China automakers show their stuff in Detroit

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LISA MULLINS: The Big Three car makers are still looking for customers, so crisis or not the North American International Auto Show must go on. But Detroit's annual catwalk does reflect an industry in distress; six major car makers pulled out this year. That left space in the main exhibition hall for Chinese auto makers to display their wares. Paul Eisenstein has been checking out the Chinese offerings. He's been writing about the auto industry for 30 years, he's currently with the Detroit Bureau, which is an independent auto news service. If I'm not mistaken Paul, it wasn't all that long ago that the Chinese auto makers were relegated to the basement of the International Auto Show. Not so this year though.

PAUL EISENSTEIN: No, as a matter of fact two of the key players over there who are, let's just say eyeing the West, got nice space up on the main floor alongside of General Motors and Ford.

MULLINS: And who are these Chinese car makers and what do their cars look like?

EISENSTEIN: Well one of them is Brilliance and it is a company following the traditional Chinese route, of modern times anyway, which is they produce under their own name but they also have a partnership going with a Western maker. The other maker is called BYD and it's one of the emerging Chinese-only brands. In other words, they're not going necessarily to just build cars for a Western company. They really want to rise on their own. What's really unusual about this company however was that up until five years ago it was a battery builder. It's in fact, one of the biggest suppliers of Lithium batteries for all sorts of uses: cell phones, computers and so on, all over the world, but now they wanna build cars.

MULLINS: All right, well we wanna hear about the market for them, but for both these manufacturers, Brilliance and BYD, do they make car models that might resemble any that we're familiar with?

EISENSTEIN: Yeah, some of them do. In fact, since Brilliance with BMW you have some BMW models rolling off of its plants, and if you look at some of the other models that they're producing under their own name, yeah they look pretty familiar. I mean, the Chinese in general are not trying to come up with an all-new vehicle that just looks totally different from anything else. What's unusual is that they are, at least some of the makers, are going for breakthroughs underneath the skin of the vehicle. BYD in particular, is putting the emphasis on electrification of the vehicle. Now, here's the long shot. There are growing rumors as the fate of Chrysler becomes increasingly uncertain, one of the things that a lot of people are talking about, is the possibility that one of the more ambitious and financially well-off Chinese companies could come in and buy Chrysler. And actually become a joint Chinese-American manufacturer using the Chrysler name to find a distribution network essentially overnight.

MULLINS: How likely is that though?

EISENSTEIN: Well, if you listen to a lot of folks it seems all but certain that Chrysler will have to do some sort of major joint venture or sell itself. In fact, one of the Republicans who helped block the bail out of Chrysler in Congress last month was visiting the show just a few days ago. And his comments were blunt, Chrysler will either have to merge or go away.

MULLINS: It's interesting to note the amount of confidence in Chinese manufactured cars, environmentally friendly cars as well, Warren Buffet's investments and a whole lot of money he put in BYD's electric and plug-in hybrid vehicles. Is there an expectation that China will ever produce cars that would be competitive with, say, those produced in Japan or even here in the U.S.?

EISENSTEIN: Well, that's the big uncertainty and that is why the Chinese are wisely holding off. They know that to get into Western markets they need to upgrade their quality, they need to upgrade their power trans, they need to upgrade their interiors and features significantly from where they are today. They probably need to have more of a distinctive styling that people really look at and say, "Hey, that is something I like." But before anybody dismisses it, you only have to look at another part of Asia, which is to Korea. Remember that a decade ago Hyundai was a joke. It was a punch line that Jay Leno could drop along with something like New Jersey or the Sopranos and get a laugh. And now, Hyundai is a very serious car maker. They just won the North American Car of the Year with their first luxury vehicle, the Genesis.

MULLINS: Thank you very much, Paul Eisenstein is the publisher of the new web magazine dealing with the auto industry, it's called the Thanks very much.

EISENSTEIN: Thank you very much.