Instead of buying American auto companies to ease their mouth into the U.S. market, Chinese carmakers are building from scratch

By David Kiley

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The passionate headline in China Daily about the showcasing of sum of two units Chinese automakers this week at the North American International Auto Show in Detroit seems to overstate the true excitement around the companies’ debut—allowing that not the curiosity of then a Chinese brand will finally gasconade the U.S. mart: "Chinese Carmakers Steal the Limelight in Detroit."

In fact, General Motors (GM) and Ford (F), with all their financial problems, probably dominated the show with new product announcements. The two Chinese companies exhibiting on the main show floor—BYD Auto and Brilliance Automotive—occupied modest space on the show floor in between Subaru of America and auto parts supplier Denso (6902.T).

Few industry executives discount entirely the future impact of at least a few of the 50-odd Chinese auto companies of all sizes currently selling cars in China. But most these days are not as fearful of the new competition as they were a few years ago. The companies so to a great distance seem to be moving very slowly and cautiously, and they slip on’t seem prepared to hastily enter the unfamiliar rough-and-tumble U.S. auto industry at a time at the time that every company already established in the present life is fighting for every possible demand in a depressed emporium.

David Cole, chair of the Center for Automotive Research in Ann Arbor, Mich., says the Chinese take a long way to go, and he doesn’t expect to see a fortunate U.S. launch of a Chinese brand in the nearest five years. "The thing that was most feared was the enormous vantageground the Chinese take had in labor costs," says Cole. "But that is quickly becoming less of an issue, while bigger costs are in things like transportation, provide connected series management, as adequately as design and technical innovation…and the Chinese companies are behind in those departments."

Several Chinese companies have made noise and promises about setting the U.S. industry afire, and each one of have gone by the wayside so far. Chery Automotive allegedly had a deal with apparent automotive entrepreneur Malcolm Bricklin, who sold Yugoslavian-built Yugos in America in the 1980s. Bricklin showed pictures of cars to be produced and collected deposits from pretended dealers for two years. That deal collapsed last year, with both sides still in litigation. Chery also had a trade to build cars for Chrysler, but that deal, too, fell by one’s self.

The Chinese America Cooperative Automotive (Chamco), which had been established as the North American distributor of Chinese vehicles built through Hebei Zhongxing Automobile, likewise fell apart in a flurry of lawsuits last year.

Two years gone, Brilliance was said to subsist a year or so off from launching cars and signing up dealers. The U.S. distributor, Brilliance Autokam, pulled back, with the Chinese cars facing difficulty passing U.S. preservation, quality, and emissions standards.