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Move over GM, Chinese automakers to enter US, CA markets
China's auto makers hope to sell cheap cars in the US and Canada within three years
By Freddie Mooche
Sunday, 10 August 2008



(AXcess News) Washington - While General Motors and Ford battle to survive against Japanese automakers in the US, a new source is preparing to enter the market - China - whose auto makers look to sell cars in North America within a few years.

Looking back at other foreign manufacturers who've entered the North American market both Korean and Yugoslavia automakers have not been too successful in winning over consumers with their brands. But in China's case against a tight US economy, price this time around might make North American buyers overlook the source in favor of a more-tempting price tag.

When South Korea and Yugoslavia automakers entered the United States market, both GM and Ford were well ensconced in their market share with very secure brand strength. The two US automakers did their best to create a publicity campaign that questioned the safety and reliability of both Yugo and Kia automobiles. But today, consumers have grown used to foreign automakers and now look more for features, reliability, fuel economy and above all - cost, before making a decision on purchasing a vehicle.

China's top automakers are looking to break into the American market by promoting far cheaper models than can be made in the US or Canada. Fuel economy will also top that list.

While lawmakers may press for duties and fees on any Chinese automobile imports, China's manufacturing sector is more than versed in marketing products in the US. China is currently the largest exporter of goods to the United States that has caused a record trade imbalance.

The Chinese automakers have studied Japanese manufacturers who've successfully entered the North American market for years. Not only how they went about it but what steps more importantly not to take. Automotive analysts feel that if the Chinese automobile manufacturers succeed, they could eventually grab up to 10 percent of the North American market, though those figures seem conservative given China's expertise at unloading cheap goods on American consumers.

America's 'Made in China' factor amongst US consumers is now totally overlooked and the bulk of clothing, toys and other goods that line the shelves of Wal-Mart Stores (NYSE: WMT) and other major retail chains dominate the shelf space. But with automobiles, China won't be able to pass off cars and trucks that breakdown or are unsafe, unlike consumer products where US consumers just dispose of them and buy more.

China was caught in a 'toygate' of sorts when countless numbers of recalls began taking place in the United States over toys which contained lead paint. The problem grew worse when ingredients used in the manufacture of pet food were killing Americans pets and a massive crackdown over product safety began to take place.

While the FDA has embarked on improving safety measures on goods imported from China and other foreign markets, automobiles are a different matter all together and with a new leader in the White House coming soon, it will be Congress that faces a political facelift before the Chinese look to break into the North American market. How the congressional re-elections go will affect the process the Chinese take and the timing. At this point, suffice it to say - you WILL see Chinese automobiles on the showroom floor within the next three to five years.

FULL Article

 

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It is inevitable, I suppose.
All the more reason for GM and Ford and Chrysler to step up their game.
The competition isn't going to stop.
 

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This is a good article and it's true that it's a good time for the Chinese to come into this market, although I don't have high hopes that we will see quality cars from the Chinese for years to come. I do disagree with the author's premise that South Korea isn't having success in selling cars here. Hyundai's quality was horrible early on, but they have come a long way over the years to improve that quality. Looking at what they offer today, these aren't the Hyundai of yesteryear. They are even building them in America.

Also, Toyota and Honda's quality left something to be desired early on. Now they are a top selling, high quality brand.
 

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First it was Toyota and Datsun copying American and European designs, making them cheaper and eventually cornering the US market during the first fuel crisis.

Now the Chinese will copy the Japanese designs that evolved from their copied American and European designs and corner the US market, making Toyota the next GM - with nowhere to go but down.

Oh how the world turns. Who will be next? Cambodia perhaps?
 

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I don't agree with talking about purchasing clothes in the same breath as buying a car.

This is very different. First off, you can get great quality, known cars, already in the marketplace............ by the dozens. Many time, with clothes and small consumer items, you have no choice.......... and settle. The items are cheap, and you know you will have to replace it quickly, but at least it is cheap. While a 7-10K car may be cheap................ it is still a far cry from $1.49. People pay more attention when buying a car, and there is a huge backlash against "made in China."

I truly think they will have an uphill battle.
 

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As stated, Hyundai is doing very well and this is because of smart management, government sponsorship, and possibly a little espionage. The same business tactics can be expected from Chinese automakers. I believe, just like Hyundai, Chinese cars will eventually be a hit with Americans for reasons such as cost, quality, and content.

The American economy as it is tied to the Yuan will most likely continue to decline in the long term. As the middle class and poor feel the effects of this decline, low cost Chinese imported vehicles will become more attractive than domestics. The Chinese government will make sure vehicles are priced well below competitors. The end result will be the complete elimination of domestic auto manufacturing in America, much like what happened in the television and radio industry. It won't be an uphill battle for these manufacturers to sell to consumers. Look how well Walmart is doing selling Chinese goods. Americans want quality at a bargain and they do not care where the product comes from.

Speaking of quality, in the early days of Japanese auto manufacturing, Japanese vehicles were regarded by Americans as junk and it took a few decades to match then outclass American vehicles. The Koreans improved at a much faster pace only taking about a decade to go from poor to excellent quality. I expect the Chinese will take an even shorter amount of time, perhaps five years after they hit the market to be on par with other Asian manufacturers.

Chinese auto management will most likely follow Tesla's play book by hiring away the world's brightest automotive designers and engineers. They will offer attractively designed vehicles that are heavily "gadget" oriented and do not scrimp on features. Taking a page from Ford, they will most likely partner with software companies like Apple and Microsoft to integrate attractive communications and entertainment features into vehicles.

The Chinese auto industry, like the Japanese, will push these vehicles carefully and methodically maybe even with an American flag wrapped around them so as not to cause alarm. This may sound like doom and gloom conspiracy theory but ask someone who used to work for Zenith electronics decades ago if they knew what would happen to the television industry at the time.

Regardless of who is in office, once a job has been lost in our economy, it is gone forever. A combination of disloyalty, selfishness, greed, and stupidity from the individual American consumer, to domestic industry, and up through the topmost levels of government is sending us down a path where we will eventually cede ownership and control of our own economy and sovereignty to other nations.
 

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Seems like every year or so an article comes out like this. Remember a few years ago it was Chery teaming up with that Malcolm Bricklin guy? That really turned out well, didn't it? Make no mistake about it, the day that the Chinese not only bring a car here but make it competitive is a long ways off.
 

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this needs to not happen. Our Gov't needs to pull their heads out, this will hurt our unbalanced country even more. :mad:
Huh? Free trade as long as it only benefits us? We don't like the rules of commerce so we want to change them when it doesn't suit us...?

Anyway, I strongly suspect that while these cars are death traps now, they will not be allowed to sell them here until they meet our regulations, so the safety argument is out the window.

Would I buy one? Absolutely not, but if they play by the same ruels as everyone else, we have no right to stop them from selling here.
 

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We must remember though that in probably a decade's time, the Chinese market will be an open market, no longer protected, and American companies, GM in particular, are poised to take huge shares of the Chinese domestic market.

Chery is the currently the only Chinese manufacturer whose sales come anywhere near those of foreign manufacturers. The Chinese know their homegrown stuff isn't up to snuff. And Chery's the top selling Chinese brand not coincidentally because its products are of higher quality than other domestics. The main reason Chinese companies are pushing to export their cars is simply because they're having such a difficult time selling them to Chinese customers. The Chinese aren't fools. They know that Chevrolets, Nissans, Fords, Citroens, and Hyundais are vastly better cars than Geelys, Great Walls, or Xialis.

So while we're probably going to see Chinese makers make some incursion into the North American market in the next decade, we also have vast potential as being a major exporter of cars, or at least components and knock-down packs, to China. In twenty years, the Chinese market will be larger than America's. That's a HUGE market, and one that is evidently fond of American brand names.

It may turn out to be an odd "Coals to Newcastle" situation, with China shipping hundreds of thousands of Cherys, GWMs, and Brilliances to America, with hundreds of thousands of Fords, Buicks, and Chryslers making the return trip! And with Chinese buyers buying surprisingly expensive cars for new-to-wheels nation, we could be in a position where we're exporting cars of vastly higher value than the inexpensive Chinese cars we'd be importing.

Quit being such defeatests. Instead of acting like Chicken Littles, look forward to the opportunities that lay ahead.

You anti-free-trade types need to realize the importance of free (and emphasise fair) trade. Without it, we lose our potential as a major exporter of goods. Free trade (not to be confused with free-for-all trade), with some degree of regulation, ensures that the buying public is offered the widest variety of goods and goods of the highest quality. Shutting down free trade will turn our marketplace into what the Soviets endured for 80 years.
 

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i guess GM should have kept saturn as their low cost import fighter rather them forcing them upmarket. oh well another market segment GM gave away.
 

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I, for one, can't wait.




 

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You anti-free-trade types need to realize the importance of free (and emphasise fair) trade. Without it, we lose our potential as a major exporter of goods. Free trade (not to be confused with free-for-all trade), with some degree of regulation, ensures that the buying public is offered the widest variety of goods and goods of the highest quality. Shutting down free trade will turn our marketplace into what the Soviets endured for 80 years.
We can compare the real growth of Americans' incomes from 1776 to 1995, when the WTO was created, and the real growth since. But instead, I'll just ask: what is the difference between free trade and fair trade. I think we all would appreciate examples of fair trade as applied to American manufactured goods.
 
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