Executive Briefings

Sooner or Later, Ordering Chinese Will Mean Buying a Car

Chrysler said it will sell a small, inexpensive car built by a Chinese automaker in South and Central America as early as next year and in the U.S. by 2009. The car is expected to cost about $10,000. But shortly after the Chinese government approved the deal between the two companies, Chery's president contradicted Chrysler and said the car would sell for about $7,000 and go on sale in the U.S. by next year. Such is life in the Chinese auto industry.
In any event, the vehicle is likely to find a receptive market. Labor costs in the U.S. make it impossible for Detroit manufacturers to make small cars that retail for less than $13,000 per vehicle and still make a profit. It used to be that GM, Ford, and Chrysler were willing to make small cars at a per-unit loss, with sales of high-profit trucks and sport-utility vehicles making up the difference. But the financial woes of all three companies have left that thinking by the side of the road.
Source: Business Week, http://www.businessweek.com

Chrysler said it will sell a small, inexpensive car built by a Chinese automaker in South and Central America as early as next year and in the U.S. by 2009. The car is expected to cost about $10,000. But shortly after the Chinese government approved the deal between the two companies, Chery's president contradicted Chrysler and said the car would sell for about $7,000 and go on sale in the U.S. by next year. Such is life in the Chinese auto industry.
In any event, the vehicle is likely to find a receptive market. Labor costs in the U.S. make it impossible for Detroit manufacturers to make small cars that retail for less than $13,000 per vehicle and still make a profit. It used to be that GM, Ford, and Chrysler were willing to make small cars at a per-unit loss, with sales of high-profit trucks and sport-utility vehicles making up the difference. But the financial woes of all three companies have left that thinking by the side of the road.
Source: Business Week, http://www.businessweek.com