Hot auto market creates native competition for Detroit
(AP)Updated: 2007-04-24 10:38
Chery, Changan and others are also ramping up exports, especially to developing countries where low prices count most.
China's auto makers exported about 325,000 vehicles last year, about 80 percent of them low-priced trucks and buses bound for markets in Asia, Africa, the Middle East and Latin America.
Chery, based in Wuhu, a city in eastern China's Anhui province, has led the export push for passenger cars, selling 50,000 units overseas last year.
The company assembles vehicles in facilities run with local partners in Iran, Malaysia, Russia, Ukraine, Brazil and Egypt and recently announced it has teamed up with Bognor SA to make bulletproof sedans in the Uruguayan capital of Montevideo.
Like many other Chinese auto makers, Chery has its sights set on bigger targets.
At the Shanghai show, it will show an updated version of the QQ, dubbed the "Chery A1," made in a new partnership with DaimlerChrysler AG. The Chinese side says it expects the alliance eventually to build compact cars for export to North America and Europe.
Little-known overseas, SUV maker Hunan Changfeng Motors Co. put on a display at the North American International Auto Show in Detroit in January, saying it hopes to begin exports to the United States within two years.
Rival Great Wall has gained a quirky reputation for its Hover model after shipping 500 of the SUVs to Italy last summer.
Executives at GM, Toyota Motor Corp., and most other big foreign car companies say China may eventually serve as an export base, but for now their big challenge is meeting local demand.
So far, despite limited exports to Australia and Europe, most of the Chinese auto makers' grand plans for selling to Western markets have not materialized.
Chery's earlier plans to sell vehicles in the United States with American entrepreneur Malcolm Bricklin fell through.
Nanjing Automobile Co. recently launched production of MG model sports car after buying bankrupt British auto maker MG Rover in 2005, seeking a foothold in Europe. Its plans to build an auto plant in Ardmore, Okla., appear to have foundered amid a cash crunch.
"We won't necessarily be building it," company President Yu Jianwei said in a recent interview with National Public Radio.
Even in developing markets, it hasn't been all smooth sailing. Geely Group Ltd., China's largest privately owned auto maker, saw its plans for auto assembly plants in Malaysia rebuffed last year.
China's domestic auto makers are not ready to meet safety and environmental standards in the United States and Europe, let alone to finance the service and sales networks they'd need to enter those already crowded markets, analysts say.
"It's still too early to seriously consider China as a competitive rival to Japan and U.S. in the auto sector," said Zhang Xin, an industry analyst at Guotai Jun'an Securities' Beijing office. "They lack the capability to reach those ambitions," he said.
Chinese domestic auto makers still lack the scale and efficiency needed to gain a real competitive edge, says John Bonnell, an analyst with Westlake Village, Calif.-based automotive research firm J.D. Power and Associates. He does believe that some have the government backing and resources to eventually succeed, such as GM- and VW-partner Shanghai Automotive Industry Corp., or SAIC, maker of the Rover-inspired Roewe.
One example of their relative readiness was evident at the Detroit show,
where the electronics in many of the made-in-China cars on display consisted of
pictures of DVD players, navigation systems and stereos - taped to the
dashboards.
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