The Chinese Invasion CommethDavid Welch
Here comes the Chinese invasion. Changfeng Motor, which claims to be China’s No. 1 SUV maker, showed off its Liebao suv at the Detroit auto show today. What a knockout. It has an avant garde look that will get attention from even the most loyal Chevy or Ford buyer. The interior rivals that of a Bentley. And it’s powered with a 320-horsepower V-8 that gets 38 miles per gallon. Oh, and it’ll be priced at $2,800. Okay, you’ve probably figured out that I’m joking.
Let’s call it the Chinese tease. This is about the third time I have seen a Chinese auto maker take the wraps off some car at a major international auto show only to drop a hint that one day they will bring the car to the U.S. or western Europe. One day, just not today. And they won’t give a precise date. Chanfeng Chairman Li Jianxin said that the company’s presence at the show “symbolizes the initiation of our internationalization strategy.” By initiation, he means getting some publicity. Jianxin doesn’t have a dealer network or any of the essentials to start selling cars here.
But let’s not be too cavalier about Changfeng or any other Chinese carmakers. They’re working on coming to the U.S. He says the company will “diligently study the marketing experience from the developed markets such as North America.” The company is developing a dealer network and hopes to be ready to sell in 2008.
Judging from the products on the auto show stand, this could take a while to be competitive in this market. Even though the vehicles will be made with low wages and sold on the cheap, it’s clear that its SUVs aren’t ready for prime time. You could fit a finger through the gaps between the body panels and doors. The plastic in the dashboard looks pretty cheap. The styling is unremarkable. The company only has production for 200,000 vehicles and did its first crash test for an suv in 2001. Nick Reilly, Vice President of GM-Asia Pacific, said he doesn’t know much about Changfeng. He keeps his eye on bigger Chinese players Geely and Chery. DaimlerChrysler has agreed to build cars for the U.S. with Chery.
All of this means that, for now, the Americans, Europeans, Japanese and Koreans can keep beating each other up in the big U.S. car market without worrying about Chinese companies stealing share. But they shouldn’t take their eye off any of them. Even if it’s not Shangfeng to get here first, it might be Geely or Chery. But one day the Chinese will have competitive products and they will undercut the incumbent players with low prices. Then even Toyota will be looking in its rearview mirror.