Fiat CEO Marchionne warns against underestimating China

Fiat CEO Marchionne warns against underestimating ChinaIn many automotive circles, whether at the mamak or in boardrooms, China is still the butt of jokes. However, underestimating Chinese carmakers may not be that wise, if one remembers that Japanese and Korean cars were once in the same position. Fiat and Chrysler CEO Sergio Marchionne is warning against that.

“If anyone deludes themselves that they can ignore China, they will pay a huge price. China’s auto industry has grown tremendously, and they have some of the most updated current technology. They should not be underestimated. We cannot afford to be unprepared for the ascent of China, reassuring ourselves of our invincibility,” Marchionne told an auto industry seminar in Michigan.

“The excuse that we did not understand or that we underestimated the scale will serve no purpose. Rather we need to continue to work to make our industrial base more competitive, because the day of reckoning is inevitably coming.”

The Italian pointed out that at present, Chinese carmakers produce almost entirely for domestic consumption, but “even assuming China were to export only 10% of what it produces, the risk we face in our home markets is enormous.”

Fiat CEO Marchionne warns against underestimating China

He has reason to worry. Fiat is fighting for market leadership in fast growing Brazil, the world’s fourth largest car market and a target for the Chinese. Chery has started construction of its first factory outside of Sao Paulo and expects to churn out 50,000 vehicles a year there by end 2013. Meanwhile, Jianghuai Automobile (JAC Motors) is to invest between $600 and $900-million for its maiden Brazilian assembly plant that will start operating in 2014.

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Danny Tan

Danny Tan loves driving as much as he loves a certain herbal meat soup, and sweet engine music as much as drum beats. He has been in the auto industry since 2006, previously filling the pages of two motoring magazines before joining this website. Enjoys detailing the experience more than the technical details.

 

Comments

  • tamiyamundi on Aug 05, 2011 at 11:13 am

    Only a ignoramus still underestimating China, a wise man has already wake up.

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    • alldisc on Aug 06, 2011 at 11:37 am

      china cars are popular in china, not yet europe, not yet north america, not yet japan.

      the reason for that is their domestic market alone has that economic of scale. they do not depend on overseas market for business. their 1 billion ppl is like the entire of asia. or entire of europe, perhaps.

      looking at cherry cars as example, i am thinking they are sre still in last decade era. even youngman relies on proton cars.

      but give them another 5 years, and they are capable of turning the tables. believe me – that is possible.

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      • “their 1 billion ppl is like the entire of asia. or entire of europe, perhaps.”

        Bullshit!!! India already have 1.2 billion population

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        • avcutie on Aug 07, 2011 at 10:58 am

          China had 1.3 billion people. That’s what I learnt 10 years ago.

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  • there are many people like that in Malaysia who like to underestimate china product…mostly people here only knew cheap or fake imitation china product..but they do not well know bout the other side of china product

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  • theprem on Aug 05, 2011 at 12:23 pm

    There are big differences between Korean/Japanese and Chinese attitude.
    The end results (products) will not be the same.

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    • I somewhat agree. The poor quality rep of Chinese products in general exists for good reason. If they can address the reliability problem of their products and rehabilitate the image of their product quality in their target markets, then they’ll go far.

      Having said that, I’ve no idea how reliable Chery cars are so, who knows?

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      • squawk on Aug 06, 2011 at 9:34 pm

        For a lot of China products, the quality depends on how much the customer is willing to pay. For the many low grade products they come out with there are also high quality stuff. It’s just that many of us don’t get to see it because no one wants to import those in to Malaysia.

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        • avcutie on Aug 06, 2011 at 10:51 pm

          Very well said. Malaysia only gets third rate reject goods from China, while the best ones landed in western countries.

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        • Agree, most Malaysian only want cheap thing.
          If you only afford to pay peanuts, you will only get monkeys…..And after that, start to curse on the monkeys.

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  • azrai on Aug 05, 2011 at 12:33 pm

    How about China-dolls? Wives already aware of it before.

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  • littlefire on Aug 05, 2011 at 12:36 pm

    They are a few local manufacturer still think they can be protected for a *long time… Without knowing that China is going to eat them alive… :P

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    • RedBeanBun on Aug 06, 2011 at 11:06 am

      there is a manufacturer and konies in Msia, the AP king alrady lined up China car. The P1 and P2 is used to earn more money for the konies aupplier and konies AP king. Period.

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  • DimSumAuto on Aug 05, 2011 at 1:32 pm

    Slowly but surely the chinese auto makers will catch up fast and they dont need bloodly 30 years of govt. support to do it !

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    • azrai on Aug 05, 2011 at 4:12 pm

      It is because their domestic market is large enough (over 1billion people) to cover cost + make profit too.

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      • tikus on Aug 05, 2011 at 6:15 pm

        1 billion people yes but not all 1bil people own a car.In China there have alot of auto maker not like bolehland P1 and P2 only and yet coming up fast. Wake up p1 &p2.

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        • azrai on Aug 08, 2011 at 7:33 am

          10% of 1 billion is 100 million, while in Malaysia 10% of 28million people only million. See the scale? That’s why Wira was sold for mor than 10years to break even and making profit. Don’t you know that? Korean alone with 80million population 10% owning cars can easily reach 8million per years.

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  • kamaji on Aug 05, 2011 at 1:45 pm

    Yes they definately are coming on big in almost everything.Cars are of no exception.What they lack now…design & branding.Technology is no issue afterall they are the master of copying & they hv the industrial might to back it.But then again I dont see why they cant develope their own efficient engine when they already hv the tech in aerospace & military hardware.

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  • I couldn’t agree more! That is so true… Remember the fact that the China has the biggest population in the world and by pure statistics and probabilities alone, they’d succeed in any chosen field..

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  • ThePolygon on Aug 05, 2011 at 3:38 pm

    Wake up guys… iPhone made in China :D

    If China can make the iPhone for Apple, letting Apple enjoying the huge success they have now… just wonder how much is the actual iPhone cost?

    China caters for both cheap and expensive market…
    There are false and fake products from China and there are genuine and quality ones too.

    They got the resources, they got the manpower… and they are relatively cheaper in terms of cost.

    More competitors is good for us consumers.

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    • tokmoh on Aug 05, 2011 at 11:42 pm

      “made” is not quite an accurate word to describe it, all Apple products state “designed by Apple in California. Assembled in China.”

      China is good as an assembler. As long as Apple (and most other foreign companies as well) monitor their assembly strictly, their products are good quality.

      That said, this Italian has a good point. If China can utilise their advantage in industrial might, they are unstoppable. Rather than hoping they wont do it, or sniping their reputation for poor quality, or relying on lawsuits to bring them down (which is pointless IMHO cuz their courts will definitely be biased to their homeboy), carmakers have to push hard to ensure they really earn their place.

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  • ahmad on Aug 05, 2011 at 3:59 pm

    slowly but surely..

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  • Expatriate VN on Aug 05, 2011 at 4:05 pm

    However, there is one exception – don’t over estimate Europstar!

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  • Ash Menon on Aug 05, 2011 at 4:34 pm

    We’ve seen Korean companies that previously cashed in on their bargain basement pricing do decently well, and then suddenly go into overdrive when they souped up their designs, tech, and quality. China is at that same phase right now, except they have several times more capital. All they need is a good designer (please, Schreyer, stay with Kia!) and some better QC.

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  • RedBeanBun on Aug 06, 2011 at 11:04 am

    In world view:
    Germans > Korean/Jap > China

    In 1Bolehland view:

    Naza = Konies= Protong = P2 > German > Jap > Korean > China.

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  • Ah Long on Aug 06, 2011 at 6:38 pm

    Another reason why P1 should just drop dead! After 25 years our ‘pride of d nation’ cant even conquer regional market. Now a new POWERHOUSE is emerging. Be realistic our population is not sustainable enough to support a car manufacture. If P1 cant export their cars better gulung tikar n stop sucking tax payers money

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  • typeR on Aug 06, 2011 at 8:38 pm

    i looked at one china-made car during one of the auto shows that i attended – even the door handle was not fitted properly and could be moved around.

    IMHO until today china still makes only slightly better than half-baked, so-so products (75%-baked) most of the time. china still has a lot to improve in it’s QC and branding. until they do that, then only the whole world will be convinced about their presence and seriousness.

    about them being compared to japan and south korea – – no comment.

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    • avcutie on Aug 06, 2011 at 10:56 pm

      The same could be said about the Korean a decade back, and where are they now? The Chinese could do it faster and better. They have the resource.

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    • squawk on Aug 07, 2011 at 9:31 am

      You’re right about their needing improvement and branding. 10 years ago not many would’ve put a Samsung or LG appliance on their To-Be-Considered list. 30 years ago, the same happened with Japanese appliances.

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  • clarence on Oct 03, 2011 at 2:26 am

    i’d checked and test drive one of chery…..not fitted properly…

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