GM Signs $800 million Export Deal With China

GM announced today that it has signed an agreement with Shanghai General Motors, one of its joint venture partners, to sell at least $800 million worth of sport utility vehicles and related parts and accessories in China under its successful Buick brand there. Of course, the only sport utility vehicle that Buick builds in the US is the new Enclave Crossover, and the deal calls for GM to export up to 25,000 Enclaves over four years, beginning in 2008. Also, the Enclave is arguably the only US-based Buick that does not already have a superior counterpart sold in China (the LaCrosse in China is a much more upscale, modern vehicle than the US version, and the Park Avenue in China is more luxurious, powerful, and modern-looking - not to mention rear wheel drive instead of front wheel drive than the US Lucerne.)

This deal comes on the heels of a deal that GM signed in May to export more than $700 million worth of Cadillacs from the US to China, bringing the total dollar value of GM's US exports to China to over $1.5 billion.

Moves like this aren't going to reduce the enormous trade deficit that the US has with China in any significant way, but it's nice to see some "Made in America" products being sent to China, rather than the usual direction. Now, my only complaint is that China literally gets the "best of the best" in terms of the global Buick offerings. They have better cars than the US Buick lineup has, and now will also receive the US market's superior crossover.

There has been some speculation that the timing of the announcement was intended to "throw a bone" to GM's striking UAW workforce, showing that the company is doing what it can to find work for their assembly plants - and job security for their workers. Whatever the timing or motivation behind it, it's nice to see GM talking more about sending vehicles to China rather than sourcing them from there, as Chrysler LLC has confirmed and Ford is rumored to be considering with its upcoming Fiesta.

Two Extremes in Chinese Knockoffs

Continuing on a humorous, yet also pathetic road that we've traveled before, two of the latest Chinese knockoff vehicles have come to light, and they couldn't be more extreme opposites. For previous coverage on this, click here.

The first is called the Shuanghuan Noble, and is almost identical to DaimlerChrysler's Smart ForTwo. Automotive News reported that Mercedes-Benz may be filing a lawsuit to block the Noble's sales in Germany. There are two major differences between the cars, visual similarities aside: The Smart is a two seater and starts at €9,490, while the Noble clone is a four seater and is expected to sell for just €7,000, making it the least expensive vehicle sold in Germany.

Shuanghuan Noble (above) and the real Smart ForTwo (below)

China Automobile Deutschland is the intended importer of the vehicle, and its managing director, said Klaus Schlössl said the car only "bears a resemblance to the Smart ForTwo from certain angles" and that "The cars are priced differently and are in a different class in terms of quality. There are many cars on the road today that look similar to each other." Well, I'll concede that they're priced differently, and that the quality is likely going to be a strong point of differentiation, but the cars look similar from more than "certain angles." Here's hoping that DaimlerChrysler prevails in keeping this vehicle out of Germany.

Our next example is the Dongfeng Crazy Soldier, which looks curiously similar to the AM General Humvee favored by the US Military, and previously in vogue by "urban soldiers" in the 1990s. The vehicle was developed in cooperation with Chinese Army officials over several years, but it is now for sale to civilians in the Chinese domestic market.

The Dongfeng Crazy Soldier (above) and the real Hummer H1 (below)

Let's see - failed crash tests, failed quality, and copycat designs. Sounds like a recipe for a successful industry, doesn't it? I'm not saying that the Chinese auto industry will never be successful, but it's not going to happen overnight.

Chery's Turn to Fail a Crash Test

We've covered the disasters that crash tests have proven to be for Chinese cars in the past (search Google for 'Landwind SUV' or click on Brilliance BS6 for information on those). Now, news out of Russia is that the Chery Amulet - the top-selling Chinese model in Russia - has failed a crash test conducted for auto magazine AvtoRevu in spectacular fashion. In its 17 year history, the well-regarded AvtoRevu magazine has conducted 39 crash tests; most of those were locally-built models, but it has also conducted tests on foreign models from the U.S., Italy, France, and South Korea. Many of the foreign models have earned top ratings, and in fact a Russian-built model built by Avtovaz earned the magazine's lowest score ever, 0 out of 16, in 2001, so there likely was no conspiracy against Chinese imports or Chery specifically. In fact, Chery officials were present during the Amulet crash test.

The test that the car failed was designed to replicate the often-cited EuroNCAP offset barrier test; the car is traveling 64 kilometers per hour (about 40 miles per hour) into a solid barrier, but only part of the front bumper hits the barrier (so the impact is concentrated on a smaller area). The result was nothing short of catastrophic and is surely making Chrysler and Fiat executives a bit nervous this morning (since both companies have entered into agreements to have Chery build cars for them in the coming years). The car continued deforming past the rear edge of the front fender and continued until the crash test dummy driver's face was as far forward as the barrier! Don't take my word for it - see it for yourself below.


The test dummy became so entwined in the wreckage that it had to be removed from the car in pieces; he basically became part of the dashboard and steering wheel. The results were so bad that AvtoRevu called on Chery to immediately withdraw the car from the market. Chery declined to do so.

For its part, Chrysler is well aware of the safety and quality concerns that Chinese cars bring to the table. Chrysler plans to send scores of engineers to China to help Chery improve the engineering of their vehicles, and the ones exported to North America in particular, and also plans to keep a close eye on the supply chain to ensure that no shortcuts are taken in terms of material quality (AvtoRevu magazine speculated that perhaps Chery used softer metal than it should have in the Amulet; Chery denies this).

Once again, as long as I continue to value the safety of myself and my loved ones, I do not plan to do more than sit in a stationary Chinese-built car until they have proven that they can build cars to the same safety standards that the rest of the world adheres to. The Chinese auto manufacturers really need to get their act together with regard to quality and safety - there's a reason their cars are so cheap, and it's not low labor costs. It's a lack of engineering talent, sub-par materials, and indifferent quality control.

Did I Say VW Was On A Death March? I Meant They're Almost At The Finish Line

From Motor Authority:

Volkswagen’s joint-venture with China’s Shanghai Auto will spawn a new car that will eventually go on sale in North America. The new model will mark the first time that VW’s Chinese partner will help develop a vehicle targeted at a global market, Reuters Reports.

So.

A brand that for the past 10 years has been dealing with quality issues has decided to outsource production of a vehicle to China.

Perhaps they saw a video of the Brilliance BS6 and decided they wanted such materials and craftmanship in their own vehicles.

On what level does this make sense? To save money? Perhaps. But doesn't this fly in the face of VW moving upmarket with their brand in terms of perception and price?