Will Americans Bite For Chinese Cars?

Posted by: David Kiley on May 26, 2005

Our News Analysis & Commenetary this week, Here Come Chinese Cars, was an interesting piece to work on. The efforts thus far to bring vehicles from China to the U.S., and sell them under their Chinese brands, is just getting underway. But my take from watching this development is that Chinese vehicles are coming and they will have as much staying power as the Koreans—Hyundai and Kia.

I agree with AutoPacific’s Jiim Hall and J.D. Power’s Tom Libby who both say that U.S. carbuyers will be lured to the Chinese cars based on price, with a few buying out of curiosity. But these new companies will have to establish trust, quality, reliability and service fast, or they will go the way of Daewoo, the Korean company that thought it could take on the U.S. on the cheap. Like Hall says, “Nobody wants to be driving a car, have it break down and not be able to get it fixed for days.” That’s what happened with Hyundai in the early days, as well as Yugo.

Our feature on Malcolm Bricklin and his Visionary Vehicles is the best known effort, but he probably won’t be first. David Shelburg, 75, of Scottsdale, Ariz. has a company, China Motor Corporation, which aims to have two Chinese vehicles in dealerships by next year—before the end of 2005 if he has some luck with the pollution and safety tests going right. Shelburg has the North American rights to distribute Geeley, Great Wall and Zhongxing vehicles. he has thirty dealers in 11 states so far, but he’s going to need a lot more to hit the 75,000 in sales in 2006 he says is possible.

Automotive entrepreneurs are dreamers. Think Preston Tucker, Henry J. Kaiser,Walter Chrysler and even John DeLorean. There is something about cars that attracts such people. Bricklin helped found Subaru and went on to found Yugo America. He also started a company that made The Bricklin.” Of course, these dreamers want a car named after themselves.

My question, which will only be answered with time, is whether men like Bricklin and Shelburg, in 2005, really have the gravitas, money and heft, as well as the dreams, to play in the global car business and do something as lasting as introducing, and then maintaining, China’s entry into the U.S. car business.

Shelburg has been unsuccessful bringing Russian vehicles to the U.S. And Bricklin’s last big play was Yugo in 1985, two decades ago—before the World Wide Web and all the changes to business that have accompanied the Net.

Like I said, only time will tell if they can pull this off. But I’m pulling for the dreamers.

Reader Comments

Hank Fard

May 26, 2005 9:39 PM

David Kiley is close to the truth, but still far too kind in his reporting of Malcolm Bricklin's ability to succeed in his latest venture. Malcolm has neither the money, the automotive talent to implement and run his company, or concrete answers to the myriad skeptical questions his potential dealer candidates have. P.T. Barnum is long dead, and dealers are not suckers - they have seen it all before. Bricklin is in it for a quick buck, and he isn't getting anyone to sign up.

Arturo Jaar

May 31, 2005 9:08 PM

This semester we did a project for an industrial engineering class (control systems) for a company introducing a new product trying to create a new market. We had to come up with three formulas, using z-transforms, forecasting, difference equations, and the use of singularity functions. The 3 formulas where for production, layoffs, and hiring. The professor plugged the formulas into his model, which was extremely similar to a real life situation, and we had to compete for market share against one of his own. At the end some resluts that were really interesting was that if demand was not satisfied at the beggining of the ordeal, demand started to decrease drastically into the future. This unsatisfied demand could be either for faulty results or for delayed service. One important point we learned was that if you wanted to succeed with a new product, you had to be really good when you introduced the product. It reminded me of the baseball players that are introduced into the majors too fast, and end up playing minor league for the rest of their lives. I just wondered how ready where the Chinese cars to invade the United States. If they don't come prepared from the very beggining they will never gain that market share they are looking for. The fact they don't have a solid reputation yet, is good. They can create one. They will either be marked and judged as trustworthy or unreliable. Their reputation and word of mouth from the very introduction are essential for their triumph.

Daniel Lim

June 1, 2005 7:06 PM

This time around, it would be a different ball-game. The Chinese automakers have come a long way and most of the experience and technologies that serve as the foundation that spurred their growth today are based on the developed western technologies.

Yes, the Chinese automakers still have a long way to go but it should not be viewed lightly. I am in the auto business myself and I know that Chinese made vehicles will very soon make its way into the US showroom very soon.

Will it effect the industry as a whole, probably not. It is too early to tell. Besides the quality, there should be concern about patents, technology, the US NHTSB safety standards.

In the meantime, the US industry should brace itself for the coming of the Made in China badge.

Kevin Stirtz

June 14, 2005 10:39 PM

If they can replicate the success Kia has had they should do fine. Sure, it may take a few years to establish a foothold but once they do, watch out!

It wasn't too many years ago few people knew what a Kia was. Now they're everywhere. And for good reason. They look good. They're priced aggressively. And they're designed and built well. Kia delivers more car for the money than their competitors. It's that simple.

zack

March 9, 2007 7:17 PM

Getting replacement parts and service should be the concern about chinese cars.

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News, opinions, inflammatory meanderings and occasional ravings about the world of advertising, marketing and media. By marketing editor Burt Helm, Innovation Editor Helen Walters, and senior correspondent Michael Arndt.

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