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Chinese cars are still cheap, but they're no longer ugly (wsj.com)
49 points by jkuria 51 days ago | hide | past | web | favorite | 72 comments



The main change that China is driving is the shift to electric vehicles - buses, cars and bikes. They already make and buy about have of the car EVs each year.


Don’t forget to mention that they are forcing foreign car manufacturers to switch to EV in order to have a chance at keeping their market shares, by imposing EV quotas. This will likely do a lot of damage to unprepared giants like VW, who are selling 20-30% of their cars in China today.


China has a horrendous smog problem. Volkswagen cheated on emissions tests for years. It's not a market they deserve to succeed in, at least not until they credibly clean up their act.

China's commitment to climate change is lukewarm, but they're all-in on fixing their air pollution problem. It's abundantly clear that internal combustion has a very short future in China. Western manufacturers need to face up to the electric future in a real hurry.


> China's commitment to climate change is lukewarm

They met their Paris targets early, the US pulled out last year amid being a decade behind on meeting it's commitment and threatened the entire stability of the agreement by doing so.

Most of the Western world isn't on target despite having lower goals than China.

I'm interested in who exactly isn't "lukewarm"?


> Most of the Western world isn't on target despite having lower goals than China.

This isn’t really fair to say. The „Paris targets“ are just global temperature goals, the actual emission targets were nationally (i.e. individually) chosen afterwards and very different, as well as being defined as „emission reductions per unit of GDP“ for developing countries while the US‘ was absolute. As a result, China‘s emissions will peak somewhere around 2030 while the US has to reduce emissions dramatically till then.

Here‘s a visualization: https://ourworldindata.org/grapher/annual-co-emissions-by-re...


I don't mean to be unfair to China - they're taking the issue seriously and doing some excellent work in developing PV and battery production capacity, but there are some real concerns about their broader approach. The primary issue is new coal power plants, which China is building at an alarming rate despite substantial overcapacity at present. The rising domestic demand for electricity combined with the huge increase in coal generation capacity is a potential timebomb in China's energy mix.

https://www.chinadialogue.net/blog/10761-China-is-building-c...


The environmentally disastrous Paris targets were entirely meaningless as it pertains to China. Using that as a reference doesn't support your premise.

Their 'commitment' allows them to perpetually increase their pollution levels with zero concern for consequences. Nothing happens to China if they fail to hit their numbers. They get to dramatically increase their pollution output over the next decade and still meet the laughable target. Which is exactly what they're doing now, by going on a massive coal power plant building spree. It's entirely a fake voluntary system meant for propaganda show, nothing more. Simultaneously there's no entity capable of enforcing anything on China nor any entity with the ability to accurately assess China's figures either direction.


Actually because of the diesel scandal VW is the best positioned "normal" car company for a success in EV market at this point.

In order to recover their image they were forced to announce and actually work on full line-up of electric vehicles and their target is 2020. Even with delays that's going to be sooner than any other company. They've been working on the technology for quite some time. Porsche Taycan and Audi e-tron are to come out this year AFAIR.

Also those are EVs that actually look like cars and not kitchen appliances from Axiom (Wall-e movie spaceship) which is something I also think is missing from the market. I can't comprehend what the car companies try to achieve with the designs and separate models.

Right now I can choose between petrol and diesel for my Golf, Volvo V40 or Hyundai Elantra. Just add electric power train to the offering and be done with it. I want EV for the performance, cost savings, environment or whatever other reason might be but I don't want any of the dorky design cues most EV vehicles present.

EDIT: typo


> Actually because of the diesel scandal VW is the best positioned "normal" car company for a success in EV market at this point.

How can you so easily come to that conclusion? One could equally conclude, that they've cheated us once, and they'll do it again.


I think that this is a good thing in the long term. It's VW's fault that they are unprepared, and the writing was on the wall for the China's switch to EV.


What makes you think that they are not prepared, they are getting multiple electric cars out this year like an suv in the coming months.


The VW Neo is coming out this year, and that‘s a far more relevant market segment than any of Tesla‘s offerings so far.


The Neo is competition for the Renault Zoe and Nissan Leaf segment, only 6-7 years too late and without the learnings from several iterations. Whether they will be able to hit their announced price targets, remains to be seen. But in 2020 they will have fierce competition in every segment, from Tesla to Hyundai and BYD. Perhaps they’ll succeed in the home market, but worldwide - probably not.


I would love to see Chinese cars drive the cost of vehicles down significantly. I've been semi-looking for a new car for a year now (now rush since I walk to work), and it's ridiculous how expensive everything is. After taxes and fees, I haven't found anything that I'd be happy with for less than $20k used or $25k new.

It would be amazing to reach a point where you could get a decent new car for around $15,000.


Why not buy a used car? I would never dream of buying a new car. It comes with greater risk but a 3 year old car does not have significant risk attached to it, but it is significantly cheaper.


Yes I agree that buying second-hand is usually better value. Remember that cheaper new cars means cheaper second hand vehicles too!


I'm definitely willing to buy a used car, and mentioned it. It's just a matter of finding one that I like that's available. I'd also like to reduce that additional risk as much as possible by buying certified pre-owned from a dealer.


There is a reason why the prices are different, warranty being one. Are you suggesting the market in cars is inefficient?


Let's say that the difference between a used car and a brand-new car is the lack of warranty (and some amount of physical depreciation, which for the purposes of this discussion we can ignore). Then for the prices to be equal it means that the price of a used car must be equal to the price of a brand new car minus the "value" of the warranty, which depends on the reliability of the car and the repairing costs. It seems perfectly possible that consumers, say, overestimate the probability of the car breaking down, which would lead to a difference in prices. Whether we can call this a market inefficiency, I don't know.


Re: warranty, I think you're leaving out the value of loss of economic productivity of using the car in the case of an out-of-warranty breakdown. If this warranty is priced incorrectly, then you should be able to buy a used car along with a bumper to bumper insurance add on for less than the price of a new car. The only exploit I see is that this is probably priced under near-100% utilization scenarios a la rental cars fleets, and your personal economic value on the car is lower, i.e. you have other means of transport, or you drive occasionally. My point is, uninformed individuals may misprice this, but transport industry purchasers won't, and I don't see them doing what I'm suggesting. Instead, they buy new cars and offload at three years.


You assume that the transport industry pays the same price. Also need to factor in the extreme inconvenience of buying a massive amount of used cars, which everyone will attempt to exploit.

Through leasing, rental etc. is how a lot of cars are delivered to the market. It is beneficial for a manufacturer to have the opportunity to sell a new car and know that there will be lots of pretty-new in great condition cars on the second hand market after a while. Which will help drive brand perception.


Inefficient depends on your perspective and what you value.

Irrational? Yes. Though nothing wrong with that, had it not been for a fact that it is also a huge and short-lived investment.


I've only ever bought used Corollas and Yarises. Cheap to buy. Cheap to maintain. Cheap to run. Always reliable. What's not to love?


Europe has a decent choice of basic, cheap cars. Dacia are well known for selling outdated but reliable cars at silly prices - their Duster crossover SUV starts at $13,000 (including 20% Value Added Tax) and their Sandero subcompact starts at $9,200.

https://www.dacia.co.uk/vehicles/our-range.html


I drive a 13 year old Dacia, simply because I paid for it with a single paycheck and if anything goes wrong, replacement parts are around $30. First owner, mint condition, both mechanically and visually. Sure, it sucks from a feature standpoint but I just installed an iPhone compatible media player and use my iPad for most of what I want. And at least I didn’t feel too bad when a moron dinged it the first week I took it out on the road. And I can mess around with it by installing things, drilling into it without feeling bad for ruining an expensive purchase. Tax on it was $15 for 2018 and it barely uses any gas.

I’m fine with buying a luxury car until after I buy my own house.


It's not an unreasonable price when you think about the enormous amount of technology, materials and manufacturing processes that go into a car. Nothing else we normally buy comes close.

Just buy a used car like everyone else.


> It's not an unreasonable price when you think about the enormous amount of technology, materials and manufacturing processes that go into a car. Nothing else we normally buy comes close.

Commercial jets come pretty close. They have such ridiculous safety standards and regulations, I'd be happy to bet that we'll Chinese consumer cars before we see Chinese commercial jets.


You normally buy commercial jets?


I think it is done. There is no way China doesn't become number 1 in every way that is possible. The stupidity and shortsightedness of western companies that partly enabled this is really staggering. I guess that initial thinking was let's do the clever part of making a product: design, IP, etc. but use cheap labor from China. But obviously the know-how was also unintentionally transferred. And now you have a behemoth with know-how, educated people, mega-cities etc. There is just no way to compete. I guess you can impose sanctions, ban sales, sabotage deals etc. but it is done anyway.

On the other hand, I don't think that China rising is a bad thing, and it will make a world a better place, since USA and its allies can't compete with China with wars (though there are some pathetic attempts) but you probably must put all that war budget money and effort into research and infrastructure.

Possibly this is a huge win-win for the whole world. Or we end up in flames if there is enough stupidity and solving things by war and force.


In my opinion this is great news, because the US was too comfortable as the only superpower after the end of USSR. And China is playing the right game: instead of trying to go along with the scare tactics of the US military, they're expanding production and technology. This is the key to any superpower. I think the US will have to learn to live in a world in which they either play the technology game at the same level or will left behind as a second-tier player in the international scene.


How could the US be left behind as a second-tier player? There's no scenario where that happens short of total collapse.

It'll have 400 million people in an integrated single market, with the dominate culture in a liberal democracy. The rest of the world isn't actually ever going to learn Mandarin the way it has English. The language is far too difficult for that to occur and there's very little benefit to doing so. Which is also why that isn't happening right now despite China having the world's #2 economy. The growth of Mandarin outside of China is almost non-existent.

Liberal democracies in Europe are going to take their marching orders from an authoritarian dictatorship? Zero chance of that. China's system is fundamentally incompatible with liberal values, it will always cause an us-vs-them conflict.

China's authoritarian, repressive system will also not allow it to ever become culturally dominate. Few countries will accept the requirements that come with that pact. Just their lack of any gradient of free speech guarantees they can never become culturally dominate.

There are no other great powers in Western culture that can supplant the US. Germany, the UK and France are not suddenly going to increase their populations by 4x or 8x such that they'll become enormous powers with massive economies (and able to pay for a powerful military with global projection). Canada and Australia are also out of the running from the start due to that.

Japan hasn't had economic growth in decades and has a declining population with an even worse government debt situation than the US. They have no military of consequence. Nothing about their situation looks primed to change any time soon.

South Korea looks to have a potent future, however their population is far too small to become a superpower.

India has a GDP per capita of $2,000. Their biggest worry has to be getting caught in the low income trap, not even the middle income trap which is what China is about to get stuck in. India could do most things right and still not be a superpower 40-50 years later. It'll take two decades for them to catch up to where Russia is at today in global positioning when it comes to politics / influence / military, and Russia is now very far away from being a superpower.

So who else is left? Nobody. It's the US and China with everybody else a million miles away. Countries with liberal values - which is nearly every single high GDP per capita country - are all going to align with the US perpetually, so long as it remains on the liberal democratic side. That liberal alignment is political, economic and military. China has no real allies other than North Korea. Being a superpower without having all the advanced, liberal, rich countries as allies, leaves you as a paper superpower boxed in at every turn; whereas the US can project globally nearly at will precisely because it has so many alliances with other advanced, liberal, powerful nations.


Nobody eats ideology. If China can produce more wealth that the US, who cares what kind of government they have. As long as people in China are fed and making money they will support their government. And foreign countries don't care about this, see for example how the US supports a dictatorship in Saudi Arabia.


It's true that the West appears to have exported a large part (maybe too much) of its industry to China. However,

>>There is just no way to compete.

We used to think the same about Japan. Japan reigned supreme in consumer electronics, motor cycles, cars ,and was taking large chunks of the mainframe market. It was 'obvious' then that Japan would take over the computer industry, in particularly with its statist

https://en.wikipedia.org/wiki/Fifth_generation_computer

Just because we can't see now who will compete with China, doesn't mean nobody will.


Japan: 126 million people.

China: 1.3 billion people.

Japan: 377k sqkm.

China: 9.56 million sqkm.

China is following exactly the same path as South Korea or Japan, but it's a huge country, not a medium sized one.

Somehow I doubt China will stop at regional power level, considering all its resources pretty much guarantee it being #1 in the world, by far, if they're managed by a half-decent government.

And nota bene, China has such a huge scale that it doesn't need to be fully democratic and fully developed to still be #1 by far. If the average Chinese citizen will produce half or one third of what the average US citizen does, the Chinese economy will still dwarf the US one, due to sheer population sizes.


To reinforce, China is already expanding its influence around the world, picking up low hanging fruit in countries the west has neglected in Africa and probably elsewhere. I don't think Japan ever had those opportunities.

On the other side, China is also raising its first generations of people born in middle class, who are starting to expect social government. From health care to the environment, to safe and comfortable jobs. We will have to see if those things will burden China as they burden Japan, the EU and the US.


I'm not sure if Japan and China can really be treated as similar in this light.

China's population size is a game changer. If they manage to get most their people well-educated and contributing on the competitive stage, it's like comparing a GPU to a CPU. China has more honor students than the USA has students. At some point that starts to make a very real difference.


The GPU and CPU comparison is interesting. Of course, a specialized GPU can do a handful of operations far more quickly, but a CPU is far more flexible and can adapt to changing needs. In the processor world, not sure the GPU will necessarily win out.

In the geopolitical space, it's not clear the analogy is on-point either. China can move quickly in some areas (e.g., staff up 100,000 manufacturing hands in a week), but it'll be much slower to adapt to foreign cultures and standards of civil liberties that are the norm in most western countries. For example, it's hard to imagine them developing a messaging app, or image analysis app that would convince U.S. users to trust and use.


The area of most concern from my perspective as an American is how long the USA maintains its military superiority operating as a relative CPU, should China focus its massively parallel GPU on advancing its military tech?

It's not like China has been signaling a lack of interest in this area, quite the opposite.

The USA is going to increasingly interfere in China's progress through other means, like crippling the economy, effectively starving the GPU of amps. If it doesn't, things are going to get interesting real quick.


and Japan did take 100% of US TV/VCR market.


The knowledge transfer was maybe unintentional for western companies, but it was also incredibly naive. It was (and is) China's big aim to acquire as much knowledge as possible. Western companies were naturally transferring knowledge to China when they built new factories there and this was exploited ruthlessly. Also, China does a lot of industrial espionage. None of this is exactly secret.


It wasn’t unintentional. China demanded technology transfer for access to their market: https://www.npr.org/2010/11/22/131520776/china-s-technology-...

Not countering this policy early on was naive on behalf of US/European politics.


Many economists disagree, as there is no reason why companies should not share intellectual property when it is profitable for them to do so, e.g. https://johnhcochrane.blogspot.com/2018/08/intellectual-prop...


This argument as presented in the blog post seems incoherent and poorly thought through to me. Companies innovate because this gives them a competitive advantage in a market that has strong protections for trade secrets and patents. This is essential for all kinds of tech companies to survive in healthy, competitive markets.

Thr flaw in the argument is that China essentially does not honor these protections. So if a foreign company invents something and wxports this knowledge to China, a purely Chinese run company will soon after build an essentially equal product without having to spend mony on any of the expensive R&D to actually develop that tech. This potentially ruinous asymmetry is not accounted for at all.


The point is, no one is forcing them to export to China. These companies accept the deal.


And all I'm saying that they made bad deals. This is coming back to hurt them.


Hyundai hired some Audi designers in the mid-2000’s to give their vehicles a more European look. It worked!


Specifically, KIA (owned by Hyundai) hired Peter Schreyer (designer of the Audi TT) as their chief design officer and gave him a free hand. The result was KIA's first good looking facelift on the KIA Optima. After the design (and evantual business) successes at Kia/Hyundai, Peter Schreyer was then named as one of the presidents of KIA.

The designs won many iF and RedDot design awards.

Check these out: https://www.motor1.com/news/99708/10-best-kia-designs-list/


Yes, I remember thinking how good they looked. I didn't know they involved Audi. But it makes sense.


Hyundai isn’t Chinese though. It’s Korean.


What happened in Korea can happen in China and India


China will eventually be able to build safe and inexpensive vehicles that can compete in the global market. However, unless they open up their society, allow civil liberties like freedom of movement, freedom of speech, and unimpeded markets, they will always be playing catchup.

The U.S. should not be afraid of China emulating our technological prowess, we should be afraid when they start challenging our values.


What are the major social problems in the US right now?

- Freedom of speech gives corporate and foreign agents unlimited influence over the democratic process.

- Freedom of movement is devastating communities in both the sources and sinks of mass internal migration.

- The free market is delivering greater and greater returns to a smaller and smaller group of people.

Those freedoms aren’t, like, self-evidently good for outcomes. If we are to stay committed to the principles, we’re going to have to acknowledge and accept thier costs, because those costs are going to be the top political issues for the foreseeable future.


Americans tell themselves that so they can sleep at night but who knows if it is really true. China is on an impressive run compared to the US and has been for some time.


I'm living in a country near China. While most of people don't take Chinese cars seriously, this perception is slowly changing and I expect that Chinese cars will eat a huge chunk of local market after 10 years. We don't use US cars either, but that EU and Japan cars will give up some of their profits. I have no knowledge about other markets, but I expect it to be the same. It's especially important during migration to electrical cars. While mechanical cars are very complex to produce reliably, I think that electrical cars will be much easier to produce because you could reuse a lot of parts easily, motor, battery, electronics and so on. You only need to develop an unique chassis and interior. And Chinese cars will deliver much more value compared to western ones for the same money.

Now something like autopilot is another thing where US could lead the market. But it seems like science fiction to me, I don't believe that I'll see it on my streets anytime soon.


That one in the picture is still ugly. The stretched-out-of-proportion chrome grill reminds me of the dentist's daughter in Finding Nemo.


one in the first picture is a direct Lexus RX 200t ripoff :)


But what about safety? My lasting impression of Chinese car manufacturers are those YouTube videos of crash tests in Australia where the passenger compartment is the crumple zone. That's the department where they need to convince me.


The Geely and Lynk & Co brands share technology with Volvo so at least those should be fine.



I'm sure they can produce crash-worthy cars. The question is whether they'll continue to do so once they're past the crash testing stage. I seem to recall reading quite a few cases in a range of industries where Chinese manufacturers substituted cheaper, lower-grade materials when the thought they could get away with it.


Personally, I would feel bad making such a negative characterization based on something I seem to recall. I'd look it up. If I was right, I'd provide the source, if I was wrong I'd be silently embarrassed.


It's a fairly well known phenomenon. There is a book called "Poorly Made In China" about it, and the term for it is "Quality Fade".

The concept is that after winning the contract (sometimes at a price below their own costs, in order to beat competing manufacturers), the Chinese manufacturer increases their profit margin by "optimizing" the product design - using cheaper components or omitting parts without the knowledge of the buyer, until the products are rejected.

Here's an article I found from a random search on "Quality Fade" [1]. For a counter-viewpoint, the China Law Blog [2] argues it isn't Quality Fade if customers still buy the products. It was written in response to a recall of 23,000 Chinese-made cars in Australia after they were found to have asbestos in their engine gaskets. Great Wall Motor had argued that "their own in-house testing [had] concluded that the asbestos was not a danger to human bodies" [3].

[1] https://sourcingjournal.com/topics/sourcing/apparel-producti...

[2] https://www.chinalawblog.com/2014/03/chinas-quality-fade-is-...

[3] https://blogs.wsj.com/chinarealtime/2012/08/17/chinese-asbes...


Thanks for posting this! I was on mobile and didn't have the time to dig up sources, but the asbestos-in-vehicles incident is one of the specific examples I was thinking of.

The baby formula example that a sibling poster mentioned is another. Where I live the supermarkets have had to limit customers to 1-2 tins of formula each because people were buying trolleys full of it to ship to China, where middle-class Chinese buy it because they can't trust locally sold formula to be safe for their babies.

The argument in [2] that if customers still buy products then everything is fine, when in fact both the immediate client and the end customer are being defrauded, just underscores the mindset behind the problem. Any company (local or foreign) doing serious fabrication in a country like China needs their own comprehensive QC system in place to oversee the entire build process.


I wouldn't. They prefaced their statement with "I seem to recall", which is a sufficient acknowledgment of the author's own uncertainty toward the statement that follows.

I applaud the poster for stating that the veracity of his memory is debatable instead of certain. I wish people would do it more often.


Many Chinese make the same negative characterization. The most famous of these cases is probably the milk powder scandal.

Now, Western companies are no saints (e. g. VW Diesel scandal). But a better system of checks and controls keeps them accountable.


Improved cosmetically? sure. "no longer ugly"? Define ugly


Evidence suggests Toyota produces superior cars https://www.yourmechanic.com/article/the-most-and-least-expe...

But its share in Global car sales is just 9.2%


GAC currently has a nice display booth at the NADA show, National Automobile Dealers at Moscone Center in San Francisco, showing about 6 cars. Which is probably some sort of a confirmation of what the article says about them coming to US dealers soon.


I always wonder why India couldn't catch up. Although I don't know about its engineering sectors, I have the impression that the country is at least not that bad in scientific research. And it has cheap labour too.


You guys have a different value of ugly. Also a LOT of astroturfing in here.

rapsey 51 days ago [flagged]

But are they still death traps?


There are a fair few "great wall" utes in Australia. Somebody might have differential on fatal accident rates but I'm not hearing tales as bad as the GMC/Chevy petrol tank problem (if we're talking death traps)




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