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China Cars Raise Questions At Detroit Show

Have you driven a Liebao lately?

As the 2007 North American International Auto Show (NAIAS) opens, what turns heads may not be sexy new designs or hybrid parts, but a participant: The People’s Republic of China.

Changfeng Liebao Sedan
Changfeng Liebao Sedan

China will make its presence known via Changfeng Group, showing two SUVs and two pickups, under its Liebao ("Cheetah") brand. Fellow Chinese nationals Great Wall and Zhongxing, also manufacturers of compact pickups and SUVs, will join Changfeng.

Of course, this is not the PRC’s first appearance at the Detroit show.

In Jan. 2006, China’s Geely Motors presented its mid-size 7151 CK Sedan. Rival Sino-carmaker Chery Automobile didn’t present, but was talked up heavily by its key backer, entrepreneur Malcolm Bricklin. He’s the tycoon responsible for bringing American consumers the Subaru and the notorious Yugo – and the latter gave him experience in dealing with another state-steered economy, the former Yugoslavia.

Geely Sedan
Geely Sedan

But Geely delayed its U.S. market debut until 2009, after several test vehicles allegedly failed U.S. crash and emissions tests. And Bricklin decided to put off the launch of five Chery models from the beginning of this year until at least year’s end, to allow for engine revamps.

But 2007 looks different. On Dec. 30, Chery and DaimlerChrysler confirmed a deal to build cars in the PRC – and sell them in the U.S. The partnership will give Chinese cars their first traction on American soil.

Honda Motor already exports a small Chinese-manufactured compact to Europe; and General Motors Asia Pacific President Nick Reilly said GM already sells Chinese-made autos to Russia. Some see the Chery-Chrysler hookup as the vanguard of a wave of Chinese auto exports to the U.S.

Chery Compact
Chery Compact

John Humphrey, senior vice president of Asia/Pacific Operations for J.D. Power, disagrees, saying the future for Chinese auto-market growth lies in – you guessed it -- China; as well as India and “possibly” Eastern Europe. Humphrey points out that these are the regions seeing the greatest demand growth, and notes that the North American car and truck market is somewhat saturated.

Humphrey says tackling the U.S. market, however, can give China something besides profit: cache. He says the Eastern firms see a strong presence in the American arena as essential “billboards” for their portfolios. But Humphrey scoffs at fears that a flood of Chinese cars will “overwhelm” Ford Motor , General Motors and Chrysler; unlike the seeming tsunami of cheap bric-a-brac Beijing exports to the world, cars are “investments that people make seriously.” And he says that China-made autos are not yet at the level of quality expected by American consumers. Firms like Chery, Humphrey declares, enjoy “absolutely no brand cache” in the U.S. market yet. So don’t expect to find Chinese SUVs at your Wal-Mart SuperCenter.

But he also maintains that, in terms of quality, Chinese cars “might not be there tomorrow, might not be there next year – but they will get there.”

Great Wall SUV
Great Wall SUV

Remember: “Made in Japan” once bore the stigma of junk. That was before companies like Sony rewrote the rules of consumer electronics, squeezing out many once-dominant U.S. manufacturers. In the same way, China may shape the globe’s economic future as it eschews the Little Red Book of Chairman Mao in favor of Adam Smith’s Wealth of Nations.


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