Made in China
As the Chinese auto industry grows larger, so does the influence of Chinese automakers. The question isn't if "Made in China" automobiles are coming to this country, but when.
Can you believe it? The Chinese buy more cars than Americans do. It's true! China overtook the United States as the biggest auto market in 2009, when passenger car sales soared to 10.3 million and total vehicle sales were estimated at 13.6 million, according to the China Passenger Car Association. That represents growth of about 45 percent from 2008. By contrast, U.S. sales of cars and light trucks plunged 21 percent in 2009 to 10.4 million as a shaky economy kept buyers away from showrooms. It was the first time in history that any country bought more cars, trucks or SUVs than were sold in America.
Not surprisingly, top carmakers from the U.S., Europe and Asia are taking full advantage of the burgeoning demand in the People's Republic. All are teaming up with one or more of China's relatively unknown auto brands, as required by Chinese law, to co-produce top-quality sheet metal for sale in that country. While that might sound as if the capitalist hordes are taking over automobile production in China, quite the contrary is true. China's homegrown carmakers are, in fact, using these relationships to learn how to build better, more desirable automobiles in hopes of eventually becoming a force in the global marketplace.
So when will cars bearing the "Made in China" badge be available here? Well, that remains to be seen. To date, not a single "Made in China" car has cracked the U.S. market. Chinese companies such as BYD Auto and Brilliance Automotive have talked a big game about setting up shop here, but have failed to do so, primarily because Chinese-made cars still aren't good enough to tempt American buyers — whether in styling, quality, safety or technology — and likely won't be for years to come.
Lots of Talk, Little Action
Some Chinese automakers insist they're on track to bring cars to America in the next few years.
BYD, whose backers include noted investor Warren Buffett, has announced plans to sell an electric car in California by year-end: the e6, a 5-passenger crossover with a claimed range of 205 miles on a charge. BYD, which stands for "Build Your Dreams," built its first dream car in 2003, and is among the world's largest makers of lithium-ion batteries — the key to a coming wave of electric cars and hybrids.
Brilliance, BMW's partner in China, also hopes to make it to the U.S. soon, likely with a midsize family sedan. But the company would not give us, or anyone else, any details.
And Coda, a California-based company that builds cars in China, hopes to sell its roughly $35,000 Coda all-electric sedan in California by year-end, then move into Northeast states in 2012. Based on the Hafei Saibao gas-powered sedan sold in China, the Coda will be re-engineered to run on an electric motor and lithium-ion battery in the U.S.
Despite these bold promises, analysts and industry experts are skeptical, maintaining a wait-and-see attitude until cars actually show up at dealerships.
Coming to America Won't Be Easy
Jeff Schuster, market forecaster for J.D. Power and Associates, says that a battered economy and a brutal car market make competing in the U.S. a daunting task for any newcomer, let alone a Chinese brand with an obscure name and unproven reliability.
Brilliance stumbled badly when it entered the European market, halting sales this year after selling just 502 sedans since 2007. The company had projected 160,000 sales over five years. The poor sales performance is generally attributed to the fact that the company's BS6 sedan scored an embarrassingly poor rating in a European crash test, sinking its already shaky reputation and forcing it to hastily re-engineer the car. And the U.S. market is even harder to crack than the European market.
While a tough blow to Brilliance, this story is not unique. "The execution of Chinese cars just isn't up to the standards that we expect in a finished vehicle," says David Cole, director of the Center for Automotive Research. Sure, automobiles made in China have shown impressive strides as of late, but they remain visibly primitive compared with the typical Chevy, Hyundai or Toyota, with dated styling, poorly finished interiors and a shortage of features that Americans expect. And no Chinese-designed car has passed U.S. emissions or crash tests to date.
"Japanese and Korean companies stubbed their toes from a quality and image perspective," says Doug Speck, Volvo's U.S. CEO and president. "They learned they needed to regroup and figure out how to compete in the world," he says. "They may well be taking a more intelligent approach to acquiring all the capabilities [needed to compete with more established nameplates]." Geely, China's biggest private carmaker, recently signed a deal with Ford to acquire Volvo for $1.8 billion.