Chinese pitch innovation, not just price

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Chinese pitch innovation, not just price  
                  
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From: automotive news                                  January 21

DETROIT — Chinese automakers want to sell only budget cars in the United States, right? Not really.



The first model that BYD Auto Co. aims to sell here is a hybrid with a battery it developed.



"Our strategy is to present ourselves as a green company," said BYD President Wang Chuanfu at the Detroit auto show. "We want our cars to be seen as offering new technology at a good price."



A few years ago, Chinese automakers aimed to market their cars on low price alone. Now they are taking a new approach. They also want to be seen as innovators, particularly with electrics and hybrids.



The catch: The technical challenges are daunting, and no Chinese automaker has started mass production of an electric or hybrid vehicle.



An innovation pitch makes sense for Chinese automakers, said Sun Jian, a vice president at consultant A.T. Kearney in Shanghai. If they can develop ideas, they can erase the huge lead that Western automakers have in standard engines and other technology.



"We are all at the starting line" with alternative-fuel vehicles is how Chinese automakers view it, Sun said.



Geely hybrid, too



Geely Holding Group Co. is at the Detroit show for the second time. Like BYD, Geely is showing several gasoline-powered cars. But the place of pride in its booth goes to the Hifun hybrid. Geely says it is developing electrics and hybrids.



Geely also is touting a tire blowout monitoring and braking system it developed that helps prevent accidents if a tire explodes. Geely calls it "a breakthrough in automobile safety."



The hybrid car and blowout monitoring system are both part of Geely's new approach to the United States.



In 2006, Geely's first Detroit show, it pitched low sticker prices. Now, Geely wants consumers to buy its cars because of service and advanced features, said Chairman Li Shifu.



"We have new technology," said Li. "U.S. consumers don't understand the Geely brand, so we need to make a good first impression."



A third Chinese automaker at the show, Changfeng Motor Co., did not show electrics or hybrids. But Changfeng does hope to succeed internationally by "introducing foreign advanced technology," and "ceaselessly and independently making innovation to develop superior new products," it said in a press release.



Changfeng, BYD and Geely are all small automakers by global standards. Geely, the largest of the three, sold 197,203 light vehicles in the first 11 months of 2007.



Electric car production



BYD says it will begin small-scale production this year of electric cars using a ferrous battery it developed. BYD has been producing lithium ion batteries for cell phones since 1995 and is the world's largest supplier of nickel-cadmium batteries for consumer products, said Wang.



Geely says a new energy car will be on the road in China this year, without specifying the kind of energy. Geely has 1,400 engineers and devotes 6 percent of its revenue to research, says Li.



"There is a lot of activity on the tech side in China and a lot of desire," said Mary Ann Wright, general manager of hybrid systems for Johnson Controls Inc.



But "a good consumer battery does not translate into a good car battery," said Wright.



Johnson Controls is supplying lithium ion batteries to Chinese automaker SAIC Motor Corp. for a fleet of demonstration hybrids due in China early this year.



BYD figures it could be selling its green car, called the Dual Mode, in the United States within three years.



Geely is more cautious.



"All Chinese brands want to come to the U.S. market, but the time is not ripe," Li said. "We need to do abundant research."

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