SHANGHAI -- This year China surpassed the United States to become the world's largest auto market. Of the 11.6 million light vehicles sold in China through November, about 52 percent were contributed by domestic brands with a reputation for making inexpensive models.
Will the U.S. market someday be flooded with low-priced Chinese cars? Well, the idea has long seemed more than plausible. According to media reports both domestic and foreign, a breakthrough has been imminent each year for the past decade. Yet in reality, another year has passed and automakers from China seem no nearer to selling their products into the U.S. market.
So let's look at the history of Chinese automakers and their attempts to enter America.
To begin with, the past few years have seen several domestic players attempting to use Mexico as a springboard to get them into the U.S. Yet one after another they have given up.
First there was Chery Automobile Co. In 2007 Chrysler touted a deal in which Chery would supply it with small cars for North America. The two planned to start by exporting cars to Mexico in 2008. But the plan floundered as Chrysler realized it was hard to market Chery's low quality products, even in Mexico.
In 2008, two more companies, Changan Automobile Co. and China FAW Group Co., also planned to build assembly plants in Mexico and then export cars from Mexico to the U.S. But earlier this year, both shelved their programs because of global economic woes and a fatal inherent flaw -- the high costs of hauling parts and components all the way from China to Mexico.
With platforms bought from MG Rover, Shanghai Automotive Industry Corp. (SAIC) has successfully built its own Roewe brand, selling more than 59,000 Roewe 550 compact cars at home in the first 11 months of this year. SAIC also wanted to revive the MG brand -- also acquired from the now defunct British carmaker -- and use it to explore western markets.
But its strategy here has stalled. A plan, announced in 2007, to assemble the TF roadster and hardtop in Oklahoma starting last year never materialized. In October this year SAIC suspended production of the slow-selling MG TF in England.
Following SAIC's steps, Beijing Automotive Industry Holding Corp. acquired some platforms and engine technologies from Saab earlier this month. And at a media briefing held two weeks ago, BAIC's president Xu Heyi also said SAIC will "go global". But the company will need at least three years to digest what it has taken over from Saab before it can seriously considering exporting its own brand models.
Then there is Zhejiang Geely Holding Group Co., now on track to acquire the Volvo Car unit from Ford Motor Co. Will Geely use Volvo's dealership network to distribute its own brand models in the U.S.?
The likelihood is small. Geely's brand image has improved as it has made a consistent effort to phase out low-priced models and launch more expensive ones. But its brand recognition is still low compared with that of the Volvo. Displaying Geely-branded models side by side with Volvo-badged cars at dealership showrooms will be the last thing Geely's president Li Shufu would like to see as it will certainly tarnish the Swedish brand.
Recognizing that they won't be able to meet the U.S.'s stringent safety and emission standards on motor vehicles, most domestic Chinese automakers have shunned the Detroit auto show for the past two years. BYD Auto Co. is the only exception. The company will display a plug-in hybrid and a pure electric vehicle at the show in January.
But BYD is probably making the effort for Warren Buffet, the American tycoon who allowed his investment company Berkshire Hathaway to inject $230 million into the Chinese company in 2008. BYD wants to show the American public that Buffet has made a worthwhile investment.
Moreover, to show a car is one thing and to sell it is quite another. BYD's electric vehicles are untested and the infrastructure to support the use of electric vehicles such as battery charging stations is still lacking in the U.S.
So, among the indigenous Chinese brands, which one stands the best chance of getting into the U.S. market?
I would pick Great Wall Motor Co. Speaking at an Automotive News China conference in 2008, Great Wall's president Wang Fengying said her company saw the U.S. market as the "ultimate" target as it presents the biggest challenges in safety and emission standards to foreign automakers.
Great Wall has made good progress towards entering mature markets. In September this year, four models of Great Wall--two small cars, a SUV and a pickup, passed certification for the European Union, where the company plans to sell them from 2011.
An executive at the company's overseas business division told me Great Wall has no immediate plans to enter America, given those strict requirements for safety and emissions. But this might just be because Great Wall doesn't want to encourage stories of its imminent entry into America; reports that have in the past so often turned out to be bogus that they now carry no currency.
Great Wall's achievement of certification for the EU speaks for itself. It places the automaker head and shoulders above its domestic peers in the contest to crack the markets of the developed world.
Yang Jian is the managing editor of Automotive News China.