China Could Charge Ahead in the U.S. Market

By Warren Brown
Sunday, January 18, 2009

DETROIT This is what the North American International Auto Show, which opens to the public this weekend, ought to be -- less glitz, less glam, substantially more substance.

It was forced into that functional austerity this year by circumstances mostly beyond its control -- a collapsed economy, a frozen credit market and drastically reduced sales for all major car companies doing business in the United States.

Put the emphasis on major.

Global Electric Motorcars (GEM), a Chrysler-owned company, actually had its "best year ever" in 2008, said company President and Chief Operating Officer Richard J. Kasper.

GEM makes battery-powered neighborhood cars, those bubble-shaped conveyances often dismissed by serious car people as "golf carts."

GEM, based in Fargo, N.D., and in business 11 years, has 40,000 vehicles in operation in the United States -- a tiny fraction of the slowest selling, mass-produced automobiles with traditional internal combustion engines. So, Kasper's "best year ever" might be taken with a bit of suspicion.

Still, he has a point, as amply demonstrated by a walk around the cavernous Cobo Hall, the annual site of the Detroit show.

Electric cars, both ready-for-market and concept models, are in. They range from the relatively inexpensive GEM cars ($7,000 to $14,000) to luxury models such as the Tesla roadster and the Fisker Karma sedan, each priced in the $100,000 range.

Keep walking the floors of Cobo. You'll see numerous other electrics, such as the battery-powered urban car proposed by Mercedes-Benz-owned Smart; the third-generation gas-electric hybrid Toyota Prius, which is about 20 percent lighter and thus even more fuel efficient than its predecessors; the ready-for-market, gas-electric hybrid Ford Fusion midsize sedan, designed to deliver 44 miles per gallon; and the marketable-by-2010 Chevrolet Volt plug-in electric, which under its current configuration can run 40 miles on battery power before requiring an ounce of gasoline.

For me, there is a big surprise here.

Cobo has a basement, a bottom floor usually reserved for less-wealthy exhibitors, such as second-tier or third-tier automotive industry suppliers, or for automobile manufacturers, such as BYD and Brilliance of China, which have yet to gain entry to the U.S. market.

But BYD and Brilliance this year are showing their stuff on the main floor, largely because hard times have forced some manufacturers -- Mitsubishi, Nissan, Rolls-Royce and Ferrari, for example -- to opt out of the Detroit show.

It's not so much that those companies were too broke to bring their cars to Detroit. It's that a tough economy is forcing them to be more selective. Rolls-Royce and Nissan, for example, are likely to be on exhibit at the upcoming shows in Geneva and New York and, because of its recession-resistant economy, in Washington.

What about Mitsubishi? It's hard to say. Mitsubishi is going through incredibly difficult times. But the Washington show is more dealer-influenced than the manufacturer-dominated show here, which means Washington area Mitsubishi dealers might copy the actions of their Detroit counterparts and come up with a minor exhibit of their own.

But to BYD and Brilliance, an opportunity is an opportunity, and the two Chinese companies have taken advantage of the prime floor space given them by the absence of better-known car companies. Both are serving notice that when they enter the U.S. market in or about 2012, they will come as high-end, high-technology automobile manufacturers.

BYD's exhibit is instructive and, indeed, should be taken as a warning by any automobile manufacturer or government inclined not to take the Chinese seriously in matters of advanced engineering. BYD is displaying a range of gas-electric and plug-in electric models, such as its E6 DM (six-cylinder, dual-mode) sedan, which BYD representatives said will be able to drive 156 miles on a single battery charge.

Are BYD and Brilliance bluffing? I don't think so. Their exhibits constituted a poignant reminder of something a Chinese university student told me two years ago in Shanghai: "You in the West own the old automobile industry. We are going to own the new one -- the one powered by batteries."

It's a good thing that the North American International Auto Show has been forced to divest itself of its glitzy, wasteful silliness. Here's hoping that its functional austerity lasts. These are hard times. But, more than that, the competition for the future of the automobile industry is getting serious. We in the United States don't have time to fool around.

© 2009 The Washington Post Company