Brendan Moore

Reprint of a post on - ONLY REGISTERED AND ACTIVATED USERS CAN SEE ALL LINKS - CLICK HERE TO REGISTER - complete except for photo of 2007 Chery QQ in original post.


When Will China Auto Companies Export to Europe and North America?

By Brendan Moore

04.17.2007

There has been considerable speculation lately about just what impact China will have on the international auto market in the future, with variable sales numbers and timelines offered up by different industry analysts. There is no doubt that China will be exporting large numbers of vehicles at some point, the questions are to which countries and when. Furthermore, the Chinese have learned from the example of the foreign auto companies that operate in China, as well as the Japanese and Korean models in the United States, that setting up production facilities in target countries (presently only developing countries) is sometimes an easier way to accomplish their sales goals.

Just how many vehicles China exported last year is a matter of contention, and the answer depends on who you ask in China and their mood that day. The estimates range from 326,000 to 600,000 vehicles exported; almost all to developing countries and almost all trucks, buses or vans. The differences in the numbers are a result of whether knock-down kits that are subsequently assembled in plants in places like Ecuador, Iran, Russia, Brazil, etc. are included, whether units manufactured in China and sent to the U.K. by companies like Honda (Jazz, City) are included, and finally, whether shipments of vehicles as small in number as 300 units by one of the auto manufacturing companies get included. There are currently over 100 companies in China registered as vehicle manufacturers, and it is an open secret that there are many vehicles made by small car companies not on the registered company list, but listed as some other type of manufacturer (i.e., anything from ovens to wheelbarrows) that are not only somehow able to sell to sell their vehicles with no legal repercussions from the Chinese government, but frequently do it at half the price of the other cars in their respective class. Accurate tracking is difficult in this sort of environment.

So, when will we see Chinese cars in any substantial numbers in the U.S. or Europe? There have been very limited exports to Europe; 600 Brilliance cars imported last month, 500 Hover SUVs shipped to Italy late last year, and a few similar examples. Chery and DaimlerChrysler have agreed to start shipping the Chery QQ car to the United States and Canada with Dodge badges on the cars that will be shipped here. But no one seems to want to put a “Dodge” name on the car yet, or commit to a date, although it looks like the 2009 model year will probably happen in terms of a date.

The problems for the Chinese car companies concerning large-scale export to Europe and North America are many. First, there is no Chinese car that is anywhere close to being able to meet the vehicle safety requirements of either market. Ditto for the emissions standards. Additionally, since most of their resources are being used to meet ever-increasing demand in China, the Chinese automakers are way short of the capital needed to set up the necessary parts and service infrastructure required to support any large-scale sales effort in either Europe or North America. Lastly, even if all of their resources were directed to export markets, no Chinese car company has the volume and manufacturing efficiencies required to compete and win in a battle with even the smallest competitors in the Europe or North American markets.

Will the Chinese be here or in Europe in 2 years under one of their own brands, in substantial numbers? No. On the other hand, it took the Koreans roughly 30 years to follow the Japanese in setting up shop in the United States, and then another 20 years in-country to effectively match them in engineering and buid quality. Will it be a similar timeline as far as the Chinese are concerned? No way. They’ll probably be here and/or in Europe within 5 years and, I predict, a match for the market leaders in engineering and build quality within 5-7 years after that. They won’t be out-selling them, but the Chinese will have some viable competitors to the current market leaders in certain segments.

I hope all the established car companies are getting ready for the Chinese push because their already-tough business is going to get even tougher by 2015.

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phaeton

Well as a Senior Moderator on - ONLY REGISTERED AND ACTIVATED USERS CAN SEE ALL LINKS - CLICK HERE TO REGISTER

I say 4-5 years, the new Roewe W2 Concept hints at what SAIC is capable of and they have the piggybank to see it throught as does Chery with the new to be released A3 & A6 series.

Roewe W2 Concept (450)


more pics - ONLY REGISTERED AND ACTIVATED USERS CAN SEE ALL LINKS - CLICK HERE TO REGISTER

Chery A3



Chery A6


more pics here - ONLY REGISTERED AND ACTIVATED USERS CAN SEE ALL LINKS - CLICK HERE TO REGISTER

Brendan Moore

4-5 years until they're selling under their own brand in substantial numbers in Europe or North America, or 4-5 years until they're a match fo the other competitors in Europe and/or North America?

There is a big difference in degree of difficulty between those two achievements. I'm interested in your estimate regarding both of those of those milestones.

phaeton

Will I think the established players in China - FAW, SAIC, Chery and possibly Brilliance will have products that are World worthy within 1-2 years easily.

As for entry in US or Euro markets -

Brilliance is already in Europe but does not have products to match Europes best as of yet, the new Brilliance Golf rival is also being released at Shanghai and if they have built it for Euro standards expect sales to increase further once it has done the usual circuits of gaining entry to Europe eg NCAP & Emissions.

As for US that can be a very different story and depends on many factors eg
US-China Relations, Consumers feelings towards Chinese products etc.

If one of the 4 Manufacturers above can build a car that rivals Toyota/Hyundai and undercut them, all that company has to do is establish Dealerships & All Services related to maintenance of the car etc, then they will be successful in US market.

ps I don't know if I've written complete garbage but if you have any more questions please throw them at me I'll answer them the best I can

Brendan Moore

Your response doesn't answer the question; and by the way, there is no right answer as I don't know the answer myself - I'm simply interested in your opinion. The bar is not "world-worthy", as Chinese cars are already sold internationally, but, rather, the two toughest markets in the world - North America and Europe.

Europe's easier, so we'll start there:

How many years before a Chinese automaker, selling under their own brand, has 3% of the market in Europe?

How long before a Chinese automaker, selling under their own brand, sells a car with the same quality, durability, performance and styling as the market leaders in Europe?

I put down my guess in the article, and since you are close to the Chinese car industry scene, I'm interested in your guess.

phaeton

1stly how much is 3% of Euro market in terms of units sold ?

As for my "World Worthy" phrase I mean Euro and US compatible, currently none meet this criteria IMO.

I stand by my 1-2 years statement of any of the Chinese selling a car with Euro durability, quality, styling and performance etc Roewe W2 is probably the 1st of these "World Worthy" cars.

As for the European introduction it all depends on the growth in China IMO, if demand is strong in home market it may delay introductions.
Why compete in Euro market when China is the 2nd Biggest ?

I know Eastern Europe is a growing market for the Chinese perhaps they'll sneak in that way.

LOL as you say we don't know the answers and can only do what most are doing, speculating

Thanks for starting the thread

Hypersonic

Can't you wait?

MikeJ

First, they need to get rid of this practice:
Seriously, the Chinese should not repeat the mistake the Japanese and later the Koreans made when first entering European markets - offering inferior products and thus earning themselves a reputation which takes years if not decades to shake. The Chinese cars currently on the market indicate that this is exactly what they are in the process of doing.

If they try to penetrate the European market with what they have now, I would say it will take at least 20-25 years before they will gain any market share worth mentioning. If they develop cars with unique (but mass-market acceptable) styling, decent build quality and reliability and make their way into public consciousness with them (in, say, 5 years from now), it would take a much shorter period of time for them to be accepted as a worthy alternative to the established manufacturers.

Hypersonic

The Koreans and Japanese should be very very worried ...but the American producers and possibly VW and Fiat have much to fear too.


BTW, how is Ford doing these days?

Hypersonic

The current Chinese-made cars are built predominately for the Chinese market ...they know they have to 'step up' to make an impact in the US and Europe. The whole industry has changed radically since the Japanese and Koreans first entered the European market -- I expect the Chinese will approach it very tactically.

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