Chinese cars will outsell Detroit cars by 2020

An Asian company may soon hit the United States the way companies from California have hit it—in an over-the-road pickup truck, and it’s not Detroit. That vehicle is a flatbed truck and isn’t made by Detroit at all. Rather, it’s made by an Asian automaker in China, and it’s hitting the U.S. just as Beijing is getting ready to increase its ownership of the U.S. automotive market.

Currently, Chinese automakers account for about 15 percent of the domestic sales of the most popular makes, according to Lee Miller, a senior analyst at the JD Power Financial Services Market Performance Report and research vice president for the Institute of Automotive Engineers. But by 2020, Chinese brands will account for 32 percent of domestic sales, according to MIT-Toledo scholar David Nardone. And that will no doubt be a problem for the U.S. auto manufacturers—especially since Asian brands are predicted to make the bulk of the growth in auto sales in the U.S. during the next decade.

Several of China’s biggest auto companies are growing quickly: both SAIC, which is owned by state-owned firm China National Automobile Corp. (GM), and Chery Automobile Ltd., reported that their combined sales more than doubled last year to reach 467,000 units, and Chinese leasing company NIO has a high-profile deal to build a U.S. base in Michigan.

Chinese producers are promoting themselves as “green” amid the planet-warming effects of their diesel-powered counterparts. SAIC’s green car line, the F300K, which combines a diesel engine with a low-emission alternative that will reduce carbon dioxide by 90 percent, was actually designed with the idea of bringing that technology into the U.S. market.

“SAIC designed it in part because they noticed that the average fuel economy of pure diesel trucks in the U.S. is 6 miles per gallon, while for gas they are around 15 miles per gallon,” explains Nardone. “It’s fuel-efficient diesel, but without the gasoline that is known for its harmful emissions.”

While all this change can be cause for alarm, some of it could actually be a boon for American automakers.

Increasing Chinese ownership of U.S. vehicles will open up new markets for U.S. carmakers. Americans make nearly half of the world’s car parts, so Chinese companies could benefit from the U.S.’s expertise in the manufacture of vehicle components, which manufacturers currently see as an advantage. For instance, in the competitive Chinese mini-truck market, China imported less than 3,000 U.S. specialty steel parts last year, whereas there were 43,000 parts imported from the U.S. in 2009, according to IDC.

GDP growth in the U.S. and China is expected to slow over the next few years, which could help cut down on the number of imported parts. Also, the weak dollar could make the Chinese produced goods in the U.S. less expensive for American consumers. In the most recent quarter, American manufacturers produced more components and components than at any time since 2008.

A slowdown also means that U.S. firms can see more opportunities abroad, especially in Asia. “China-oriented manufacturers would look to purchase parts from U.S. partners in order to streamline production, and expanded sales of North American-made parts to China should take the pressure off of foreign companies to expand into China,” notes Nardone.

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