WHEN WARREN Buffet decided to buy 10 per cent of a relatively unknown Chinese car company, its shares doubled on the Hong Kong stock exchange and many believed the day of the Chinese car had come.
But Buffet did not invest in just any company – Build Your Dreams (BYD) is the world’s biggest producer of batteries.
Buffet took a broader view, and little notice of what has been happening in the Chinese car industry. The market has fallen by some 15 per cent, production has slowed, fuel prices remain high and the state may have to intervene to boost the industry.
The reality is that Chinese car manufacturers may be ambitious to expand globally, but most of the world is in crisis and they have a long way to go before they match the standards of manufacturers worldwide. The cars they showed at the Detroit auto show may look polished and gleaming but don’t feel like they have the necessary quality.
Cars like the M3 coupé and the five-door hatchback from Brilliance make an initial impression but they remind one of the earliest examples of cars from Korea. Even Long Shen, general manager of Brilliance, admits they “ can be better”.
But one should not underestimate the Chinese car industry. BYD is well advanced in battery engineering and in developing electric-powered cars. The company most likely to win the electric race is Toyota, whose plug-in Hybrid will arrive in America before General Motors’ Volt gets going. The Chinese, however, will be best placed to win the price war and, these days, that may well be the most important one.