one will buy them.

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Chinese consumers don't care about quality, they are price-driven.

superidler said:

Well, may be that's why you're not the chief. IMO, the auto industry is doing a death match all the time. They try to increase the share of market no matter what untill the enemy is dead. Even if they don't get enough profit they'll fill the lose their money and keep selling a low priced car until the enemy is dead. Thinking about that why toyota would need to develop such a low priced car while they're doing well without it?

Because they care about what chinese auto is doing and the chinese car market. And they want to win battle as they did in other countires.

Also,I don't think Chery can lower their price much more than now. I read the thread in this forum somewhere that 30% of car price was downed last year.
When you think about the price is the most advantage of chinese car , do you think they were able to put the high margin at the beginning?

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haha, I don't want to be him.

The problem is some Chinese car makers have a much higher margins than your average western car makers. The high margins are at the high ends, true. But the real highest margins are the older models that has basically ran their tooling cost out already. The cost of these operations are much smaller. The employee retirement and health baggage is smaller for these smaller companies. lower overhead, highly productive workforce, low interest loans = low low cost. You can find plenty of cheaper labor else where in the world, but you can't find as productive enviornment as in China.

I read somewhere that the average profit margin for cars sold in China is 28%, while in EU and US is 5% or less. thanks to Chery, basically the expensive foreign brand has to lower their price. This already has cut margins of alot of people. So again who wants to fight a price war?

Also, remember, Chery has massive financial backing of multipule state owned banks and the local government. If some SK car makers want to fight a price war, they better be prepared for a price war with banks.

Some bigger picture rant... Chinese companies are moving up the ladder fast. next up are SK companes. While some are moving up the ladder, china retain the low cost competitiveness. That's what's scary about it. nothing is safe from compeitition. The Chinese can make fighter jet engines and cheap cigarrette lighter, and do both efficiently and cheaply. Can you compete? sure you can, but it is hard.

Real_I_Hate_China said:

Hyundai knows about the consequence of using cheap parts better than anyone else.


Exactly. It was the 100K warranty that forced Hyundai to go above Toyota quality in the US.


US ones, yes. Japanese and Korean ones, no.


Actually it shows your own ignorance. This is not some airplane manufacturing with high overhead costs. These Japanese and Korean auto manufacturers are as lean as it gets.


So you have no idea how Hyundai runs its plants.

You can blame the Chinese communist party for that.

Chery's average profit per QQ is $50. This means they are losing money on basic models while making some in higher end models. Yes, even Chery has hit the limit of price cutting. 2006 Price cutting has hurt Chery's quality really badly, now the second worst in China after Geely.


Chinese consumers don't care about quality, they are price-driven.

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May I laugh? hahahaha...

Cheap parts =/= cheap cars. period. their are much more factors in cost of manufacturing then component price.

about the way Hyundai runs its plants. I don't know how is it in SK, may be they are all slave like so they had to resort to drill sargeants. (may be a alittle whip too? )

But I know how it is in Beijing. and anhui and shanghai. and detriort and Georgetown, productivity doesn't mean drill sargeants.

oh the communist the communist. lets all be afraid of the red terror...

The truth is SK are uncompetitive (in the chinese market) there fore they resort to politics. Sure, come and build your car in Beijing. provide more jobs. but that's a bone thrown to them. nothing more.

actually chery's quality is going up year after year. 2006 they had one of the biggest expansion. under that circumstance. I would say they are doing great.

About chinese consumers, if you think they are price driven but not quality you are very ill informed. It's all about 性价比. (go look it up of what it means. )
The way that chery and other chinese companies are moving up that fast, and the SKs getting alot of complaints means that on 性价比 SKs just don't get it. therefore SKs will fail. don't fight it. it is inevitable.

The problem is some Chinese car makers have a much higher margins than your average western car makers.

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QQ's $50 per car margin sounds low even by Chinese standard.

But the real highest margins are the older models that has basically ran their tooling cost out already.

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And why aren't those companies cuttinig prices to compete if they live on such a fat margin?

lower overhead, highly productive workforce, low interest loans = low low cost.

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Sounds like foreigners doing business in China.

I read somewhere that the average profit margin for cars sold in China is 28%, while in EU and US is 5% or less.

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That was a couple years ago. The price war of 2005~2006 has brought down foreigner's margins to 5% and Chinese margins to negative. Yes, Chery is losing money right now.

So again who wants to fight a price war?

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There are too many automakers in China and a price war is inevitable, as the Chinese market consolidates around global giants.

Also, remember, Chery has massive financial backing of multipule state owned banks and the local government.

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Chery has run out of cash and is preparing an IPO to raise cash.

You are so behind the news it isn't even funny.

$50 margins. you know how much GM and toyota makes on its cars?

Why should they cut margins if they all had huge profits? it's the overall that matters. why doesn't Ferrari cut its prices?

"Chinese margins to negative. Yes, Chery is losing money right now."
you mean you guesstimated?

"There are too many automakers in China and a price war is inevitable, as the Chinese market consolidates around global giants."

Whatever.

"Chery has run out of cash and is preparing an IPO to raise cash.

You are so behind the news it isn't even funny."

raise cash yes. running out of cash? sure. That's why you have banks.

"You don't know how to right equal inequal operators."

you don't know how to read.

"Like what? "

Like defects, like lean manufacturing. like low overhead. like work with your suppliers to make sure they have the lowest defect rates.

"No, those drill sergeants are labor union leaders. But it is disturbing that the drill sergeants agreed to a 16% higher throughput in China than they would accept in Korea. There is a racism at work here."

your sentence don't make any sense. you know that SK unions are not in china right?

"Why don't you ask why Beijing workers are working 16% faster than their Korean counterparts.."

Because SK workers are natually dumb and lazy? Just a guess.

"So you haven't read J.D. Power's Chinese Car quality survey 2006 report that put Chery as seeing the biggest quality drop off in China in a single model year. The worst quality in China no.1 = Geely. no.2 = Chery."

That's with huge expansion and with a first public recall. mean while what did hyaundai did? recalled 100,000 of their crappy cars. not bad chery.
http://auto.people.com.cn/GB/14555/4925974.html

- personal observation -
when some one is mad enough to put "hate" in their username, that means China has got to be doing some thing right to piss them off and make them mad enough to "hate" China. :thumb:

Real_I_Hate_China said:

GM : -$1,000
Toyota : $2500


They don't.


Chery lost $80 million from January 2006 to October 2006 according to Chinese press. Chery's losses since October is unknown.


Well, the last big loan Chery took was about half a billion dollars. It wasn't long after Chery announced an IPO. Chery's burning cash fast.


A foreign concept to Chinese. Chinese only care about price. Quality be damned.


Factory floor supervisers are. I actually saw a documentary on how a Kia factory floor manager trained his Chinese subordinates. He carried around a baseball bat and smashed whatever the defects he saw on his worker's workmanship. This scared the hell out of Chinese workers and the quality improved quickly.

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haha, is this the best you can do?

"GM : -$1,000; Toyota : $2500"
If you gonna quote numbers. quote them correctly. Is that an average or worst/best?

"They don't."

you just said in the previous thread that:
" And why aren't those companies cuttinig prices to compete if they live on such a fat margin? "

Obviously they did cut prices. or else you are contradicting yourself in two postings. Did they or did they not cut prices across the board in China?

"Well, the last big loan Chery took was about half a billion dollars. It wasn't long after Chery announced an IPO. Chery's burning cash fast."

You know where that loan come from? actually most car companies has rolling loans. no biggie. as for the IPO, exes wants to cash in, so does the local gov' t who owns a chunk of it.

Chery burning cash fast? is that a news? they have been burning cash to rolling out models and set up engine plants ever since 3 years ago.

If you want to test how deep the pocket of Chery is? basically its as deep as the gov't of China.

"A foreign concept to Chinese. Chinese only care about price. Quality be damned."
And where you get this assertion from? I guess you didn't do the homework I
gave you huh? 性价比, look it up what it means.

"I actually saw a documentary on how a Kia factory floor manager trained his Chinese subordinates. He carried around a baseball bat and smashed whatever the defects he saw on his worker's workmanship. This scared the hell out of Chinese workers and the quality "

I guess that did wonders for the productivity huh?
How many strikes did Hyaundai had last year?
how many billions did it lost due to strikes?
How much production lost due to these strikes?
Go look it up. then come back to tell me it's productive.

That's how stupid Hyaundai is I guess, thinking that by acting tough and violent equals productivity. The sad part is you bought it too. haha. Hopeless SKs. :thumb:

"GM : -$1,000; Toyota : $2500"
If you gonna quote numbers. quote them correctly. Is that an average or worst/best?

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Divide each company's reported profit/loss by their production and you get the unit profit/loss.

Obviously they did cut prices. or else you are contradicting yourself in two postings. Did they or did they not cut prices across the board in China?

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Most of the smaller Chinese venders are unprofitable, but are cutting prices nevertheless due to market competition.

You know where that loan come from?

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Forgot the name of the bank.

as for the IPO, exes wants to cash in, so does the local gov' t who owns a chunk of it.

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Chery doesn't want IPO because it hinders their fast growth, but they have no choice because they are running out of cash.

If you want to test how deep the pocket of Chery is? basically its as deep as the gov't of China.

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Chery is a job project by the city government of Wuhu; it has nothing to do with the communist party. Again you know nothing about the state of Chinese auto industry.

I guess that did wonders for the productivity huh?

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Yes. Hyundai/Kia's Chinese lines run at the fastest throughput.

That's how stupid Hyaundai is I guess, thinking that by acting tough and violent equals productivity.

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Worked in China. Interestingly, I also saw how the militant labor union's drill sergeants were training their American workers and they were talking politely through a translator. So there is a racism at play. Or talking politely to Chinese doesn't work and this is why the drill sergeant carried around a baseball bat.

"Divide each company's reported profit/loss by their production and you get the unit profit/loss. "

You are dumber than I thought you were,
Did you know that one of the biggest division at GM is GM financial (credit cards)?

this has become an interesting game of guessing how dumb you can be...

And i am losing!

"Most of the smaller Chinese venders are unprofitable, but are cutting prices nevertheless due to market competition."

wrong, smaller is more profitable. Go ask some of the sales rep here.

"Forgot the name of the bank."

you mean you forgot to look it up?

"Chery doesn't want IPO because it hinders their fast growth, but they have no choice because they are running out of cash. "

When did an IPO has hindered a company's fast growth, ever?

" Chery is a job project by the city government of Wuhu; it has nothing to do with the communist party. Again you know nothing about the state of Chinese auto industry. "

Wrong again, it was orginally set up as the 951 project by Anhui Provincial government, you know what 951 mean? look it up, it has some thing to do with 95 and #1. They picked Wuhu because its right next to Yangze river.

"government" and "nothing to do CCP" shouldn't go in a sentence that describes China, period.

Go find out who gave that loan and why and the terms, and you will be the one who knows a little bit about the state of chinese auto industry.

It seems that your understanding of China is, at least to say, weird.

"Yes. Hyundai/Kia's Chinese lines run at the fastest throughput."

How may cars and $ and production Hyundai lost due to strikes?

How many cars Hyundai recalled in China?

"Worked in China. Interestingly, I also saw how the militant labor union's drill sergeants were training their American workers and they were talking politely through a translator. So there is a racism at play. Or talking politely to Chinese doesn't work and this is why the drill sergeant carried around a baseball bat."

yeah, SKs are notorious for bad behavior, I guess ignorance breed racism. oh, well, if you intent to be treated with respect, treat other with it. I guess the SKs are not developed enough to understand that. and may be why SKs are generally viewed with contempt in China. :thumb:

May be talking politely to Americans has to some thing to do with American troops occupying SK? You got to be to the guy occupying your house right? :thumb:

Question,
Is SK even a fully sovereign country? same category as may be Afghanistan and Iraq may be?