The probability is close to 50/50 that the smartphone on which you might be reading this article, is made in China. We are also told that cars are now (becoming) nothing but smartphones on wheels.
So why isn't your car made in China?
Good or bad, later than never, they have finally arrived. Or at least one made-in-China car, with two more on the way in the months to come.
The first car made in China by a large reputable automaker, and sold in respectable volumes in the United States, is the Volvo S60 Inscription. Volvo (the car company, not the similarly named truck/bus/etc company) is of course owned by Chinese Geely (OTCPK:GELYY) (OTCPK:GELYF), and this Volvo S60 is made in Chengdu, China.
Does this Volvo S60 Inscription differ from the regular Volvo S60 midsize sedan that's made in Gent, Belgium? Yes, but only slightly. Most importantly, the car is three inches longer, substantially all of which allocated to the rear seat room and its associated doors.
So does this mean that the Chinese-made Volvo has a fantastic rear seat? Actually, no. The foot and knee room is good, and the bench seat is comfortable, but there is still way too little headroom for anyone approaching six feet tall. If you are less than 5'7, it starts to work for you.
For the front seats, ingress and egress are most comfortable, as is the seat itself and the resulting seating position. This is just a fantastic place to sit, while the design of and around the seat looking very Scandinavian plain. Again, Scandinavian design - but made in China.
The infotainment system is Volvo's old one, which doesn't have Apple (NASDAQ:AAPL) CarPlay or Android (NASDAQ:GOOG) (NASDAQ:GOOGL) Auto. Hey, at least Bluetooth works as well as it should in every car. Scrolling between SiriusXM (NASDAQ:SIRI) channels on the steering wheel's scroll mechanism is the industry's best.
On the downside, the backup camera is relatively terrible. It gives a nasty "funny-mirror" arcade view of what's behind you.
The engine feels a little rough, and you can certainly hear plenty of it, but as with many diesels, it's almost part of the charm. It's a two-liter four-cylinder gasoline turbo, and it feels stronger than the 240 horsepower it's got. It's rated at 25 MPG city and 37 MPG highway. I got 1 MPG less than those numbers.
The price starts at $39,640 but reasonably equipped will be closer to $45,000. Four wheel drive? Add $1,500. The discounts at the Volvo dealers should begin around 10% before you start negotiating.
As with the European-made Volvo 60-series cars, this is a most relaxing ride, even if - or perhaps because - it's made in China. I spent an equal amount of time driving a European-built version of a largely similar Volvo V60 right after, and I really couldn't tell the difference. It's a most pleasant, friction-free and well-balanced experience all-around.
The Chinese Volvo may seem a bit boring, but it's an extremely comfortable ride, with no meaningful friction points other than lacking Android Auto and Apple CarPlay - something which the all-new 60 series cars that arrive two years from now will have.
Speaking of two years from now, that may also mark the end of this Volvo export from China to the US. What? Why?
Volvo has started construction on a factory near BMW's (BAMXY) factory in South Carolina. It is expected to start producing almost all Volvo cars sold in the US, starting in 2018. In this case, by that time, China's car export to the US will have lasted no more than three full years.
Geely, which owns Volvo, may also start to export other cars to the US at or after that time - the Geely-branded ones, perhaps. It's already got designers working in Southern California. We shall see what strategy the company decides to pursue, with respect to the larger group's efforts in the US market, after 2018.
For example, we already know Volvo will start launching all-electric cars in 2019. We also know Volvo sold 503,127 cars in 2015, up 8% over 2014. That's a very healthy growth rate for a car company of that size.
Buick: Yes, we are from China too
Less than a year after Volvo started exporting from China to the US, Buick will do the same starting in the second quarter 2016.
Buick has of course been one of GM's (NYSE:GM) great success stories over the last half decade. Unit sales were up another 8.7% in 2015 to 1,231,941. Still, Buick has only two SUV models in the US - one very small (Encore), and one of the larger ones (Enclave).
Lacking an SUV model "in the middle" to compete with Audi Q5 and BMW X3, for example, Buick now begins to import the Envision SUV from China. To illustrate how urgently GM wanted this car on US soil, it arrives this June for just a few months as an abbreviated 2016 model, lacking Android Auto and Apple CarPlay. Those features will be in the 2017 model that will show up closer to the end of 2017.
I was in the Buick Envision briefly last week, and there is nothing exciting to report, bad or good. It seemed perfectly fine - except for lacking Android Auto and Apple CarPlay - but nothing stood out as either bad or great. I imagine it will be offered at an attractive price, and be able to capture Buick customers for whom the Encore is too small and the Enclave too large.
Aside from the point that this will be the first significant car by a US company made in China and sold in the US, do let it sink in for a while that Buick is doing so well as a brand, with over 1.2 million cars sold in 2015 and growing at 8.7%. This is not what you're being told at cocktail parties in New York or San Francisco.
With over 1.2 million cars sold in 2015 and a growth rate of 8.7%, what would Buick be worth if GM spun it off? I'm not saying that it will or that it should, but just ask yourself what a company like that would be worth.
Cadillac: GM's other success story
Other GM news that you're not going to hear about at those New York or San Francisco cocktail parties, is Cadillac's 7.5% unit growth in 2015. Cadillac sold 277,784 vehicles in 2015, and it's now got the second-highest average transaction price of major luxury car lines - after Mercedes.
The first Cadillac made in China will also be exported to the US starting later this year, and that's the plug-in hybrid Cadillac CT6 large sedan. It's got an 18.4 kWh battery - similar to the new Chevrolet Volt 2.0 - but it sits in a much larger luxury sedan, mated to a much more powerful gasoline engine to propel the car when the first 30 miles of electric range has been depleted.
The "regular" gasoline-only Cadillac CT6 will be made at a factory near downtown Detroit, and this one will start showing up in US dealerships already this Spring, by March 2016.
Conclusion: Volvo and GM meet the iPhone
Volvo is already exporting one of its most popular cars from China to the US. In 2018, this may cease in favor of production in South Carolina instead.
Buick starts to export its midsize Envision SUV from China to the US this June quarter.
Cadillac starts to export its large luxury sedan CT6 in plug-in hybrid version from China to the US later in 2016.
Automotive trade flows are not what the average US consumer expects. Here are either other examples that immediately come to mind:
Jeep is exporting the Renegade model from Italy to the US.
Jeep has opened up two factories in China and Brazil.
Toyota (NYSE:TM) is exporting a car (the Yaris) from France to the US.
Infiniti is making a car, which is basically a joint-venture development with Mercedes, in the UK and will begin exporting it to the US in the next quarter.
Buick is making a convertible coupe in Poland and will begin to export it to the US next quarter.
Audi is moving production of the Q5 SUV from Europe to Mexico in late 2016.
Volkswagen (OTCPK:VLKAY) will begin building a new large SUV in Tennessee in late 2016.
Mazda builds a car for Toyota/Scion -- made in Mexico, and exports it to the US.
Disclosure: I am/we are long AAPL, GOOGL.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: At the time of submitting this article for publication, the author was long AAPL and GOOGL. However, positions can change at any time. The author regularly attends press conferences, new vehicle launches and factory visits, hosted by major automakers.
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