China emerges as world's auto epicenter

[OhioChick]

As Detroit crumbles, Beijing picks up the pieces — at a bargain

Mon., May 18, 2009
America's auto titans are dismantling their global empires. But across the Pacific, it's as if the global economic forces that have pummeled Detroit never struck. Chinese auto sales are up, and this year China is projected to displace Japan as the world's largest car producer.

Now, the auto world is buzzing that China's auto industry may try to pick up the pieces of Detroit -- at a bargain.

Chinese companies have tried to dampen speculation, issuing regulatory filings that deny bids to buy Ford's Volvo or General Motor's Saab. But there's little doubt among analysts that Chinese automakers are interested in the United States and that Detroit's automakers are interested in them.

Buying up iconic brands such as Hummer or Saturn could supply Chinese automakers with the technological expertise to help them leapfrog past long-established competitors, said Kelly Sims Gallagher, a lecturer at Harvard University's Kennedy School of Government, who wrote a book on Chinese automakers.

"That's where Chinese firms are weakest," she said. "They have world-class business and manufacturing capabilities now. What they still lack is technological know-how, systems integration, being able to design new vehicles from scratch and get them to a manufacturing line."

China still suffers from its reputation of being a copycat manufacturer. An acquisition could lend clout to some of the nation's 100 car companies that are largely unknown outside their home country.

Such a deal would be "off-the-shelf legitimacy that you can purchase," said Aaron Bragman, an auto analyst with IHS Global Insight.

'Center of gravity is moving eastward'
The global auto industry is restructuring. Italy's Fiat is on the verge of taking control of Chrysler. Last year India's Tata Motors, already famous for its $2,000 Nano, acquired Jaguar and Land Rover.

And China's auto sector has emerged as a threat to the long-standing pecking order. Earlier this year, Geely Automobile, one of China's largest private carmakers, purchased an Australian drivetrain transmission supplier, a leading gearbox manufacturer. Weichai Power, one of China's top diesel engine manufacturers, acquired a French diesel engine producer. Another Chinese company, BYD, which counts Warren E. Buffett as an investor, launched a mass-market plug-in electric car, ahead of GM's anticipated Chevrolet Volt.

Detroit's annual auto show in January was somber, but Shanghai's show dazzled attendees with throngs of models, rock bands and light shows. This year, Nissan skipped Detroit and attended the Chinese event in April. Mercedes-Benz, BMW and Porsche all unveiled new-vehicle models in Shanghai.

"The center of gravity is moving eastward," Dieter Zetsche, chairman of Daimler, told reporters at the show.

"When we look back 20 years from now, the year 2009 is likely to be viewed as the year in which the baton of leadership in the global auto industry passed from the United States to China," Jack Perkowski, a Western transplant and former chairman of a Beijing auto parts company, wrote in his blog "Managing the Dragon."

More: http://www.msnbc.msn.com/id/30802161

[aquart]

1. Are we ashamed yet?

[The Traveler]

2. Back in the 90s

Spider Robinson predicted that in the early 21st Century, Americans would become good at two things: Writing computer software and delivering pizzas in under thirty minutes.

He did not properly take outsourcing and off shoring into account.

This is what Friedman's "libertarian" economics has done for America.

My, how we've grown.

Trav

[imdjh]

4. In other words- Italy

[imdjh]

3. or, it could be a huge mistake

I may not think much of Ford at the moment, due to the flying spark plug issue, but China buying Ford would not increase my perception of value, even if the prices are good.

The only way China can buy its way into the status of automaker, would be to Hyundai it. Buy GM, and then offer warranties and service which simply cannot be matched by Ford and Toyota.

I'm not cure they could save Chrysler even with this strategy. Chrysler has been on the death spiral of reputation since the 1970's. The amazing part is that it has taken this long.

[HooptieWagon]

5. How do you say Yugo in Mandarin?

China may be a huge market, and they can make crappy stuff ridiculously cheap, but they are a long way from making quality autos. It took Japan over 30 years. For the kind of $ an auto costs, I think consumers will demand that the car continue running at least until the loan is paid off. I don't see that happening in China for at least a decade, if not longer.

[DavidDvorkin]

6. All the factories must be underground.