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The future of the world auto market was on display at the annual Detroit show last week and it was represented by the ugliest, most outmoded vehicle: The Geely 7151CK. Forget that it looked like a 10- or even 20-year-old Honda Civic put together by drunken workers during breaks from the New Year’s Eve party.
By one account, the four-cylinder Geely sported bad panel fit, misaligned trim and rough-edged bumpers, resembling grandma’s time-warp, garage-dwelling low-mileage Hyundai. But a renamed and cleaned-up Geely is headed for the American market. What’s remarkable about it? Well, it’s made in China and it will likely be sold for less than $10,000.
New York Times columnist Thomas Friedman described the Geely as a "sputnik" for our times. Like that Soviet satellite, it caught the world by surprise, but it shouldn’t have. After all, nearly everything else we buy is made in China, so why not our cars? And since the Chinese, unlike the Big Three, are willing to make very cheap sedans that get great gas mileage, they should have a hit on their hands in the energy price wars to come.
The Geely Holding Group is not the only player in this new market. Malcolm Bricklin, the auto importer with the dubious distinction of introducing the ultra-cheap and much-derided Yugo to America, has a new company called Visionary Vehicles. The latter is partnering with Wuhu, China’s Chery Automotive Co., to bring cars to the U.S. in 2007.
With financial help from the New York investment firm Allen & Co., Bricklin plans to import a full lineup, including a compact sedan, an SUV, a crossover vehicle and a sport coupe, for as little as $6,900. Bricklin wants to sell 250,000 vehicles the first year, which seems pretty optimistic for a new venture. Because the Chinese aren’t known for world-class design, Bricklin plans to offer unique vehicles styled by Italian trendsetters Pininfarina (a frequent partner with Ferrari) and Bertone (Citro�n, BMW).
Honda dealer and Visionary Vehicles board member Tim Ciasulli visited China last December and came back convinced.
"I was blown away," he said. "I would never have believed that the American public is going to have the opportunity to buy top-of-the-line, fully loaded cars for 30 percent lower than the current pricing available from Detroit."
Not good news for the Motor City, where Ford announced it was laying off 30,000 workers last week.
The auto industry has so far focused on selling cars to the Chinese: General Motors, for instance, increased its production in China to nearly 500,000 in 2004. The Chinese cars will probably have teething problems, but expect a fast learning curve. If Bricklin can stick to his lowball pricing strategy, he’ll probably do well. Most carmakers neglect their entry-level models and the average new car sells for more than $30,000. It’s instructive to compare Bricklin’s Yugo with another inexpensive ($4,995) car that debuted in 1986, the Korean-built Hyundai Excel. Early Excels were just as badly built as the Yugo, but the company quickly made improvements. Hyundai now tops BMW, DaimlerChrysler, Subaru and most other established nameplates in J.D. Power quality surveys.
The long-term prospects for Chinese cars in the U.S. are actually pretty good and it’s encouraging that the Chery vehicles will reportedly be backed with a 10-year, 100,000-mile warranty. With Geely breathing down his neck in a race for the U.S. market, Bricklin should aim for quality. He’ll have to be prepared for a long haul, not a fast buck.
