Chinese Car Companies Soon to Make Waves in United States

Chinese Car Companies Soon to Make Waves in United States

Audience: SPCH 230 class and instructor

Topic: Chinese car companies coming to United States

Specific Purpose: To inform audience about the benefits and disadvantages that Chinese car companies have in coming to United States

Thesis: Even though there is a lot of skepticism towards Chinese car companies making a foothold in the American car market, with the right marketing and not rushing into the market, there is a good chance that the Chinese car companies will follow the Japanese car companies and carve a spot in the American market.

Introduction: Who here has a license? Who else is tired of overpaying for a car when you will likely want another in a couple years? Well, two Chinese car companies (Geely and Chery) are going to try to help out and offer cars that are much cheaper then any car on the market. The problem is finding a spot in the American car market because of prejudice in American and trouble finding backing. Even though there is a lot of skepticism towards Chinese car companies securing a foothold in the American car market, with the right marketing and not rushing into the market, there is a good chance that the Chinese car companies will follow the Japanese car companies and carve a spot in the American market.

Transition: The perception of Chinese car companies is changing since Geely was the first Chinese car company to display a car at the North American International Auto Show.

I. Geely has shown promise and determination since they have decided to try to become players in the American auto market.

A. Mr. Shufu Li, Chairman of the Geely Automobile Company, of Hangzhou, China, announced in Detroit that Geely is ''... on track to enter the United States automobile market in the year 2008. Our goal is to present to the American people another choice for the family sedan, a vehicle that possesses the highest quality but is available at the lowest price,'' said Mr. Li.

B. "This is the first Chinese automobile to participate in the Detroit Auto Show, so we're unique," said John Harmer, vice president and COO of Geely-USA. "As auto shows go, this year isn't dramatically different from last year -- the most significant change is that Geely is here."

C. More distributors are interested in the Chinese cars than ever.

D. Malcolm Bricklin's Visionary Vehicles has already backed Chery Automobiles and plans to sell 250,000 Chery cars in the United States in the first year through 250 dealerships nationwide, raising sales to 1 million vehicles annually by around 2010.

E. "What you're seeing is the first stage," says Mike Hanley, global directory of Ernst & Young's automotive practice. "Everyone recognizes that Chinese cars will end up in North America. It's a matter of time."

Transition: There are many advantages to having Chinese car companies in the American marketplace.

I. Cheaper Prices

A. Chery plans to sell cars up to 40 percent below current market prices

B. Geely has big plans, aiming to export 1.3 million vehicles worldwide, including small sedans for less than 10,000 and a sports car, the Beauty Leopard, which sells for 15,125 in China

C. At the 2005 Shanghai Auto Show, Chery introduced a convertible with a retractable hardtop, that won the award for best new car

II. Location where they are built

A. Tariffs on parts have declined

B. Cheap Labor (production workers only make 2 dollars an hour)

C. Sales there have been very strong

D. Logistics costs will decrease

III. Exporting in China has been done or is being done by bigger companies

A. Last year, Honda became the first foreign automaker to set up a major export operation, shipping a compact car to Europe from a plant in China

B. GM and Volkswagen have exported small quantities, such as the Chevy Venture minivans to the Philippines and Polo compact cars to Australia

C. Chrysler plans to build its 300-model in Beijing for domestic sale and possible export

IV. Consumers are willing to buy from Chinese companies

A. Americans are growing accustomed to higher-end Chinese products, such as flat-screen TVs and laptop PCs.

B. Art Spinella, president of CNW Marketing Research, surveyed consumers to see if they would consider buying a Chinese car. About 36 percent said they would. "That level of consideration is twice what it was for Korean brands 10 years ago," he says.

C. Mel Rapton, the California car dealer, figures that the combo of 100,000-mile warranties and cut-rate pricing will get Chinese cars moving. "It's a pretty big gamble," the 77-year-old admits.