China A Threat To Western Auto Markets, Says Rick Wagoner

[JoeT]

Chinese Makers Descend On Frankfurt

Neil McDonald 03/10/05
www.goauto.com.au

Asia is most likely to feel the impact of low-cost Chinese vehicles before Europe or the United States, according to General Motors chairman Rick Wagoner.

The three main Chinese car manufacturers – Geely, Brilliance China Automotive Holdings and the Jiangling Motors Group – all exhibited their international wares at the recent Frankfurt motor show, marking a coming of age for the infant Communist car industry.

However, Mr Wagoner told GoAuto that 99 per cent of China’s automotive output would be absorbed in China before any serious export markets were pursued.

"I think that’s going to be the case for a significant period of time," he said. "Having said it: Will there be some exports? Yes I expect there will be.

"Asia is a more natural market than Europe and the US for a variety of reasons. The Asian economies are growing, I think probably some of the product fit is going to be a little more natural there."

Despite his casual acceptance of China as a global player, Mr Wagoner said it posed a huge threat to Western markets, including the United States.

"A while ago someone announced a plan to sell 250,000 units from Chery in the US by 2007," he said. "That’s highly ambitious. I don’t think that’s going to happen over that timeframe. But I think that we should expect that over time the Chinese industry will develop in a way that’s pretty competitive."

Mr Wagoner also believes Australia is in the front line to receive Chinese-built cars.

Volkswagen has already tested the waters with the Chinese-built Polo sedan, which has had a lukewarm reception here. Build quality is among the key issues.

Mr Wagoner conceded there might be a day when GM vehicles are built in China and sold in Australia.

"I don’t rule it out – but it’s not something that we currently have on the mainline agenda," he said. "We are going to be bringing in some more products into Australia from Korea and I think it’s not a big step from there to think about China.

"But as we’re working on it today we don’t have anything that I can cite for you."

Chrysler Group marketing chief Joe Eberhardt told The Car Connection website that he anticipated the Chinese manufacturers to quickly spread throughout the world.

It took the Japanese more than 20 years to become serious competitors in Western markets, and the South Koreans "half that time", he said.

With the assistance of foreign partners, Chinese manufacturers could move even faster, once they venture outside their own borders.

"It’s just the trend to globalisation in every segment in every market," he said.

The Chinese manufacturers were tucked away from the mainstream offerings at Frankfurt, however, their mere presence sent a chill through European manufacturers, most of whom consider them a serious threat.

The Chinese trio exhibited about 10 vehicles, most of which still require homologation for European regulations. However, manufacturers and importers of these vehicles told GoAuto they were close to earning European Union approval.

Of the three, refrigerator maker Geely, which was founded in 1986 and built its first car in 1998, had the biggest presence with five cars.

Geely builds a range of 1.0-litre, 1.3-litre and 1.5-litre small sedans and hatches priced from as low as $US4000 ($A5220).

At Frankfurt, it unveiled its new $US12,000 ($A15,600) 1.5-litre CD (China Dragon) coupe, which boasts electric windows/mirrors, central locking, leather, park distance radar and a CD/DVD stereo. The four-cylinder engine develops 69kW at 6000rpm and 128Nm at 3400rpm.

Company spokesman Li Shufu told GoAuto he was buoyed by the positive response to the cars, saying the brand had not yet looked at Australia but was keen to look at all possible markets.

Geely is already exporting to Africa, the Middle East, Central and South America and has just established import relationships in the United States, Europe and South-East Asia.

Its European partner is Portuguese importer Hipolito Pires, which will receive the first cars this month and is assisting in getting EU-type approval for three sedans.

GoAuto found that the Geely cars on show at Frankfurt and Jiangling’s Isuzu Frontera-lookalike Landwind four-wheel drive – the only Chinese-built (Nanchang) vehicle currently sold in Europe – were all distinguished by low-rent interiors, coarse plastics, poor panel fit and below average paint finishes.

The Brilliance Zhonghua 2.0-litre mid-size sedan was the most polished vehicle on offer.

About the size of a Holden Vectra, the Zhonghua is highly equipped and expected to go on sale in Europe in November with a pricetag of about $US21,000 ($A27,500).

The Gibraltar-based Euro Motors is the private importer for the Brilliance Zhonghua, which is built by the Shenyang Brilliance Jinbei Automotive Co in Shenyang, which also has a joint venture deal with BMW.

$1.00 Aust = $0.76 US 03/10/05

China's Jiangling Landwind

[redimpss5]

OK, So Rick has been wrong about many things about the auto business, so I am supposed to jump on this train wreck belief also? When will these clowns ever have a clue? How can I tell these cheesy ****************************s I will never buy the same belief the japanese tried to con me into buying in the 80's? I HATE front drive!!! Let's look at this....Hmm, back in the 80's, suckers were told that front drive and the way those cars were built, was better then the car built at home, so they bought from overseas. However, you can not buy a new 1980's automobile!! Some clown in Detroit drank enough beer, and thinks, he can con me into buying into those 80's autos we dont have anymore. BRING BACK REAR DRIVE!!!!!!!!! The only choice I have is a lame SUV? How is it, that to get rear drive, I am supposed to be happy wth 14mpg? The 98 Chevrolet Camaro got 29 MPG!! This is not that hard to do!! Come on Chevy....step up to the plate and prove we are still good enough in the world to lead and not follow!!!!

[1BadPig]

The Asian economies are growing, I think probably some of the product fit is going to be a little more natural there.

Gee, I wonder who contributed to their growing economy? They are using technologies GM gave them. And what GM didn't give them they blatently copied. Also didn't GM recently "encouraged" their suppliers to go to China so they can reap the benefits of cheap, I mean less expensive parts? Great while China is booming with new automobiles, we're having a bicycle boom here in the states... isn't that a case of irony? See article : http://news.yahoo.com/s/afp/20051001...s_051001131406 . Will there be a SchwinnInsideNews.com coming soon?

It took the Japanese more than 20 years to become serious competitors in Western markets, and the South Koreans "half that time", he said.

With the assistance of foreign partners, Chinese manufacturers could move even faster, once they venture outside their own borders.

Yeah, especially when the Communist Government is backing the whole ventures. More profit = more military build up. I recently read that China is retooling their military hardwares. I think only North Korea spend more per capita than China on the military. We have to be very weary of the Chinese military. BTW, China is celebrating their 56th year of Communist rule (and victory)... http://apnews.myway.com/article/20051001/D8CV8FK80.html

[Dizzer]

The Chinese will use import restrictions, "joint venture" policies, government funding and subsidies to develope their own industries and infrastructure which they will then UNLEASH into the world markets. And we, the Japanese and the Europeans will be powerless to stop it.

[mrfunji]

Wagoner uses the phrases "I think" and "probably" a lot - "i think" he maybe unsure what to think about Chinia

BTW, is that car in the picture the one that got a 0 star safety rating? Somehow I don't think that will go over well in the USA.

[camaro_freak]

GM better watch out.... Rick and the gang let the Japanese and the Koreans into the market without a fight. The last thing the BIG 3 need is yet another foreign competitor to eat up market share.

I sure hope Ricker is making plans now and not just talking about this issue.

[nikivee]

Originally Posted by redimpss5

OK, So Rick has been wrong about many things about the auto business, so I am supposed to jump on this train wreck belief also? When will these clowns ever have a clue? How can I tell these cheesy ****************************s I will never buy the same belief the japanese tried to con me into buying in the 80's? I HATE front drive!!! Let's look at this....Hmm, back in the 80's, suckers were told that front drive and the way those cars were built, was better then the car built at home, so they bought from overseas. However, you can not buy a new 1980's automobile!! Some clown in Detroit drank enough beer, and thinks, he can con me into buying into those 80's autos we dont have anymore. BRING BACK REAR DRIVE!!!!!!!!! The only choice I have is a lame SUV? How is it, that to get rear drive, I am supposed to be happy wth 14mpg? The 98 Chevrolet Camaro got 29 MPG!! This is not that hard to do!! Come on Chevy....step up to the plate and prove we are still good enough in the world to lead and not follow!!!!

Producing a "camaro" or RWD doesn't prove to the world that we lead in automobiles.

[LI CADILLAC]

c'mon rick. if we build world class cars now, then they wont get the stronghold that the japanese companies got.

[XaviousOrgus]

Time for Wagoner to resign!! GM needs a REAL LEADER!

[lytmup]

China is more than a threat to western auto Markets, they are a threat to this country PERIOD.

They are financing our national debt. I dont think that I need to spell out how bad that is for the economy when we cant pay, and they come calling.

[69Firebird400]

Did anyone see the article in the November Motor Trend about Malcom Bricklin and his plans to import Chery cars from China into the US? It seemed overly ambitous to me, and the guy has a pretty big ego about his likelihood for success considering his track record. I think that 250,000 by 2007 comment that Wagoner made was about Bricklin.

The cars that Bricklin was talking about bringing here had larger V6s (3.6L I think) and sounded more appealing on paper than the 1.0 to 1.5L tin cans that the Chinese firms displayed at Frankfurt. However, even competing on price, I think it will be a while before the Chinese figure out what the US market wants to buy, and more importantly, convinces the US consumer that an unknown Chinese-branded car is something better than a model they have already heard of and already has established a reputation.

By the way, Bricklin is the guy who brought the Yugo to the US. He may have sold a lot of cars initially on price, but they really turned out to be a POS. There are probably more punchlines to jokes about Yugos than there were cars sold.

[hdmax]

A $4,000 vehicle! those will sale here! With $3 gas people will start looking at smaller cheap cars for getting around town. Can you say Yugo?

[genjy]

That 0-star safety SUV isn't the only car produced by Chinese companies, and Chinese cars won't be 0-star forever. I hope no one is in the disillusion that the Chinese auto industry won't affect the Big 3 or the Japanese.

[vanshmack]

Originally Posted by camaro_freak

GM better watch out.... Rick and the gang let the Japanese and the Koreans into the market without a fight. The last thing the BIG 3 need is yet another foreign competitor to eat up market share.

I sure hope Ricker is making plans now and not just talking about this issue.

I don't think Rick Wagoner is responsible for letting the Toyota and the Gang into the US market virtually unapposed. He deserves his share of blame for the current predicament, but you can blame Roger Smith for the surrender to the Japanese. He chose robots over good cars.

[timman]

It took the Japanese more than 20 years to become serious competitors in Western markets, and the South Koreans "half that time", he said.

With the assistance of foreign partners, Chinese manufacturers could move even faster, once they venture outside their own borders.

"It’s just the trend to globalisation in every segment in every market," he said.

The Chinese manufacturers were tucked away from the mainstream offerings at Frankfurt, however, their mere presence sent a chill through European manufacturers, most of whom consider them a serious threat.

This is so ominous...the monster on the horizon I've been ranting about lately.