Cheap Chinese Cars For U.S: An Improbable Wish?

We all know by now that the Chinese are coming to the American automobile market.

It is Chrysler who is helping the Chinese enter the U.S. market, making a historical agreement to sell inexpensive cars built by Chinese automaker Chery in the Central and South American markets in 2008 before heading northward to sell in the U.S. in 2009.

Will Americans buy Chinese cars? Will people opt to buy cheap or will they seek cars with more safety features? Chrysler has stated that the Chery car will be priced at $10,000. However, Chery has said that the car will carry the price tag of only $7,000. More interestingly, it states it will be available in the U.S. in 2008.

Now the reputation of Chinese made products have taken a major hit in recent weeks. BusinessWeek reminds us that we've had the pet food controversy, the tire fiasco, the tainted fish problem, and substandard products made by Chinese companies being sold in China. The bad publicity is sure to impact on sales of Chinese cars in the U.S. and that impact will be negative rather than positive.

Still, China continues to be the darling of the automotive world. Besides Chrysler, other western auto makers such as General Motors and Volkswagen are making deals with other Chinese auto makers.

So why are the American auto makers helping to push Chinese cars on to the American market? The simple answer is that they can't construct cars and sell them for $13,000 or less. The arrangements with the Chinese auto makers makes it possible for them to offer the more inexpensive cars.

Our take? So, is the rush by the American car companies to partner with the Chinese car companies going to be profitable for everyone concerned? Just like everything else, we have to let the whole thing play out.