THE CHINESE ARE COMING
This article is from our archives and has not been updated and integrated with our "new" site yet... Even so, it's still awesome - so keep reading!
Published on Wed, Jan 23, 2008
By: The LACar Editorial Staff
Chanfeng Liebao CS6 The 2008 North American International Auto Show Words by Christopher Merlo, Mark Dapoz and Chuck Dapoz Pictures by Mark Dapoz and Chuck Dapoz
Everyone knows the Chinese auto manufacturers are coming to America. Their arrival is years away, but like clouds on the horizon, we've seen them coming for a while, and they continue to move closer. Two years ago at the North American International Auto Show, Geely Automobile was the first Chinese company to display vehicles at a U.S. auto show. Last year at NAIAS, Changfeng Group held a news conference. This year, five Chinese manufactures are on the floor at Cobo Center: BYD, Changfeng, Geely, Li Shi Guang and Zhongxing Auto. The Chinese manufacturers clearly are not ready for prime time. Their products do not meet U.S. standards for safety, emissions, quality or even basic features. Their displays and marketing materials are woefully inadequate. What's notable about the companies is their continued progress and the reception they're receiving in Detroit. A few impressions: The Chinese manufacturers have come a long way in a short time, and they're growing faster than fast. Consider that in 1986 Geely was founded as a maker of refrigerators. In 1992 it began making motorcycle parts, in 1994 began manufacturing motorcycles, in 1998 began manufacturing cars, and exported its first cars in 2003. Or consider that BYD started in 1995 with 20 employees as a maker of batteries for consumer products, and in 2003 it bought a failing auto manufacturer. Today it has 100,000 employees, claims it makes 65% of the world's nickel-cadmium batteries, and is a leading developer of hybrid vehicles. The Chinese manufacturers seem to have realistic understanding of the challenge of gaining a foothold in the U.S. The companies loosely talk about selling vehicles in the U.S. in two to five years, but they also admit they have a lot to learn, and appearing at NAIAS is part of the learning process. Li Shufu, Geely's chairman, would not commit to a timeframe for U.S. sales, saying he's not sure Geely vehicles will be welcomed by U.S. consumers in the near term.
BYD's F6 The Chinese automakers are ambitious, but take some claims with a grain of salt. Numbers of cars, plants and other data are tossed around faster than Mahjong tiles. For example, a Geely brochure says the company sold 2 million cars in 2006 and plans to sell 20 million by 2015. Put those numbers in perspective: both General Motors and Toyota sold about 9.4 million vehicles worldwide last year. Automotive News' 2007 Global Market Data Book forecast Geely's sales for the year at 200,000 units, not 2 million. Geely's published numbers don't sound right. Maybe something's lost in translation.
BYD's F8 carries a familiar shape U.S. politicians are welcoming the Chinese manufacturers with open arms. The BYD, Changfeng and Geely news conferences at NAIAS all began with welcoming remarks by Wayne County Executive Robert Ficano. (Wayne County is the largest county in Michigan and includes the city of Detroit.) He talked about the three trade missions he's taken to China, with a fourth being planned, and of hoping to entice Chinese companies to establish manufacturing operations in Wayne County. Separately, Michigan governor Jennifer Granholm also talked with Chinese executives to encourage them to set up shop in the state. Before Michigan's economic downturn began about four years ago, politicians didn't openly court foreign companies out of fear of alienating the Detroit Three and the United Auto Workers union. Clearly, the world's changed. It's interesting, though, that when Republican presidential hopefuls Mike Huckabee, John McCain and Mitt Romney visited the auto show, they avoided the Asian and European stands, wanting voters to see only images of them in front of American brands.
Li Shi Guang Ming exhibited some funmobiles It's a small world after all. Though the Chinese automakers are growing fast and will increasingly export vehicles, remember that China itself is dominated by foreign manufacturers. The top three manufactures in China in 2007 were Volkswagen, with 910,000 sales, Toyota and General Motors, both with nearly 500,000 sales. The next three top-selling manufacturers also were non-Chinese: Hyundai-Kia, Renault-Nissan and PSA/Peugeot. All of these manufacturers are operating joint ventures with Chinese partners. Though the non-Chinese automakers in China are building, in most cases, world-class cars, many of the Chinese automakers are making small and inexpensive cars, for domestic sales as well as to third-world nations. Look for the Chinese to gain experience by selling in Asia, Africa and Latin America before developing cars for Europe and North America. The Chinese manufacturers are coming, but they won't be in the U.S. this year or next. Keep an eye on future Detroit auto shows. NAIAS may be the only U.S. auto show the Chinese manufactures will participate in for several years. When they're ready for prime time, there's a good chance the news will come from Detroit.
Chanfeng Kylin For LA Car's coverage of the North American International Auto Show, see Turning Up The Heat In January. See also: Back Seat Driving: In Detroit, The Auto Show Is Bigger Than Big