SHANGHAI -- Now that China's automakers are rushing to expand production, will cars made in China flood the world?
Some observers think it could happen, since China's production capacity is expected to double by 2020.
At a recent industry forum in Detroit, BorgWarner CEO Tim Manganello warned that Chinese automakers will be tempted to export vehicles to Europe and North America if they can't sell them in China.
Could China's market be swamped by excess production capacity? Hmm, that's highly probable. But will those excess vehicles flood into Europe and North America? My view is they won't.
When talking about auto production in China, don't forget that much of it is controlled by global players. Except for Renault, nearly every major global brand builds vehicles in China.
Of the 13.4 million light vehicles produced in China in the first 10 months of this year, 6.3 million were built in global automakers' assembly plants.
International companies like General Motors and Volkswagen aren't going to export large numbers of Chinese-built vehicles to overseas markets where they already have their own plants.
Brilliance, Geely and others
But what about the domestics? Will they flood overseas markets with their products in 10 years' time? Well, even if they want to, they won't be able to do it anytime soon.
Three years ago, Brilliance China, Geely, Chery and ZX Auto all boasted that they would soon start selling vehicles in Europe and the United States. But they quickly realized that these sophisticated markets are not so easy to penetrate.
In 2007 and 2008, for example, Brilliance's cars repeatedly did badly in European crash tests. After selling just a few hundred vehicles in Europe, Brilliance China suspended exports to that market earlier this year.
In North America and Europe, domestic Chinese brands also must contend with stringent emission standards and tough rules on intellectual property rights.
For example, an Italian court has ruled that Great Wall illegally produced a copycat version of Fiat's Panda small car.
To be sure, several state-owned Chinese automakers have launched their own brands with technology purchased from international companies.
SAIC sells several sedan models built on MG Rover platforms. Likewise, Guangzhou Auto has developed a mid-sized sedan based on the platform of the Alfa Romeo 166.
Do these companies have a better chance to sell in mature markets such as Europe and the U.S.? The answer is no, at least not in the next ten years. Few European consumers will want to buy an imported car built on an old MG or Alfa Romeo platform.