If U.S. Auto Market Looks Tough Now, Wait 'Til the Chinese Get Here (Soon)

Before anybody gets too euphoric about the current success of small cars from the Detroit 3, like the Ford Focus and the Chevrolet Cobalt, don’t forget the elephant in the room that nobody much is talking about right now: future imports from China.

High gas prices and the Detroit 3’s other troubles have largely knocked Chinese imports out of the headlines in recent months, but Chinese imports should start landing by around 2011 or so.

A joint venture between Chrysler and Chinese manufacturer Chery looks like it has the inside track to be the first Chinese imports to arrive in the U.S. market, but the details are sketchy, especially the timing.

The Chinese automakers don’t seem to be in any great hurry – which in the long run is probably worse luck for the Detroit 3, and also their Japanese and South Korean rivals. When they finally get here, Chinese imports are not going to be Yugos, which according to the old joke had rear defrosters so you could keep your hands warm while you pushed them.

“They definitely want to get it right,” said Tim Dunne, director of Asia-Pacific Market Intelligence at J.D. Power and Associates, in a Sept. 5 phone interview. That is, Chinese exporters are taking the time to get their U.S. distribution networks right, and above all their product quality.

A couple of would-be U.S. importers that were on a crash program to hurry up and be the first to offer Chinese cars have already ended up in the ditch, according to Automotive News (subscription may be required).

With high U.S. gas prices, the demand for small cars is definitely growing. Year to date, Ford Focus sales were 155,036 through August, an increase of 25.9 percent from the year-ago period, according to AutoData. Chevy Cobalt sales were 145,941 through August, an increase of 9.6 percent.

Those numbers represent increased market share, since car sales overall were down 2.1 percent year to date, and the entire market, including trucks, was down 11.2 percent.

General Motors recently announced plans to add an extra shift to build the Cobalt. Ford has also announced plans to boost Focus output.

GM and Ford should make hay while the sun shines, not to mention Toyota, Nissan, Honda, Hyundai and Kia, because the Chinese storm is definitely coming, even if it seems far away at the moment.