Auto Industry’s Aggressive Expansion Into China Continues, But Not Without Obstacles
A roundup of news from the China automobile market, where expansion is continuing, but with the burgeoning market comes business conflicts and questions about vehicle safety.
GM’s OnStar Telematics Service Hits 200,000 Subscribers In Shanghai
Today, China Car Times reports that since its launch in Shanghai in 2009, Shanghai OnStar Telematics Co., Ltd has signed over 200,000 subscribers. While Toyota, Honda and Nissan have added similar services that will increase competition with GM‘s OnStar, GM was the first to offer telematics service, integrated with its major brands Cadillac, Buick and Chevrolet. Additionally, it offered free OnStar service for the first year for customers who bought GM vehicles with the OnStar system — a big plus among Chinese consumers.
The telematics market is only heating up, with OnStar doubling its customer base in the last three months alone. So far, OnStar boasts service numbers such as 1,460 automatic crash notifications, 50 stolen vehicle locations, 37,000 remote door unlocks for vehicle owners, and more than 1.8 million turn-by-turn navigation routes in China.
Chinese Carmaker BYD is the “First Ripple In A Potential Chinese Wave”
In case you missed it, last week the New York Times profiled carmaker BYD and its plan to take its affordable electric cars to the US market, having set up temporary North American operations at a dealership in Los Angeles. In particular, BYD’s plug-in hybrid, the F3DM, while bland-looking, was described as having the potential to make a mark on the U.S. market when it is potentially launched next spring.
BYD’s challenge is made more daunting because it will take years to establish a nationwide network of dealers. The company, which will base its American headquarters in downtown Los Angeles, plans to start by opening about five dealerships in early 2012, where it will also sell the e6 pure electric car (with a promised 200-mile range), as well as BYD solar panels, solar-shaded parking systems, home energy-storage systems, charging systems and LED lighting.
By the end of my day with the F3DM, I had logged 112 miles and used 2.3 gallons of gas. That comes to 48.7 m.p.g. for the day, mileage that my 2006 Prius would not have reached given my frequent stomping on the accelerator. It was once thought impossible that Japanese and Korean cars would ride alongside Fords, Chevys and Dodges on American roadways. After my day with the impressive, though imperfect, F3DM, I see that Chinese cars—electric and affordable — are not only possible, but imminent.
230,000 Buicks In Safety Recall
Yesterday, Shanghai General Motors Corp recalled more than 230,000 Buick Regal and LaCrosse units. Shanghai Daily reports that this is the biggest recall for the Chinese auto industry this year, and the third in China for GM in the last two months. With carmakers aggressively expanding in China, the number of recalls are also rising, bringing up issues of vehicle quality.
The recall affects 133,074 Buick Regal mid-class sedans and 99,857 Buick LaCross sedans due to faulty engine pipelines. GM is not the only company dealing with quality issues, as Toyota announced a recall of over 5,000 imported Lexus cars last week due to malfunctioning accelerators. Last year, over 1.17 million vehicles were recalled in China, many produced by foreign carmakers.
While many factors play in recalls, including changes in design, craftsmanship or materials, Shanghai Daily, quoting industry analysts, points to the rapid expansion of car manufacturers making it increasingly difficult to control quality, showing that this could be a sustained issue as the market continues to grow, particularly in inland areas.
Subaru’s Italian Advert Featuring Mao Angers China
Today, a different type of problem arose as China Car Times reported on an Italian Subaru advertisement showing Chairman Mao with a feminine face, followed by the tagline, “a high driving position and superior interior space worthy of a revolution.” The advertisement is particularly ill-timed because Subaru is on the verge of minting a deal with China’s Chery Motors that will see Subaru producing its Forester model in Chery’s new factory in Dalian. China Car Times mentions a similar misstep by Citroen in 2008, which featured a picture of a scowling Mao Zedong.
There is still a festering wound in China for Japanese actions in World War Two, so Subaru’s rather ill timed advertisement is only likely to affect any on-going negotiations for its joint venture in Dalian with Chery, until at least Subaru delivers a grovelling apology.
Subaru China were unable, or unwilling to comment on any actions taken by Subaru Italy and claimed to have no knowledge of the advertisement when prompted by Chinese media outlets. Expect an internet outcry over the next few days from patriotic Chinese and a boycott of Subaru’s products that will last at least a few days.