Chinese Cars Face Struggles Ahead
The Chinese Auto Industry Must Deal with Major Perception Problems
Jan 15, 2008
The Detroit auto show is in full swing. This is one of the world’s most important shows, given its location in the capital of North American car making.
Every major car maker and a lot of smaller companies are present in Detroit, showing their latest production and concept vehicles.
China's Car Makers
The Chinese are there, too. China is flexing its muscles and is getting ready to take on the global auto industry. Chinese car makers are still in their infancy in terms of their ability to market around the world; right now, only one Chinese car company, Chery, is selling anything in Europe.
But that is about to change. Changfeng Group is set to start exports to Europe next year. Industry observers are predicting that sales to the highly prized U.S. market will likely begin in months.
Even before the first Chinese car is loaded onto a container ship, however, Chinese manufacturers face a number of very difficult hurdles.
Consumer Concerns with Chinese Cars
Most of these have to do with perceptions. There are some very unflattering videos on YouTube that feature Chinese cars in German crash tests. Not a single vehicle tested fared well; in fact, many folded up like cardboard boxes on impact. The crash test dummies inside had to be cut from the vehicles in more than one instance.
So, the first perception facing Chinese car makers is one of safety. And in a world where today’s cars are among the safest of any vehicles, coming to market with a product inferior in such a critical area - whether merely perception or not - is a huge impediment. It will take a long time and a lot of money before Chinese auto makers can convince sophisticated European and North American consumers.
The second perception centres on reliability. Both Japan and South Korea, two major and highly successful car making nations, experienced what happens when cars do not have the reliability to withstand North American driving conditions.
Japan ironed out its difficulties in quick order; South Korea did likewise but Korean car maker, Hyundai, still suffers from the hangover even though auto journalists praise cars like the Sonata for their style, construction and price.
Chinese Manufacturing Problems
China, however, is already fighting reliability issues on other fronts. The recent pet food scandal and the problems with lead paint on toys made in China do little to create positive impressions of their manufacturing standards.
One could also argue that communist countries do not make good cars. The Russian Lada was nothing short of a disaster in North America in the 1980s. Owners complained that screws were hammered into place, rather than screwed and the vehicles literally fell apart months after being purchased.
Production targets had to be met in order to emphasize the success of the Soviet system and that often meant workers assembled the vehicles as quickly as possible.
It’s doubtful that China would suffer these same production woes but we don’t know yet. And that lack of knowing is at the heart of the perception issue.
BMW and Mercedes Sue Car Maker
German car makers, BMW and Mercedes, recently sued Chinese car maker Shuanghuan for copying their designs. Shuanghuan built a frighteningly similar vehicle to BMW’s X5 and the Mercedes Smart car. The company says there is nothing wrong with copying other designs.
What China’s auto industry does not need is the view that it isn’t capable of creating its own designs but needs to pirate successful models from other manufacturers.
There is no doubt that China will, one day, be a major player in global automobile production. It’s unlikely that day is anytime soon, however.
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