Driving the global road
Updated: 2013-11-01 11:59
By Michael Barris (China Daily USA)
Hong Su, chief engineer at Changan US R&D site in Plymouth, Michigan in front of Changan sign. Michael Barris / China Daily
Sixty years after the birth of its automobile industry, China is the world's largest automotive market in terms of production. But the prospect of a Chinese passenger car being sold in the US remains distant, reports Michael Barris in New York.
In the US research center of Changan Automotive, engineers pore over a cutaway model of the prototype for a large luxury sedan. Their goal: to better understand the structural chassis of a vehicle.
"Most of the engineers are very young in China," said Hong Su, the Changan executive who heads the facility in the suburban Detroit city of Plymouth, Michigan, which seeks to improve the competitiveness of Changan cars in the Chinese market. "They know how to make vehicles, but they don't know how to develop them."
The comment underscores the challenge China faces in its quest to become a major player in the global automotive market. Sixty years after Mao Zedong inscribed the name of First Automotive Works (FAW) to launch the Chinese automotive industry, China has become the world's largest automotive market in terms of production and sales. It also is making inroads as a supplier, thanks to domestic companies acquiring the assets of foreign automotive suppliers, and wide-open government policies regarding joint ventures with international parts manufacturers.
But the prospect of a Chinese passenger car being sold in the US remains distant. That is partly due to domestic Chinese firms' challenges in designing a car that meets US performance and quality standards. Another potential obstacle are the political issues which invariably attend US-China relations and need to be managed adroitly and effectively.
Some analysts are skeptical it will happen any time soon.
In August, when China's Geely Automotive Holdings said that in two years it would begin exporting to the US cars it co-develops with Sweden's Volvo, David Sedgwick, an analyst and the former editor of the Automotive News, told China Daily in an interview, "I'm not convinced that US consumers are ready for a Geely-badged car in the US, even if it's on a Volvo platform. It could blur Volvo's brand image in the US, and that would be bad news for the Swedes."
On the other hand, Tim Dunne, director of global automotive operations at market-research firm J.D. Power and Associates, believes "it can certainly happen that China makes a vehicle for the US market". China, he said, "has the financial and manufacturing (power) to become a dominant player beyond its borders."
But "based on feedback from Chinese consumers, the quality, dependability and appeal of Chinese domestic vehicles is not yet on a level with international competitors," Dunne said. "Chinese domestics may be able to export to developing nations and compete on their low price, but they are not yet ready for the world."
"The bigger unknown," Dunne said, "is how this will be viewed and handled politically, especially if Chinese-made cars made any progress into Detroit's market share."
If China fails to make it in the US auto market with a homegrown vehicle, it won't be for lack of trying.
The transformation of China's auto industry has been a central government goal since the 1980s. In a seminal moment for the industry, American Motors Corp in 1983 and Beijing Automotive Works signed the first joint venture to produce Jeeps in China. (AMC was later acquired by Chrysler, which built Jeeps in China until its bankruptcy in 2009, when the joint venture was dissolved.)
At the time, numerous local automakers operated in China. "The government reasoned that its domestic manufacturers would not reach higher quality, technology and management standards without assistance from foreign automakers," according to an August report for the US Congress by the Congressional Research Service.
Thanks to a proliferation of joint car-making ventures, such as SAIC's partnerships with Germany's Volkswagen AG or GM, and Wuling Automobile Co's minivan venture with GM, which produce about 70 percent of new passenger cars sold in China, "some international automakers operating in China are already producing vehicles that are good enough to be exported to mature and developing markets - and are being exported," Dunne said.
"The question is whether they want to devote their production to gaining share in China - a market that already accounts for one-quarter of global light-vehicle sales, or do they want to use China as an export platform?"