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Move over GM, Chinese automakers to enter US, CA markets

Beijing, 110808. While General Motors and Ford battle to survive against Japanese automakers in the US, a new source is preparing to enter the market - China - whose auto makers look to sell cars in North America within a few years.

GM just revealed that it would be cutting its salaried workforce in North America by 15%, Ford had already started. The two leading US auto makers have been closing plants, cutting jobs and trying to do all they can to survive as sales of SUVs and trucks tumble in the face of rising gasoline costs - both in Canada and the United States - that have cut sales sharply. Toyota Motor Co. has nipped at the heels of both icons of American automotive production to the point where GM's lead is now threatened.

While competition is typically viewed as being healthy for markets, the Chinese are now looking to step into the middle of the North American automotive field with their own brands and hope to have cars on showroom floors as early as 2010.

Looking back at other foreign manufacturers who've entered the North American market both Korean and Yugoslavia automakers have not been too successful in winning over consumers with their brands. But in China's case against a tight US economy, price this time around might make North American buyers overlook the source in favor of a more-tempting price tag.

When South Korea and Yugoslavia automakers entered the United States market, both GM and Ford were well ensconced in their market share with very secure brand strength. The two US automakers did their best to create a publicity campaign that questioned the safety and reliability of both Yugo and Kia automobiles. But today, consumers have grown used to foreign automakers and now look more for features, reliability, fuel economy and above all - cost, before making a decision on purchasing a vehicle.

China's top automakers are looking to break into the American market by promoting far cheaper models than can be made in the US or Canada. Fuel economy will also top that list.

While lawmakers may press for duties and fees on any Chinese automobile imports, China's manufacturing sector is more than versed in marketing products in the US. China is currently the largest exporter of goods to the United States that has caused a record trade imbalance.

The odds of Detroit - or Toyota's Tennessee-based American auto manufacturing subsidiary - being able to compete against China's cheap labor are nil. The only thing that could prevent the Chinese auto sector from taking over would be the government. But in the past, the auto sector had more of a voice in Washington when its powerful union workforce had more clout. As GM and Ford wean themselves from high-priced union labor, the companies are loosing a strategic partner in lobbying Washington and with the chances of the Democrats taking control of the White House in January their political bank will be near broke.

China plays the waiting game

The Chinese automakers have studied Japanese manufacturers who've successfully entered the North American market for years. Not only how they went about it but what steps more importantly not to take. Automotive analysts feel that if the Chinese automobile manufacturers succeed, they could eventually grab up to 10 percent of the North American market, though those figures seem conservative given China's expertise at unloading cheap goods on American consumers.

America's 'Made in China' factor amongst US consumers is now totally overlooked and the bulk of clothing, toys and other goods that line the shelves of Wal-Mart Stores and other major retail chains dominate the shelf space. But with automobiles, China won't be able to pass off cars and trucks that breakdown or are unsafe, unlike consumer products where US consumers just dispose of them and buy more.

China was caught in a 'toygate' of sorts when countless numbers of recalls began taking place in the United States over toys which contained lead paint. The problem grew worse when ingredients used in the manufacture of pet food were killing Americans pets and a massive crackdown over product safety began to take place.

While the FDA has embarked on improving safety measures on goods imported from China and other foreign markets, automobiles are a different matter all together and with a new leader in the White House coming soon, it will be Congress that faces a political facelift before the Chinese look to break into the North American market. How the congressional re-elections go will affect the process the Chinese take and the timing. At this point, suffice it to say - you WILL see Chinese automobiles on the showroom floor within the next three to five years.

Source: Axcessnews.com.