Guest Post by Eric Peters
It’s funny – or sad, depending on your point of view.
America car companies are downsizing and U-hauling operations to China as fast as they can . . . at the same time that Chinese car companies are preparing to launch a kind of vehicular Operation Overload directed at the mainland United States.
Two Chinese car companies – Zotye and GAC, which sells cars under the Trumpchi label (no reference to the Orange Man, it translates as “passing into happiness”) have announced they will begin selling cars here just a few months from now.
There will be “landings” in a dozen states, including Virginia, Florida, California, Pennsylvania, Indiana, Kansas, Oklahoma and Maryland.
GAC has met with 80 potential distributors, according to the trade publication, Automotive News. Zotye has reportedly signed non-disclosure agreements with at least 120 prospective U.S. dealers.
And that’s probably just for openers.
The Chinese car industry is a state-sponsored industrial juggernaut that already outproduces the American car industry in terms of total volume – in excess of 23 million vehicles manufactured annually vs. about 17.2 million in the U.S.
This is analogous to what happened in the United States around 100 years ago, when Henry Ford began cranking out the Model T in numbers.
Just smaller numbers, over a much longer period of time . . . vs. the Chinese.
From 1909 to 1927 – a production run of almost 20 years – Ford built just under 15 million cars.
The Chinese built almost twice as many cars . . . last year.
That stat is giving nightmares, surely, to every round-eyed executive in Detroit. Better brush up on that Mandarin.
And – like the Japanese first and the Koreans second – the Chinese can make cars a whole lot cheaper.
About 20 percent cheaper, according to Zotye’s North American CEO Duke Hale, who says the company’s compact, mid-sized and full-size line of Traum (as in dream) crossover SUVs, which go on sale here in 2020, will undercut the existing competition by at least that much.
If so, it tells you – elliptically- just how much it costs to make cars here.
The Chinese can make a car there, then ship it halfway around the world on a fuel-guzzling container ship, absorb all the costs associated with the loading and unloading – and it still costs them 20 percent less than it does to make an equivalent car in Detroit.
The usual line of objection is that this is the dark fruit of coolie slave labor, or at least of labor arbitrage – the leveraging of China’s toiling proletariat in the service of corporate oligarchies. Which was once true. But the Chinese middle class is indisputably rising; one metric of this is the fact that there are already more licensed drivers in China than in America.
A “proletariat” that can afford to buy new cars equipped with air conditioning, power windows and Bluetooth’d stereos – and which drives on roads that are in better shape than our roads – isn’t very proletarian.
China has become, by more than one measure, a nicer/cleaner/more generally prosperous place – and for the average person – than America is for the average American, the flag-humping fatuities about “the greatest nation on Earth” notwithstanding.
See, for example, the People of Wal Mart – including the 60-plus-year-old men and women manning the cash registers for $8 per hour, who aren’t driving brand-new anything.
Many of these used to work for American car companies like GM.
China is “communist” to the same degree that America is a “republic.” Both are in function if not name corporatist oligarchies – with the difference being the Chinese oligarchs seem determined to make everything and lots of it – allowing the Chinese people to partake of this, to a degree analogous to the America of the 1950s… while the American oligarchs seem just as determined to do everything they can think of to make it impossible to make anything . . . and create thereby a vast sea of government-dependent serfs tapping away at their Obamaphones while waiting for their EBT cards to reload.
One is an oligarchy on the rise; the other in past-due terminal decline, its wilting car industry being Exhibit A.
American car companies are reducing their model lineups while the Chinese are expanding them; shuttering manufacturing plants – as the Chinese build them. Instead of figuring out how to lower the cost of what they sell – which might result in more sales – American car companies are hellbent on increasing the cost of what they plan to sell (i.e., electric cars).
Because what America needs above all at a time when most Americans could not come up with enough cash to pay a $500 emergency plumbing bill is an electric car that costs 40 percent more than an otherwise equivalent non-electric car. This is a measure of the brain-rot which cripples the country.
Meanwhile, Zotye offers a sub-$10,000 car – the five-door Z100.
It’s actually sub-$9,000.
This car – which has AC, power windows and locks – stickers for about $8,800 in the export markets where it’s already available. It costs about $5,200 less than the least expensive equivalent cars you can buy right now – models like the just under $14k Mitsubishi Mirage (reviewed here).
In China, the Z100 is available for less than $5,000 – about a third the cost of the Mirage.
It could change everything – if the Chinese can get it past Uncle.
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No surprise here. China is governed by smart people, Europe by idiots and America by criminals. The results speak for themselves. The Chinese will end up rich, Europeans broke and Americans dead.
You could have saved yourself the umbrage. LLPOH already spelled it out years ago.
https://www.youtube.com/watch?v=qAnGe40-o9Q
Das Arschloch, great observation: China is governed by smart people (mostly engineers), Europe by idiots (wealthy aristocrats who never worked), and America by criminals (lawyers).
That explains a lot.
Smart people governing = billions of dummies shitting in the local river.
BETTER DEAD THAN RED
“America car companies are downsizing and U-hauling operations to China as fast as they can . . .”
If you remember, the tax cuts were supposed to prevent this kind of thing according to the Used Car Salesman In Chief.
Neddy, if you were any more behind the times, you’d be an engineer from Minnesota.
Try making a low-rider out of those.
GM spends an average of $7 billion a year to fund it’s pension and health care promise for retirees, that cost is built into every new car. The sad fact is GM agreed to this cost when they produced half of all cars sold, today they produce 2 out of ten and half of those sit on a dealer lot unsold.
The automotive supply companies we work for have been complaining for over two year’s at their gradual slowing down of orders from American companies.
One company in Holland Mi said their orders from Ford went from $23 million a month to $16 million in the last six months.
If China starts to import cars, doom and fucking gloom………..but expected, I also expect more bailouts or bankruptcy, then watch those pensioners who didn’t save a dime of their own money scream and wail.
At that rate, they won’t be funding it too much longer.
$4000 pickup truck.
https://www.forbes.com/sites/tychodefeijter/2016/06/13/this-is-the-cheapest-pickup-truck-in-china/
If the specs don’t suck, I’d buy one tomorrow.
But the big 3 (and the foreign 5 or so) will likely collude with the US government to make sure that you NEVER have the chance (or will have to pay $20,000 for it with tariffs, emission requirements, safety requirements, etc.).
In 1988, having just gotten a job that required us to purchase a second car (I had been riding my bicycle to work – wonderfully close job), we looked at the offerings of Toyota. At the time they were selling the “$5998 workhorse” – a small, no-frills, pickup truck, and the Tercel EZ, a no frills two-door hatchback with the same price tag. The Tercel got 41 mpg, and though it came without A/C, a radio, or even a radio antenna (the last two we corrected ourselves for under $100), it turned out to be an outstanding commuter car. My wife and I carpooled to work in it until we finally traded it in after 135,000 miles. Being a hatchback (and a huge one at that), it carried nearly everything we needed, and as out other car was a pickup truck, we have everything else covered.
At the time, Hyundai was selling a car for $4998, and the Yugo was selling at around $3800 as I recall. This was Hyundai’s first offering in the US, and the Yugo was generally considered a piece of shit, but as our truck was a Toyota and had given us no complaints, we stuck with the brand.
Boy I miss the days of great cars for low prices. If China is going to fill that void again, great for them. Likely the price of other foreign cars will come down to try and compete. I have a feeling that Uncle Donald will likely burden these cars with so many tariffs they will still be overpriced, but who knows. Competition is always good for the consumer.
Mr Lib, the original Hondas with 13″ tires didn’t do so well in a country where behemoth was the norm. They eventually liquidated their stock at $900 a car. Imagine!
https://en.m.wikipedia.org/wiki/Honda_N360
If it weren’t for the last 1% of emissions specs, imports would be 20% cheaper already.
So would American cars.
Millions of Americans will trade their over priced computerized US POS in for a basic car or truck.
But they will NEVER be allowed to and we all know it.
“China is “communist” to the same degree that America is a “republic.” Both are in function if not name corporatist oligarchies –”
If this be true and you had the ability to change one thing (i.e. a tax or law), what would it be?
chinas rural areas are WAY more rural than americas
Eric’s statement ‘China is “communist” to the same degree that America is a “republic.” ‘ is certainly accurate. Communism is a form of economics. China was certainly communist 30 or 40 years ago, but not anymore. The fact that it still has a totalitarian government doesn’t make it communist. Fortunately a lot of people no longer refer to China as “communist China”, but many people still do, and as long as that continues there will continue to be confusion.
Kind of like calling America “free.”