Topic: From The Economists: China's speeding auto manufacturing

[mp3butt]

It's from the current issue. I have the hard copy but my wife has taken it with her.  Just a few key points I would like to share:

- I forget the exact figure, but Chinese firms can sell cars for USD$7000ish and a few manufacturers lament that they can't even buy enough steels for that kind of of money.

- Facing fierece competitiion and pressure to grow, production cycle is shortened to something like 3 years.They are able to do so as they "borrow" designs oversea. However,  it means they won't have enough time to probably engineer and test out new cars before rolling them out, resulting in inferior quality.

- According to the article, the average problem rate new cars made by Chinese manufacturers in the year of 2005 is for every 100 cars there are 338 problems. It is actually higher than the year 2004.  (Note: according to CR, the most reliable brand in 2005, Subaru, has a rate of merely 8 problems for every 100 cars in the first year)

Chinese manufactuers will nevertheless find ways to export cars to our shore. It is not a bad thing for consumers. They will certainly be attractive to some people because of the awfully low prices and progressive, often "cute" styling. However, quality and service are issues worth thinking about. Just don't remind me of Pony and Yugo. 


Here are the English websites for three of the largest Chinese auto makers.

Geely: http://www.geely.com/english/index.htm

Great Wall Motor: http://www.gwm.com.cn/eng/html/company/introduce.asp

Chery Automobile: http://www.cheryglobal.com/

[Mitlov]

For now, everything I've heard suggests that Chinese cars are c--- on wheels.  But that could change in time.  Look at the HUGE advances made by Hyundai, which went from being a pauper's car to a credible competitor with Honda and Toyota in just a few years.

[Turbo Bob]

They will be slagged off in the media for years, until the domestics realise they have surpassed them in 30 years or so...

[Wolfe]

Chinese manufactuers will nevertheless find ways to export cars to our shore. It is not a bad thing for consumers. They will certainly be attractive to some people because of the awfully low prices and progressive, often "cute" styling. However, quality and service are issues worth thinking about. Just don't remind me of Pony and Yugo. 

The Chinese car companies will have a number of significant hurdles to overcome before they can make it here. First of all once they start selling cars outside of China they will become exposed to enforcement of copyright laws and will no longer be able to "borrow" car designs. They will have to build up their own design and engineering capacity to a level competitive with other international car makers. This will not be quick, easy or cheap. Meeting international safety and emissions standards will be another hurdle (do a search for Chinese SUV crash test ). Right now it seems to me that the Chinese car companies are still scrambling to meet the challenges of the Chinese domestic market. And finally I expect these Chinese cars to cost more than expected when they do arrive. They will likely have a price advantage but I doubt that they will be able to bring a $5000-$7000 car to market here.

Sure Chinese car companies will eventually make it here but it will involve more than just loading some cars onto a ship and setting sail for North America. Once they do make it here, though, watch out.