Chery Automobiles China s Auto War Begins
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Chery Automobiles: The Dawn of China’s Auto Revolution
Introduction
Chinese cars are about to make a significant entry into American roads, echoing the earlier influx of Asian cars with remarkably low prices. If you think your Kia is affordable, wait until you see the prices of these new imports.
Overview
China plans to start shipping passenger vehicles to North America by mid-2007. Leading the charge is Chery, a Chinese automaker whose name is reminiscent of Chevy. Chery is set to introduce a range of low-cost cars that could disrupt the U.S. auto market and challenge Japanese and Korean automakers like Toyota, Honda, Nissan, and Hyundai. This economic battle could be a new front in U.S.-China relations.
Chery's Offerings
Chery, a state-owned company from Anhui Province, already produces several models in China, including the QQ?"a compact akin to the Daewoo Spark (from GM’s Korean division)?"and several sedans and a compact SUV. Companies like Toyota, GM, and Honda have accused Chery of copying designs, notably the Honda CR-V. Although a Chinese court dismissed the Toyota case and GM dropped theirs, Honda is still negotiating with Chery.
Currently, Chery’s lineup features the QQ, the Tiggo?"a compact SUV developed with Mitsubishi?"and three sedans: the Oriental Son, Flagcloud, and Windcloud. Recent additions include a crossover similar to the Chrysler Pacifica, priced under $20,000, which is significantly cheaper than competing models.
Competitive Pricing and Market Strategy
Published reports suggest Chery's basic models might start at just $6,995 in the U.S., undercutting the Chevy Aveo by about $3,000. This aggressive pricing alarms many in the auto industry, fearing a deluge of affordable cars could hurt the market. However, like Hyundai’s initial North American foray in the 1980s, Chinese models might initially struggle with quality perceptions. Yet, if history repeats itself, improvements could lead to increased popularity and sales.
Dealer Network and Market Expansion
While Chery’s U.S. dealer network is still forming, a limited presence is anticipated by Summer 2007. Plans are underway for rapid expansion across the U.S. and Canada. Although the Chery name will change for the U.S. market, these cars are expected to reshape American car-buying habits. Additionally, other Chinese automakers such as Shuanghuan and Geely are also preparing to enter the North American market shortly after Chery's debut.
Conclusion
The entrance of inexpensive Chinese vehicles into North America could have unforeseen economic impacts. It remains to be seen how this development will unfold, but it’s an exciting and transformative time in the automotive industry.
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