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.

2007 Chery QQ

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.

COPYRIGHT Autosavant.net – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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7 Comments

  1. As a Chinese (currently pursuing my PH.D in US) I’d say not likely in the next 10 years. We simply don’t have the qualified auto industry.
    Copying is not a viable strategy for building cars. I hope they’ll not set their minds to purchase chrysler or anything, rolling out our version of chevy prizm obviously leads to big loose.

  2. I am Chinese too in England as student. Maybe small cars from China soon in five years but very long time for big cars like Audi A4 or Mercedes E class.

    I would not buy car from China now if I can buy something else because safety is low.

  3. Chinese cars sure performed poorly in the EU crash testing done last year. I hope Chrysler improves their safety standards before they sell them here as Dodges.

  4. Sheesh, is everything going to manufactured somewhere in Asia twenty years from now? It seems like most everything is now, and now we get Chinese cars? Is this a good idea?

  5. sirspeedy, are you just now waking up to this fact? Not much made in the good ol USA anymore. Chinese cars, yeah, that will be great. Can’t wait for that.

  6. If we could get many more small cars that are fun to drive in the market, then that would be a positive thing.

  7. I saw these in China and they are well made, cute and get great mileage…and at those prices I saw…anyone can afford one. I can’t wait until they get to the US and may just get one and ship it here anyway ahead of time.

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