Financial Crisis Could Slam the Brakes on Chinese Export Cars

Financial Crisis Could Slam the Brakes on Chinese Export Cars

By Nick Kurczewski

If the just-ended 2008 Paris Auto Show is any indication, the era of Chinese car exports may have ended before it even began.

Only two Chinese auto companies turned up for the show and, of these, one was merely a French distributor.

On the show stand of Shenyang-based Brilliance Automobile, the same generic-looking coupes and sedans seen at previous shows were on display.

The mid-size Brilliance BS6 is most note-worthy mainly for how spectacularly it failed German crash tests conducted last year. (It later performed better in Spain's crash test.)

Nearby was the stand for China Automobile France, the French distributor of vehicles built by Shuanghuan Automobile, based in Shijiazhuang, China.

  Tucked quietly to the side was the company's large sport-utility, dubbed the CEO.  Much like the Brilliance BS6, the CEO is well-known, but for all the wrong reasons. The truck is nearly a direct copy of the BMW X5 - at least until you step closer and spot the shoddy build quality. (Brilliance is BMW's Chinese partner.)

At the 2007 Frankfurt Auto Show, it was rumored that BMW would sue Shuanghuan (and its German distributor, China Automobile Deutschland) for copying its SUV.  Asked about the ongoing legal wrangling, a China Auto France representative smiled and said that it was "a German problem."

Too Little Too Late

With the exception of Paris, every recent international auto show has featured several Chinese car companies that have insisted on their readiness to crack Western markets. Brilliance plans to make its first appearance at a U.S. show in January at the 2009 Detroit Auto Show.

Unfortunately, it's the Western markets that have now cracked. Auto sales in the U.S. were down 26 percent in September. In Japan, car sales are at their lowest level in more than thirty years. European markets are faring just as poorly. 

With the deepening global financial crisis sending stock markets around the world tumbling, the ripple effects on export-dependent China are now being felt. Bloomberg News reports that China's main stock index is set to experience its worst week ever recorded.  The Chinese economy grew only 10.1 percent in the second quarter of this year, its slowest rate since 2005, according to Bloomberg.

This week, the China Association of Automobile Manufacturers reported that September vehicle sales fell for the second month, in marked contrast to the frenzied growth China had been experiencing in recent years. Analysts note the global economy that appears headed for a recession will curb Chinese exports. Observers expect a massive consolidation of China's many automobile companies, which number in the hundreds.

Reacting quickly to economic challenges and changing consumer preferences will be the key to the survival of many car companies. In Paris, for instance, the theme of the show was environmental technology, be it electric cars, hybrids, or clean-burning diesel. Both Brilliance and China Automobile lacked any credible eco-themed vehicle. Brilliance had none; its entire lineup runs on conventional gas or diesel motors (most of which are purchased from Mitsubishi). China Auto displayed the roly-poly "Chika" electric car, a blue egg-shaped device that looked more like a toy than a road-ready vehicle.

Photos by manufacturers
1 - Chika concept
2 - Shuanghuan CEO

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.