GM Faces Competition from Chinese Carmakers

(CBS)  With names like Geely, Chery and BYD, you might not know they're some of China's top automotive companies - but Detroit certainly does.

"These are companies that no one had heard of ten years ago that today are getting a lot of international attention," said Bill Russo, the president of Synergistic Limited.

The Chinese market is a bright spot on the balance sheets of U.S. automakers where buying American is both a good investment and a status symbol, reports CBS News correspondent Celia Hatton. For the first time ever, GM has sold more cars in China than in the United States during the first half of this year. More than 1.2 million cars rolled off GM lots in China, versus less than 1.1 million in the United States.

But future demand in untapped markets has foreign and Chinese entrepreneurs seeing dollar signs: 64 million vehicles crowded China's streets last year, but over 200 million cars will jam onto those roads by 2020.

So, to meet that demand, domestic companies are embracing the Communist government's push for leaner, greener vehicles. They're fast-tracking research and development in low-cost electric and hybrid motors in hopes of erasing their past reputation for simply copying American models.

Take Geely - one of the biggest carmakers here. It snapped up Volvo from Ford for an estimated $1.8 billion, while also unveiling 39 of its own car models at the Beijing auto show - including the world's cheapest car - the I-G, with rooftop solar panels and a $2,300 price tag.

As these companies grow, their appetites are going global. Geely's rival, Chery, already exports cars to South Asia, Africa and Eastern Europe. And someday - the United States explains CEO Yin Tongyao.

"The American consumer knows cars very well. We need to be well prepared," Tongyao said through a translator. "I dare not send our cars to the U.S. market before we are really ready."

Other Chinese automakers think they are ready. A dozen years ago, BYD, or Build Your Dreams, manufactured phone batteries. This year, it beat Toyota and GM to sell the world's first mass-produced electric car.

About 50 electric taxicabs are roaming the streets of southern China but soon - perhaps later this year - this same car will be available in the United States, brought to the United States by China's ambitions and America's dollars.

The U.S. billionaire Warren Buffet raised eyebrows when he invested $230 million in newcomer BYD. It's starting to look like a smart move.

And if Chinese car companies succeed in making their cars as good as their dreams, the world's next generation of speed demons might grow up thinking the only cool cars to buy are those made in China.

[JayAdler1]

As a former car salesman I can tell tell you not to worry about the Chinese imports yet. At these unheard of prices, I would guess that younger buyers will be out in force because they will be buying essentially on price rather than reliability and safety. Safety is something that I would be concerned with with these vehicles being marketed at under $3000. At that price it is doubtful that the frame could be manufactured with material strong enough to prevent a real demolished vehicle when creamed on the highway. On the other hand Hyundai and Kia which are generational vehicles produced by Hyundai are frenetically improved every year until today my Hyundai Elantra is well equipped, reliable and really low cost. Some car buyers only buy American as they were ingrained to do. The Jingoism that Americans displayed thirty years ago is gone with the huge success of Toyota and Honda. So the Chinese bumper cars may make it but the first few months will determine their destiny in the US.

[shylove2]

I think the torch has been passed... we only have wars and no way to pay for them...or the damages we do to ourselves in fighting thme... shooting ourselves in the foot over and over agains since WWII and the bills are stacking up for the next generations to pay...

[tsigili]

Personally, I am not buying anything made in China, unless there is absolutely no other source, anywhere in the world.

[USSAmerikan]

Aaah, that savant of the business world, Ross Perot, predicted what NAFTA would do to us... The "giant sucking sound" of jobs leaving the U.S. as he referred to it.

However, we have always been our own worst enemies and our empire is imploding in the same way as the Roman empire did... From within. We demanded cheap and we bought cheap... Cheap clothing, cheap cars, cheap household goods. Well, what we did not understand is that the jobs we have sent abroad will never come back in any shape or form. Service Industry? Good luck! There are at best a couple of million high paying jobs in the U.S. that can't be exported. The rest are fair game. We will end up working in a different kind of service industry... As in Food Service, MBA and all! Today's giant sucking sound is just us.

Our politicians and CEOs are slowly but surely turning us into the next third world country.

[magnumdr]

NAFTA was a great way to ruin all of the jobs that Americans had. Now all the USA has to do is figure how the working class people can get jobs that pay enough to even buy a new car?

[cride1]

Heh... Most of the best mass produced bicycles are made in Taiwan and China. It is no surprise that cars are next in line. Lot of "elite" cyclists in the States ask the question "Is it made in China?" when they look to purchase a high-end carbon fiber frame bicycle. In reality, that part of the world do make the best mass produced carbon fiber frame bicycles, so questioning where it is made is dumb.

[ToolMangler1]

You are right!! Americans shouldn't be allowed to make things. Why should Americans have jobs? We designed and built the first and best computers in the world. To my knowledge none are made here now, they are all sent to the slave states where labor is plentiful and low cost. Now you are happy that everything else will be made in China as well. (In ten years, what are you going to buy them with?)

[sjc_1]

Reagan told everyone that they would be working in the "service sector" one of those sectors was Financial Services, but since the U.S. spread the sub prime disease around the world, they don't like us any more.