Detroit is Under Attack!

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This posting appeared today on, written by Michael Vaughan:

Motown, Motor City or Rust Belt; what’s your name for Detroit? If you’re into sports, maybe it’s Hockey Town or City of Stanley Cup Champions. Go back to the Second World War and Detroit was The Arsenal of Democracy when this was the fourth largest city in the USA; now it is number 11 and sinking like a stone. Call it what you want, but for almost a century Detroit was the car capital of the world.

I’ve been going to Detroit for years. The first several times were to see the Detroit Tigers which I had heard Ernie Harwell describe on the radio summer after summer as a kid at a cottage on Lake Huron. More recently I’ve gone each January for the Detroit Auto Show, which this year opens to the public from Jan. 17 to 25.

When Detroit truly was Motor City this was the most important auto show in the world. Now it’s still in the top rank, but now there’s also Tokyo and Frankfurt and a few others to give the Detroit Auto Show a run for its money. And this year, when we’ve seen Detroit CEOs pleading for bail-out money from Washington and Ottawa, it’s easy to think it’s all over for Motown.

People here know what the competition from Japan and recently Korea has done to the Detroit Three (nobody calls them the Big Three anymore). Global production and sales have plummeted as the industry deals with the worst downturn in decades but Detroit has done even worse.

For the last several years everyone has expected the Chinese car makers to march into the Detroit Auto Show and launch the cars, at a fraction of Detroit’s prices that will drive the last nail into Motown’s coffin.

In December 2005, the media went crazy for the Geely. It was going to cost less than $10,000, be available everywhere (maybe Wal-Mart) in late 2008, and run General Motors, Ford and Chrysler right out of the midsize segment. Geely Motors was the first Chinese automaker ever to display a made-in-China car intended for sale in the United States in Detroit. There were reports of U.S. car dealers, all looking for the next Toyota, lining up to sell Chinese vehicles.

I remember seeing the Geely and I got down on the floor and started crawling around under it. It looked to me like the body panels had been attached with drywall screws. To say that the parts and panels were fitted loosely would be an understatement. On the surface the body looked like it had been painted with a stick and the interior was made up of some of the lousiest looking plastic I’ve ever seen.

A little later a videotape of some crash testing of the Geely turned up YouTube. It’s still there; you should see it. That Geely was crushed on impact like a beer can and the test dummy disintegrated into a thousand pieces. Not much more has been heard from Geely since.

The following year, in December 2006 all the talk was about Chang Feng Motors which was planning to build an assembly plant in Russia from which to flood the US with cheap SUVs. Chang Feng’s chairman came to the Detroit Auto Show and said in two years they would be selling throughout North America. There’s no sign of them yet.

This year Brilliance Auto (see photo) is supposed to be the new star at 2009 Detroit Auto Show.

In China, Brilliance Auto is the partner of BMW and they already sell the midsize BS6 sedan in Europe. However once again crash testing got in the way of market success. You can see what happened to the Brilliance (certainly not Brilliant) on YouTube too. It had to be withdrawn from Europe after that for some serious re-engineering, but it’s back.

There’s no doubt that some day cars produced in China will be sold in the United States and Canada. They’ll start off as low end products selling for twenty percent less than other low-end competition just the way the Japanese and Koreans began over here. But will they climb the quality and desirability ladder like the Toyota, Honda, Nissan and Hyundai? Or will they end up nowhere like Yugo?

It may take up to 15 years for Chinese manufacturers to gain a decent share of the North American car market when you take into account the time needed for further product development as well as the creation of a dealer and service network. But make no mistake Detroit is going to be under siege from the Chinese soon.

If you’re interested, the last time Detroit was actually under siege was during the War of 1812 and it didn’t turn out too well. The Battle of Fort Detroit was a humiliating loss for the Americans and ended their planned invasion of Canada.

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