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Things are starting to get interesting in China's automobile market. Ford (F) and General Motors...

Things are starting to get interesting in China's automobile market. Ford (F) and General Motors (GM) hope to continue to benefit from the falloff of Japanese automakers (HMC, TM, NSANY.OB) through their local joint ventures, but domestic firms are starting to understand the need to ramp up quality and innovation in order to compete. As it stands now, domestic brands only account for a third of all sales - short of the Beijing's target for 40% share. Volkswagen (VLKAY.PK) appears to be all-in with 70% of its new plants slated for China, while even Tesla Motors (TSLA) thinks it can make a splash in the region.
Comments (9)
  • It is amazing to me that finally quality and innovation has become an issue with domestic carmakers. Ever wonder why our sales fell off in the first place ... ?


    Then, of course, here comes Tesla with its brand new Model S making an enormous splash, out of the blue. Why? Because of its fabulous quality and innovation! And its all electric, with no compromises. And it can even be updated through the web. No wonder people are interested ... and especially after they have had a chance to drive it.


    And now the Chinese market is opening up. Who do you think will win here? I think that if Tesla can bring the price down and build a charging infrastructure, they should have a chance.
    14 Mar 2013, 01:29 PM Reply Like
  • I agree that China offers huge potential for Tesla. The charging infrastructure may not become an issue. China is piloting a program that is favoring a Battery Swap model (QBX) and The Model S Battery was designed to be swappable. Also China has a much more ambitious plan, with much better incentives to adopt EVs than we do.


    Telsa will continue to without any real competition for at least 2-3 years. That will be plenty of time for them to grow their market share considerably and they are doing all the right things to make that happen.


    I think you might have misread the article in respect to “Domestic Quality” I believe they were referring to China’s domestic brands having to improve to compete with our cars. Isn’t that a hoot?
    14 Mar 2013, 03:56 PM Reply Like
  • The "domestic carmakers" ("domestic brands", "dometic firms") being referred to in the article are those that are indigenous to China - in other words, the Chinese brands (eg: Jiangling Motors, which is partnered with Ford).


    It has nothing to do with Ford or GM quality, they are simply partnered with those Chinese automakers in setting up production facilities to produce US brand products. Ford and GM are essentially teaching quality and innovation to the Chinese automakers, who are a good 30-40 years behind the state of the art on their own. They (the Chinese) are rapidly catching up.
    14 Mar 2013, 04:31 PM Reply Like
  • Surf Dog ... I think that you are right, that I misread it - thanks. I wouldn't think that our manufacturers would have too much problem with quality compared to the Chinese - Buick is, or at least was, the number one selling car from GM. Although, now with the shift to electric, China is starting to go there big-time, and yet, what from what I have read, the problem with electrics there is with cost - the cost of importing batteries is so high because of their own import duties, that to build electric for them is almost prohibitive to their own people. (maybe, that's a break for Tesla, also.) As far as Chinese quality is concerned ... it may be improving, but sometimes the materials that they use in some of their products can be toxic, from my own experience with electronics (I couldn't even keep these in my home - I either returned them or gave them to someone who wasn't affected). I would hope that their cars don't have the same problem.
    15 Mar 2013, 11:27 AM Reply Like
  • it is true that China is way behind on environmental health and safety, in manufacturing processes as well as materials. This is the sort of thing they are learning from their American Mentors (Ford and GM) as those companies won't allow their employees into unhealthy situations.


    In any case China has, most of all, cheap access to the sort of materials and labor to build the cheapest EV batteries on the planet, in just raw copying the designs used by other automotive and battery companies. Decent chance they can build a $10,000 US battery design for under $1000, and a $5000 motor-generator for under $500, once they get the hang of the procedures and quality. At those prices, an EV can be had for a bargain price, possibly even cheaper than a conventional car with a complex turbocharged gasoline or diesel engine.


    The real question is going to be around whether the Chinese electrical infrastructure is going to support "millions" of EVs with 6-10kW and higher chargers.
    15 Mar 2013, 02:17 PM Reply Like
  • "it is true that China is way behind on environmental health and safety, in manufacturing processes as well as materials. This is the sort of thing they are learning from their American Mentors (Ford and GM) as those companies won't allow their employees into unhealthy situations.


    Can you cite a source.


    VW has been JV with SAIC motor since 1985.
    15 Mar 2013, 07:49 PM Reply Like
  • Sources? Where to start? Google it? Do they allow that in China?

  - Environmental health in China: progress towards clean air
    and safe water - Junfeng Zhang, Denise L Mauzerall, Tong Zhu, Song Liang, Majid Ezzati, Justin V Remais ... PDF available for downloading at

  ~mauzeral/ papers/ Zhang. Mauzerall. etal. China.Env. Health. Lancet.2010.pdf (delete the spaces)






    15 Mar 2013, 09:37 PM Reply Like
  • sorry couldn't pick up any of these references.


    My point is that other global MNCs already brought safer working conditions, long before GM came to Shanghai in 1997, VW came in 1985.


    in March 1985[13] allowed it to produce competitive cars with foreign technology. Early success at SAIC may also be a result of guidance provided by local Shanghai authorities; at one time SAIC was simply an extension of the Shanghai Municipal government.[14] For these two reasons and more, SAIC grew swiftly. In the 11 years leading to 1996 annual production capacity increased ten-fold to 300,000 units/year, and the company established itself as one of the leading Chinese automakers.[15]
    During this period SAIC effectively built an entire modern automotive component supply chain in Shanghai from scratch,[16] and the number and quality of locally produced auto parts rose significantly.[17]
    15 Mar 2013, 09:45 PM Reply Like
  • And my point is that the major Automakers, all of them including VW, are teaching their Chinese partners how to build automobiles and, in general, operate modern manufacturing facilities and perform material handling in environmentally sound ways; and that there is still a long way to go for them, the Chinese, to shake off the "sins of the past" and adopt modern internationally recognized industrial environmental health and safety standards.


    The evidence is everywhere - engineers from the US arrive in China and are continually stunned by the lack of the most basic safety equipment and rules, and the poor to nonexistent environmental controls to protect the health and safety of the factory workers and the public. And conversely, the Chinese are continually stunned and awed that their US counterparts are so insistent on following basic environmental health and safety rules and regulations.
    15 Mar 2013, 10:20 PM Reply Like
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