China Car Forums banner
1 - 3 of 3 Posts

· Registered
1,278 Posts
Discussion Starter · #1 ·
In an article entitled, "China's drive into U.S. car market stalls" Mina Kimes of Fortune magazine, states this about Chinese-made cars:

"This means conquering the U.S. and European markets with something other than cheap knockoffs and reversing an abysmal safety record (83% of the country's recalls in recent years involved domestic-made vehicles, which command just one-fifth of the market)."

I'm not sure where Ms. Kimes gets her information, but I am hard pressed to remember the Chinese government recalling anything other than cars made by the foreign joint ventures. Oh wait, I do remember a recall of Chery units for a vanity mirror-related battery draw problem. If the 83% figure was true then I think we would have seen a number of those little makers close up shop a long time ago.

No, there's very little oversight by the Chinese government on safety, or on quality. CAQ (China Association of Quality), CACSI (Chinese Automobile Consumer Satisfaction Index), and SAQSIQ (State Administration of Quality Supervision, Inspection and Quarantine) all seem to be sitting on their hands, and doing nothing to make small Chinese makers accountable for their products. As for U.S.-based J.D. Power, well they just don't want to hurt anyone's feelings in the host country.

· Registered
1,190 Posts
China's drive into U.S. car market stalls

October 31, 2008: 6:09 AM ET

NEW YORK (Fortune) -- It's been more than three years since Chinese auto makers first sent chills down Detroit's spine with plans to sell cars in the United States beginning last year. China, now the world's second-largest automobile producer, was already selling low-cost vehicles in dozens of countries around the world at the time - with jarring success.

But with 2008 nearing an end, not a single Chinese-made car sits in a U.S. showroom - nor is there likely to be one anytime soon. China's ambitious plans to crack the U.S. market are woefully behind schedule. The reason: the country's cars still haven't met the emissions and safety standards necessary to export to the United States.

Chery, the country's largest independent carmaker, has twice delayed its U.S. rollout. Brilliance Auto, a smaller Chinese carmaker that sells sedans in Europe, and Geely, China's third-largest independent automaker, have postponed their U.S. push. While all three are reportedly looking to jumpstart exports to the United States in 2009 or 2010, some analysts predict it won't happen for another five years at least.

Detroit shouldn't rest easy, however. The Chinese government, no longer content to be a low-cost manufacturing economy and facing lower sales growth of homegrown cars, has set its sights on building a global car empire. The means conquering the U.S. and European markets with something other than cheap knockoffs and reversing an abysmal safety record (83% of the country's recalls in recent years involved domestic-made vehicles, which command just one-fifth of the market).

To get there, the Chinese government has stiffened safety regulations and offered other incentives to convince local carmakers to focus on quality, says Belzowski. "They'll figure this out," said Belzowski. "Some Chinese carmakers will come out of this and rise to the top."

A tighter domestic market
As U.S. car production has shriveled in recent years, China's has soared - to 8.8 million cars and commercial vehicles last year, a 22% increase from the year before, reports the International Organization of Motor Vehicle Manufacturers.

Meanwhile, China's car exports are also on the rise - 310,600 in the first half of 2008, a 70% increase from the same period last year, according to the Chinese Ministry of Commerce. Most of those vehicles are shipped to Latin America and Southeast Asia, where lower fuel emission and safety standards have helped China's low-cost knockoffs of European models gain market share. (See "The new Motor City.")

Even so, China carmakers are starting to come under pressure. Growth rates, while impressive, are slowing: JD Power and Associates estimates Chinese auto sales will rise 9.7% this year, less than half the year-ago increase.

Local automakers are also getting squeezed by competition from the likes of General Motors (GM, Fortune 500) and Volkswagen. Domestic customers prefer the prestige attached to foreign models, says David Jin, a managing director at Boston Consulting Group in Shanghai.

"Chinese companies can penetrate at the low end, but they need to scale up to survive," said Jin. And one way to do that is to go other countries."

The American and European markets are key to that strategy. But China's forays into Europe, which started in 2005, haven't been easy. Europe too has fairly rigid safety and emissions standards, which have limited exports. What's more, European carmakers have been aggressive about combating what they perceive to be illegal clones of their own designs.

Both Italian sports car maker Fiat and Germany's BMW, for instance, have recently won court orders blocking Chinese car makers from selling lookalike models.

China's designs for the future
The Chinese are taking these lessons to heart. Because of bad publicity from the copycat lawsuits and safety concerns, Chinese officials have tightened safety regulations and pressured carmakers to move beyond cheap knockoffs to original designs. China's leading auto executives no longer boast about competing on pricing alone.

Chery, for instance, recently acquired an Italian firm to improve designs. Last year Shanghai Automotive Industry Corp. acquired Britain's MG Rover Group, which had sold Land Rover to Ford (F, Fortune 500). BYD Auto, which has historically used Mitsubishi engines, started producing its own engines in February. The company built a 120,000 square meter R&D Center, which is focused on developing original vehicles.

"The newest cars are no longer direct copies of the internationals," said Lin Huaibin, a senior analyst at Global Insight in Shanghai.

The Chinese are also eyeing the booming market for hybrids. Although only 100 "new energy vehicles" were sold in June, according to the China Association of Auto Manufacturers, China recently placed a 40% sales tax on large vehicles, hoping to increase fuel efficiency. Both Chery and rival Chang'an have also rolled out hybrids.

Meanwhile, BYD, the world's largest maker of cell phone batteries and China's second-largest independent carmaker, has developed a battery-powered concept car, the F3e, and recently unveiled an electric crossover, the E6, that it hopes to export soon. The plan has one high-profile booster: Warren Buffett, whose MidAmerican Energy bought 225 million shares of BYD in September.

But even with the Buffett stamp of approval, it's still not clear when BYD's cars, or any Chinese vehicles, will show up at dealers near you. Jin predicts it will take another five to 10 years. "There's still a huge capability gap," he said.

Written by CNN , I am not surprised. Most of the vehicles recalls in China are Toyota, Honda, VW, GM.
1 - 3 of 3 Posts
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.