Friday, February 25, 2005

Chery on Top


A decent analysis of Chery comes from the Detroit news here. I've written about Chery before, it's the ultra cheap Chinese car manufacturer that is trying to sell its products here. It's no surprise that Chery has terrible reliability; this seems to be the hallmark of all cheap brands. But the fact that Chery has the Chinese government behind it, means it has an enormous supply of cash to draw upon.

The article for some reason forgets two important factors in Chery's development. The first is that like many Chinese companies, they would prefer to steal their ideas rather than create their own. The above photo is of the Chery QQ, which looks very similar to the Daewoo Matiz, a GM product. GM is now suing Chery for this very reason. For Chery and China to make it in the US marketplace with cars, they will have to have original ideas.

Secondly, comes the idea of financing. People want a new car, and are many times willing to purchase an inexpensive brand like Kia, rather than buying a used, more reliable brand like Honda. The problem is that eventually there is a limit. Cars can be so cheap through financing, that there really is no market anymore for an even cheaper car.

So Chery has a few hurdles, but with the ever diminishing value of the dollar verses the world's currency, I think there might be a market. If the dollar doesn't continue its trend downwards, I doubt it.

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