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bleucheese
Veejay
Joined: Aug 01, 2003
Posts: 1992
Location: this side of the tracks
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  Posted:
July 13, 2007 - 03:55 PM |
 
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| Post subject: a winner? obese italian man bets big on chinese cars |
Low-Cost Chinese Cars Making Restrained Entry to European Market
PALAZZOLO SULL’OGLIO, Italy — They have names like the Brilliance BS6, the Landwind Fashion or the improbable Hover Wingle, and though these sedans, vans and sport utility vehicles are hardly as familiar to Europeans as, say, a Volkswagen Golf, they are beginning to show up on European roads.
Great Wall is exporting sport utility-type vehicles to Europe, and nearly 400 have been sold by Italian dealers, with hundreds more expected.
Carlo Scalvini in his Hover limousine, built by the Great Wall Motor Company. A regular Hover he bought for his company is in the background.
“I’ve got air-conditioning, ABS brakes and air bags,” said Carlo Scalvini, describing his Hover, a big and boxy sport utility vehicle built by the Great Wall Motor Company, with headquarters in Baoding in eastern China. “And the price is competitive: you pay 10,000 euros less in the end,” more than $13,000.
The enthusiasm of people like Mr. Scalvini could influence the global auto industry and China’s place in it. China’s quiet inroads into Europe are the first test of rich markets by Chinese automakers as they build dealer networks and deliver small shipments of cars to test the reaction of drivers and auto industry experts.
Many of the dealers who have signed on with the Chinese previously worked with the Japanese and the South Koreans, and so have experience in coaxing Europeans to purchase cars with unfamiliar names and unusual looks, but sweet prices.
If business is starting fitfully, they foresee healthy profits down the road, aided by the weak dollar. European car dealers pay in dollars for the Chinese cars, yet are paid in strong euros when they resell them, pocketing nifty profits from exchange rates.
“The game the Japanese mastered in 15 years, and the Koreans in 10,” said Nigel Griffiths, director of European light vehicle forecasting at Global Insight, “they will do in 18 months to 5 years.”
Paradoxically, the Chinese have been helped in Europe by their alliances with Western automakers in China. Some of the Chinese cars being imported into European countries use electrical components from Bosch, the big German parts supplier, or have been designed by Italian firms like Giugiaro. Now, the Europeans are seeing their ideas and components flow back into their own markets.
That the European market is essentially open is also helping the Chinese. Because so many European cars are now being built elsewhere, a quota on imports is politically almost impossible.
There have been setbacks, like abysmal results on a crash test done on a Chinese car two years ago. Some specialists are skeptical that the Chinese can become major competitors in Europe and the United States. After all, car buying remains an emotional business. “There is a general lack of brand awareness, and distribution is a hurdle,” said Michael K. McKenzie, a China expert at PricewaterhouseCoopers’ automotive institute in Detroit.
But the Japanese and South Koreans overcame similar hurdles. Moreover, the Chinese are moving in several stages. “They are coming through the back door: first Russia, then working their way west,” Mr. Griffiths of Global Insight said. He estimates that China will sell 54,000 cars in Russia this year, out of a total market of two million, compared with 31,000 last year.
The Chinese are arriving even as European carmakers struggle with flat prices and diminishing profit, and the Chinese presence is expected to ratchet up the pressure. That will force some European companies that stayed in the mass market for small cars, like Fiat, either to move up to larger, more expensive models, or to perish, Mr. McKenzie predicted. “They will undercut these companies, and the market will be more contested,” he said.
It began when a Dutch Nissan dealer, Peter Bijvelds, visited China with a friend in 2004 to inspect the Landwind factory in Nanchang, a gritty city south of the Yangtze River in Jiangxi Province. The trip ended with Mr. Bijvelds’ introducing a big and boxy Chinese-made S.U.V., the Landwind New Vision, a twin of G.M.’s Opel Frontera, at the 2005 Frankfurt auto show. It did not handle like a European car and its engine had little excess power, but for Europeans tired of station wagons or wanting to tow a trailer, this car cost 25 percent less than a Kia or a Hyundai model. It had air-conditioning, air bags and aluminum wheels. In the first two weeks, Mr. Bijvelds said, he sold 500 of them.
Then, at about the time of the Frankfurt show, the German automobile club, known as ADAC, put the New Vision to a crash test. The driver’s survival chances were about nil, the club’s testers said.
Mr. Bijvelds’ Chinese partners were dismayed. The New Vision was put aside while Landwind ironed out the kinks. A successor model, the Landwind Expedition, has a comely design by an Italian design studio, a German-built engine and all European safety features.
Mr. Bijvelds suggested that the automobile club might have been prompted by German automakers to undermine his project. A club spokesman, Maximilian Maurer, denied that. “I am sure that in time the Chinese will succeed here,” he said, “and the ADAC doesn’t want to keep them away. We simply want to inform consumers about the quality of these cars.”
Mr. Bijvelds, 28, receiving a visitor at the headquarters of his Landwind Motor Corporation near Antwerp, Belgium, said, “We get so many products from China with Western brands, why not cars?” Europeans, he says, are after value, citing Renault’s recent bonanza with the Logan, a car built in Romania that has a six-month waiting time for delivery in Belgium. “They want a lot of car for a little money,” he said.
The German crash test, a colleague told him recently, may have been a blessing in disguise. “Now everybody knows you,” the friend said, “For good or bad, they know you.”‘
In Germany, Hans-Ulrich Sachs, a former Volkswagen executive who is chairman of HSO Motors Europe, is signing on dealers to sell the Brilliance BS6, a comfortable sedan with a vague resemblance to a midsize BMW. Indeed, Brilliance assembles BMW’s 3 and 5 series cars for the domestic Chinese market.
By the end of this year, Mr. Sachs, 54, wants 150 showrooms in Germany, and by next year, 1,100 throughout Europe. This year, he hopes to sell 6,000 to 7,000 cars. The first 500 arrived in mid-March.
Why would a German buy a Chinese car? he asked rhetorically. “Value for the money.”
For Europe’s carmakers, alliances with Chinese companies could become two-edged affairs, providing models that one day may well compete against their own cars. Volkswagen, for instance, has joint ventures with Shanghai Automotive and First Auto Works. Yet Kai Grüber, spokesman for the Volkswagen Group China, played down the potential for competition, saying that VW focused for now on the domestic Chinese market. “Future exports into the Southeast Asian area are conceivable in markets where we can expand our offering with new models,” he said.
At Eurasia Motor here in Palazzolo, about 35 miles northeast of Milan, where Mr. Scalvini bought his S.U.V., a shipment of 360 arrived in November, and have all been sold through a network of 95 Italian dealers. “We’re now expecting 800 more — in lots of 200 each — of the same model,” said Federico Daffi, Eurasia’s chief financial officer. Eurasia pays Great Wall $14,000 for the S.U.V.’s, and sells them for as little as 19,600 euros (about $27,000), still one-fourth below the South Korean competition. Eurasia then uses the lower price to market to middle-class families who until now could not afford an S.U.V.
Mr. Scalvini, 44, would buy more Hovers now, if they were available. He is the owner of Consorzio Vela, a company that employs about 800 people and maintains a large fleet of vehicles supplying services like delivery and catering to other Italian companies. The Hover’s Mitsubishi-built engine is fuel efficient and will offer the option of shifting from gasoline to liquid propane gas in future models.
“I’m convinced it will be a winner,” he said.
http://www.nytimes.com/2007/07/13/business/worldbusiness/13eurocars.ht ml?ref=business |
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yu888
Board Deity
Joined: Jan 25, 2003
Posts: 17973
Location: ZhongShanParkArea SH
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July 13, 2007 - 04:52 PM |
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The Hover is quite nice actually. I would get one here if I were to need such a vehicle. The Landwinds here leave a bit to be desired, but id indeed the inner workings of the new Landwind expedition have been redesigned by the italiens for Euro- rated safety I would also consider something like that. |
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ArKay
Seeker
Joined: May 07, 2007
Posts: 63
Location: Nanchang (JiangXi) & Germany
Status: Offline
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July 13, 2007 - 05:42 PM |
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They still fail to pass ADAC's safety crash tests in Germany. Last year it was the Landwind, this year it's the Brilliance which got very bad grades. They are working closely together with ADAC though to address the issues.
Even at 55km/h your life's in danger which is not acceptable. |
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yu888
Board Deity
Joined: Jan 25, 2003
Posts: 17973
Location: ZhongShanParkArea SH
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July 13, 2007 - 06:12 PM |
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Every Asian import company has started like this, The reason why its tough to pass ADAC regulations of course if becaue they are some of the most stringent n the world.. and considering the speeds cars are driven in Germany vs in China, sadly it may be awhile before any Chinese car will meet those requirements. but the fact that they are working on it is a good step forward. I have driven the German market Honda Accord and teh US model and can tell you Honda had to add hundreds of pounds of metal reinforcments and a solid hood just to pass those tests. Opening and closing teh doors and hood of that car felt like a BMW as compared to mt then US model Honda which wqas lighter weight for sure but passes US standards. |
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ArKay
Seeker
Joined: May 07, 2007
Posts: 63
Location: Nanchang (JiangXi) & Germany
Status: Offline
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July 14, 2007 - 02:20 PM |
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Yeah, 150-200kmh is normal on our highways so the cars have to be safer than here. Still I think that 55kmh isn't very fast, you can probably reach that speed in the city.  And the way people drive here making them safer in general (for the Chinese people as well) probably isn't a bad idea  |
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yu888
Board Deity
Joined: Jan 25, 2003
Posts: 17973
Location: ZhongShanParkArea SH
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July 14, 2007 - 02:37 PM |
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^ cannot argue with you there...just saying taht the demand for safer cars is part of the evolution of the society who are just getting into the automotive age. Until CCP members' families are forced to drive local cars and start experiencing injuries and deaths, progress will likely be very slow. |
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ArKay
Seeker
Joined: May 07, 2007
Posts: 63
Location: Nanchang (JiangXi) & Germany
Status: Offline
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July 14, 2007 - 07:51 PM |
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That makes sense, yup. When I came to Nanchang the first time I was surprised that find that most of the cars here seem to be Volkswagens and not a local brand (at least in Nanchang). All taxis are VWs, even though IIRC in Beijing they drive something else and have new taxis. I know that those are made here, but how did that brand get so popular? |
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jacobbarnes
Barker
Joined: Dec 14, 2006
Posts: 127
Status: Offline
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July 18, 2007 - 02:58 AM |
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There are plans to assemble these in Mexico for the U.S. market so they can be imported duty-free. They are claiming the suv will sell for around $13K. I think they are shooting for '08 or'09, by which time they hope to meet safety standards. |
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bougie
Board Buddha
Joined: Nov 20, 2004
Posts: 13292
Location: Wuhan Hubei China
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July 18, 2007 - 07:08 AM |
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That is probably how long it will take to find the "right" official to help them "pass" the test |
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bougie
Board Buddha
Joined: Nov 20, 2004
Posts: 13292
Location: Wuhan Hubei China
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July 18, 2007 - 07:09 AM |
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Oops, sorry we are not in China? |
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tijssie80
Veejay
Joined: Sep 04, 2006
Posts: 1812
Location: Shanghai, Honkou
Status: Offline
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July 18, 2007 - 09:44 AM |
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Hovers suck ass, as do Brilliances etc, have you ever driven one? My God, the utter and complete horror of the materials, the dashboard, the finishing, suspension, big engines with little power etc...and then I am not even coming close to safety!
The importer for Belgium, Holland and Luxemburg refused taking in the Brilliance after its sad crash-result and the drivers-organizations advised the public to never buy a Landwind.
China will pick up in a few years but with all do respect, launching cars in the European market right now is a bit optimistic at least.
Technically these cars are based on 1995-models from Europe (roughly), looking at engine, suspension, gearbox etc so no wonder there is a price difference there. Cars like these are not an investment, look at the second hand prices for Tata (huge company from India) or Lada for instance, u will have to pay the dealer to take it back from you after a year since he wont give you a nickel for it.
Americans though will maybe accept these cars easier since they are used to sloppy finishing, bad interior materials and cars that due good at straights but that hate taking corners  THen again, retailing an SUV for $13K sounds more interesting than it is looking at prices of a Ford F150 or something similar down there.
I dunno, I am definitely looking forward to seeing China reach quality and safety levels that are at least acceptable since it will cause a massive shift in the powers that be in automotive land but that will take a few years.
Untill then...go walk |
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