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Chinese brands, with their low prices, are selling like hot cakes as Latin America's consumer class expands amid rising incomes.
Reporting from Lima, Peru, and Bogota, Colombia
At first, Lima taxi driver Mario Segura was disgusted by the thought of buying a Chinese-made car. He had doubts about the vehicles' durability, service and resale value.
Cars made by Chinese company JAC Motors are on display at a dealership in Rio de Janeiro. The low cost of Chinese cars is winning over buyers in Latin America. (Antonio Scorza / AFP/Getty Images)
But favorable word of mouth, assurances that spare parts are plentiful and, of course, unbelievably low prices won him over.
"Little by little, I heard favorable comments," said Segura, speaking in a Chery showroom in the Surquillo district. He had just plunked down $12,000 in cash for a new Fullwin XR sedan, half the cost, he said, of a comparable Fiat or Renault. "It took a long time to decide, but I'm risking it."
So is Luis Luna, a doctor just back in Lima after working for several years in Argentina. He had planned on buying a secondhand Japanese car. Until, that is, he noticed billboards touting low-priced Chinese brands and listened as his relatives insisted that he kick tires at a JAC dealership, one of dozens of Chinese brands sold here.
"We realized for the same money that we'd pay for a crummy secondhand car that inspired no confidence, we could have a brand-new Chinese car with a two-year warranty," Luna said as he finished paperwork on his new $16,000 JAC B-Cross family wagon. "I'm totally convinced this is the right decision."
Similar buyer testimonials can be heard across Latin America these days, where Chinese cars with unfamiliar brand names like Great Wall, JAC, Brilliance and Sinotruk are selling like hot cakes. Chinese cars were introduced in Peru in 2006 and now one in six new cars sold here is a Chinese make.
There are no fewer than 90 Chinese car manufacturers to choose from, according to the trade group Automobile Assn. of Peru. The Chinese auto industry has yet to undergo the winnowing process that, over a century of competition, has reduced the U.S. car industry to three big players.
The Chinese brands' main selling point is, of course, price: New Chinese cars typically sell for half to two-thirds the cost of a comparable European, U.S. or Japanese vehicle, said Guido Vildozo, an auto industry expert with consultants IHS Automotive in Lexington, Mass.
"What makes Chinese cars so much cheaper? Start with labor," Vildozo said, noting that a typical Chinese autoworker makes $300 to $400 a month, a fraction of the $2,000 to $3,000 in wages that Mexican workers make or the $5,000 to $7,000 a month that U.S. auto workers average.
Another price advantage, said Jian Sun, a partner with AT Kearney business consultants in Shanghai, stems from the "reverse engineering," or design and mechanical imitation, that many Chinese carmakers use in competing models to save them the expense of designing new models from scratch.
Chinese manufacturers are entering the market as Latin American incomes are rising to unprecedented levels, flush from the decade-long global commodities boom filtering down to an expanding consumer class.
[SUB]February 09, 2012|By Adriana Leon and Chris Kraul, Los Angeles Times[/SUB]
Reporting from Lima, Peru, and Bogota, Colombia
At first, Lima taxi driver Mario Segura was disgusted by the thought of buying a Chinese-made car. He had doubts about the vehicles' durability, service and resale value.
But favorable word of mouth, assurances that spare parts are plentiful and, of course, unbelievably low prices won him over.
"Little by little, I heard favorable comments," said Segura, speaking in a Chery showroom in the Surquillo district. He had just plunked down $12,000 in cash for a new Fullwin XR sedan, half the cost, he said, of a comparable Fiat or Renault. "It took a long time to decide, but I'm risking it."
So is Luis Luna, a doctor just back in Lima after working for several years in Argentina. He had planned on buying a secondhand Japanese car. Until, that is, he noticed billboards touting low-priced Chinese brands and listened as his relatives insisted that he kick tires at a JAC dealership, one of dozens of Chinese brands sold here.
"We realized for the same money that we'd pay for a crummy secondhand car that inspired no confidence, we could have a brand-new Chinese car with a two-year warranty," Luna said as he finished paperwork on his new $16,000 JAC B-Cross family wagon. "I'm totally convinced this is the right decision."
Similar buyer testimonials can be heard across Latin America these days, where Chinese cars with unfamiliar brand names like Great Wall, JAC, Brilliance and Sinotruk are selling like hot cakes. Chinese cars were introduced in Peru in 2006 and now one in six new cars sold here is a Chinese make.
There are no fewer than 90 Chinese car manufacturers to choose from, according to the trade group Automobile Assn. of Peru. The Chinese auto industry has yet to undergo the winnowing process that, over a century of competition, has reduced the U.S. car industry to three big players.
The Chinese brands' main selling point is, of course, price: New Chinese cars typically sell for half to two-thirds the cost of a comparable European, U.S. or Japanese vehicle, said Guido Vildozo, an auto industry expert with consultants IHS Automotive in Lexington, Mass.
"What makes Chinese cars so much cheaper? Start with labor," Vildozo said, noting that a typical Chinese autoworker makes $300 to $400 a month, a fraction of the $2,000 to $3,000 in wages that Mexican workers make or the $5,000 to $7,000 a month that U.S. auto workers average.
Another price advantage, said Jian Sun, a partner with AT Kearney business consultants in Shanghai, stems from the "reverse engineering," or design and mechanical imitation, that many Chinese carmakers use in competing models to save them the expense of designing new models from scratch.
Chinese manufacturers are entering the market as Latin American incomes are rising to unprecedented levels, flush from the decade-long global commodities boom filtering down to an expanding consumer class.
[SUB]February 09, 2012|By Adriana Leon and Chris Kraul, Los Angeles Times[/SUB]
