American Buyers Embracing Cars Manufactured In China

The stigma of buying a car manufactured in China seems to be fading. A decade ago, the internet was filled with videos of Chinese-made cars folding up like a cardboard box in a hurricane during crash tests but that was then, this is now. The reality is that people are accustomed to vehicles made in South Korea and Japan. In fact, cars from those companies have earned reputations for being both safe and reliable. That aura seems to have spilled over to Chinese made cars as well.

General Motors is selling lots of Buick Envision compact SUVs in the US, even though they are made in Shanghai. From a few hundred a month in the spring, the Envision sold more than 1,600 units in September. Buick dealerships are clamoring for more as American tastes swing more and more toward smaller SUVs, also known at crossovers or “cute utes.” In China itself, the Envision is hugely popular and is on pace to sell as many as 200,000 units this year.

When GM announced a year ago that it would import the Envision from China, the UAW called it a “slap in the face to U.S. taxpayers” who famously bailed out General Motors after the global economic meltdown of 2008. But GM countered that the decision just made good business sense, since demand for smaller SUVs was mushrooming in the US and the company did not have a domestically produced model to offer its Buick customers. Or as Donald Trump would say, “It’s just business.”

China currently has a glut of manufacturing capacity. It can produce up to 40,000,000 vehicles a year but its new car market, while the largest in the world, is “only” 25,000,000 a year. Volvo is also importing its S60 sedan from China to the US and Cadillac is bringing in a small number of its new CT6 pug-in hybrids from China. If US demand is strong enough, it could import many more.

In general, car makers prefer to make their cars as close as possible to where they are sold to minimize transportation expenses. Getting cars from far away can cause supply issues. For instance, it can take 6 months to custom order a Buick Envision for delivery in the United States. Factory orders within the US normally take half that much time to fill.

But manufacturers are going to look at all that unused production capacity in China and want to take advantage of it. Whether you are for a or against globalization, the allure of making a product for less money elsewhere and selling it domestically is strong. Now that Buick has crossed the line and started importing Chinese made cars in significant numbers, expect more Chinese made cars in American showrooms in the future.

Source: The Wall Street Journal