Chevy to Chery

General Motors finally kicked the bucket. The company that revolutionized and dominated the U.S. auto industry for nearly half a decade declared bankruptcy. GM and Chrysler dealers across the country have been instructed to unload their inventory and shut down. Many dealers being given a matter of days to sell up to 40 cars.   

We might be witnessing the end of the U.S. auto industry. I say this because a type of perfect storm has begun to develop in the auto industry. While U.S. and European demand is on a steady decline, China’s demand increased by about 10 percent last year. How are U.S. auto makers going to compete?

In fact, many Chinese companies have begun to switch from producing U.S. cars in China to buying up large shares if not majority shares in car companies such as Saturn, Saab, and just recently Hummer.

This typifies a transition that is beginning for the Chinese people. A slow move has started which involves China moving away from a primarily consumer market to a producer.

Further evidence of this comes from the emergence of large automakers within China. Companies such as BYD Auto and Chery Automobile, which are widely unknown by Americans, have begun producing new lines of uniquely Chinese auto products.

But their emergence has not gone unnoticed to all. According to the Financial Times, trendspotter Warren Buffett purchased 10 percent of BYD in September 2008. BYD already supplies batteries to various American car companies, mainly Ford and GM, and is in the process of developing a hybrid for about 4,000 euros.

Chery, which might not be focusing on economical cars, could be the next household name in high performance. This company is the fastest-growing independent automaker in China and is only twelve years old. It is already working with companies such as Gruppo Bertone and Carozzeria Pininfarina of Italy, which helped develop companies such as Ferrari and Lamborghini. They’re also pairing with a top engine producing company, AVL, out of Austria to develop a high-performance engine.

Even more intriguing is where these Chinese-made autos are being developed. Unions aren’t restricting where these cars are going to be made. In late 2006, a deal was finally reached in which Chery will develop an auto plant in northern Iran. The plant will produce 200,000 Chery QQ6 sedans. But this is only the tip of the iceberg. Chery has also developed small plants in Malaysia, Egypt and Uruguay.

So how are U.S. automakers supposed to compete? They can’t.

U.S. automakers have such a long-established history that it is going to take decades to reform. U.S. cars are known for being gas-guzzling giants, not fuel-efficient hybrids. The fact that China’s companies are new allows them to develop a whole line of cars centered on economic and environmental features, and high-performance cars. As well, they have no pre-established plants or unions to slow down the process. We simply have to face the reality that in 20 years we may all be driving a Chery instead of a Chevy.