Shenzhen, China, based BYD doesn’t really know yet how to make decent cars, but it definitely has mastered the art of making decent headlines. Today, the company is in the news, saying, via Bloomberg, that “Chinese cars are poised to begin hitting U.S. showrooms by next year.” The thought of Chinese cars arriving at U.S. shores is always good for triggering deep-seated fears and the odd suppressed racism.
American cars in China: Good. Chinese cars in America: Bad, bad, bad. Fear not: They aren’t coming.
BYD knows how to troll the U.S. auto industry and its cheering section, and when there’s nothing else to put on the wire, the threat of Chinese cars menacing ‘merica always is good for headlines. And, speaking of alliterations, the tired “Buffet-backed BYD” celebrates merry resurrection.
Never mind that BYD has been in America for 5 years already. All along, it has made ample headlines, but very little in terms of sales. The New York Times test-drove a BYD F3DM in 2011, subjected it to the rigors of Los Angeles traffic, and pronounced it the beginning of a “Chinese wave.” The wave never came.
At around the same time, BYD made headlines by announcing that it would locate its U.S. HQ into Los Angeles, which made for a great photo-op with the Governator, but little else. The company that was supposed to bring jobs to California, instead brought Chinese, and paid them $1.50 an hour. That at least generated some cash, by way of a $100,000 fine by the state of California for violating minimum wage laws.
Stella Li, the senior vice president in charge of BYD’s U.S. business (if you can call it that), told Bloomberg that the company “wasn’t ready when it earlier sought to enter the U.S. car market in 2010,” but that it “is more prepared this time.”
I don’t know why some Chinese carmakers are hell-bent on entering the U.S. market. It is one of the toughest to get in and to stay in. The price of entry is high. To federalize a good European car costs anywhere between 60 and 100 million $. No telling what the price for a Chinese car would be, definitely more than what the serial cheapskate Li, Chuan-fu, BYD’s chairman, is willing to pay. And that’s just for starters. Dealer networks want to be built. Litigious lawyers are ready to skin you alive. BYD is said to be very liberal in its approach to intellectual property, and I can imagine that some parties are just waiting to put the case(s) in front of a sympathetic American jury.
Successful entry of Chinese cars into the American market will take a while. It definitely won’t happen next year. Ironically, the first company to succeed with Chinese cars on American soil could be GM. It quietly has turned China into a global export hub. The U.S. market is currently avoided for political reasons. Honda sells a Chinese-made Fit in Canada, and it is selling well, says the company. Eventually, it will go South. Next in line could be a Chinese-made Volvo.