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HOW HE SEES IT China has its eyes on world's largest car market



Published: Thu, April 7, 2005 @ 12:00 a.m.



By DALE McFEATTERS

SCRIPPS HOWARD NEWS SERVICE

China plans to take a crack at the European car market this year, the world's second-largest. And these are not foreign cars, like VW, built in China, but real Chinese cars.

Chinese automakers believe they can pull this off because their cars are cheap, really cheap. According to The Wall Street Journal, Great Wall Automobile is selling an SUV in Russia that even with stiff Russian tariffs sells for 35 percent less than comparable models.

Major price break

A company called Brilliance China Automotive will enter the European market with the Zhonghua, a sedan that, from its pictures, looks like a perfectly ordinary four-door sedan. But for a 30 percent price break, a car buyer might be willing to tolerate a lot of ordinary.

Ultimately, the Chinese have their eyes on the world's largest car market -- us.

A deal has already been signed with a U.S. importer for Chery Automobile Co. to begin exporting five models -- a compact, a mid-size sedan, a luxury model, an SUV and a crossover -- to the United States starting in 2007. Again, the Chinese hope to win a place in the market by selling at 30 percent less than their rivals. If the cars are any good, that's a huge advantage. If the cars are not, comparisons to the Yugo will be inevitable.

There's no great secret to the Chinese advantage. According to the Journal, labor costs in China are 95 cents an hour compared to $26 an hour in the United States and $36 an hour in Europe. (GM, according to press accounts, complains that Chery has achieved additional savings by copying Chevrolets.)

It will be an interesting experiment. Remember, we laughed at the first Toyotas and Hondas.




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