First the good news. AFP reports that GM's joint venture Chinese sales rose 18.5 percent in 2007, clocking-in at 1.03m vehicles. That's 548,945 units with SAIC-GM-Wuling and 479,427 vehicles through GM-SAIC. In a written statement, GM China Group President and Managing Director Kevin Wale rang-in the glad tidings. "Despite growing competition across the board, demand remained robust for our established products such as the Buick Excelle and LaCrosse and the Chevrolet Lova," Wale said. According to the statement, GM snagged the title of sales leader in the PRC– amongst global automakers– for the third straight year. Yes, well, Dow Jones Market Watch puts a different spin on the story. DJ restricts the stats to '07 passenger cars, and says Volkswagen's Chinese production outstripped GM's by 431,064; putting VW's increase at 28 percent. It also points out that GM's 18.7 percent rise represents slowing growth, when compared to the previous year's 26.8 percent gain, or the overall market's 20.7 percent expansion. Bloomberg fingered the usual reason: product. "GM's expansion in the world's second-largest auto market slowed as customers opted for Volkswagen's Skoda Octavia and the Ford Focus over the Buick Excelle." As China's domestic automakers break free from their foreign "partners," the boom times may soon be at an end. 

While the bad puns we like making with Chery's name are usually the pits, forgiving the prepositional sentence ending, the Chinese independent automaker isn't to be laughed at. Businessweek reports that in just ten years, the company has risen from relatively obscurity to become China's most successful domestically-branded auto maker, Chery now owns 7.5 percent of the PRC pie. Overall, Chery is number four in the very crowded Chinese auto market, behind the VW/FAW, GM/SAIC and VW/SAIC joint ventures. It's also one of the most aggressive Chinese companies, branching out into Russia, the Ukraine, the Middle East, Europe, Mexico and South America. Chery has factories in several overseas locations, including Iran, Egypt and Russia. They have a deal to provide engines for Fiat and manufacture Fiats and Alfa Romeos in China, as well as with Chrysler to develop a small car for the U.S. and sell Chery A1s under the Dodge banner in Mexico. With GM practically abandoning the U.S. market, is the time ripe for Chery picking up the slack and entering blossoming on American soil?

When Shanghai Automotive Industry Corporation (SAIC) bought Nanjing last month, Fiat pulled out of their money-losing joint venture with Nanjing. Now China Car Times reports Chery has announced they're creating a joint venture with Fiat in 2008. The partnership will produce the Fiat Linea, Bravo and Grand Punto for the Chinese market. Fiat and Chery already had an agreement to build Alfa Romeos for China and supply engines for Fiat. It'll be interesting to see if there's any bleed-over between the agreements between Chery and Fiat, and Chery and Chrysler. With Chery and Fiat wanting to get into the American market and Chrysler starved for small cars, it could be a ménage à trois made in heaven. Or the San Fernando Valley…

Last August, TTAC predicted the Chinese auto makers would start taking steps to edge their joint venture partners out of their market. And so today's International Herald Tribune reports that the Chinese government has "asked automakers to combine to compete with overseas rivals like Toyota and Volkswagen." To that end, China's largest auto maker has just announced that they're buying Nanjing Automotive Group's automotive assembly and parts-making businesses. Shanghai Automotive Industry Corporation (SAIC) currently has joint ventures with GM and VW. Nanjing owns the rights to the MG Rover brand– and is busy dumping their current joint venture with Fiat. There are no known plans to terminate any other joint ventures, but as SAIC strengthens its position in the Chinese auto market, they'll be looking to cut loose their foreign "partners." Count on it. 

Curious about the Chinese pickup truck market? China Car Times gives a rundown of what they consider the best-looking pickups offered to the people of the PRC. Their favorite is the Big Diesel God, with styling copped from Chevy and power by Mitusbishi or Toyota. They're also fond of the Great Wall Wingle, which looks more cute-ute than pickup. The Photon SaPu and Zhongxing Grand Tiger round out their round-up. From the looks of it, if the Chinese ever want to launch an attack on the small truck market in the U.S., they already have some pretty good ammo in their arsenal – not to mention some of the coolest model names for trucks since the Chevy LUV (Light Utility Vehicle).

At the rate it's going, the first Chinese car sold in the U.S. might come from GM, assembled right here in North America. Currently GM buys 20 million parts per month from Chinese suppliers. Reuters reports they're increasing their spending by 25 percent a year through 2010. You can expect to see air conditioning, chassis, steering and brake parts coming from the PRC, in addition to the electronics, plastic parts, engines, aluminum wheels (half of the aluminum wheels they use worldwide are Chinese) and other Chinese-made components they currently use. If the trend continues, that "American-made" Chevy will soon have more Chinese content than domestic. An American revolution? I don't think so.

The union between Chrysler and Chery is about to bear fruit. China Car Times reports a rebranded Chery A1 will go on sale in Mexico "very soon" under the Dodge banner. This is the same model they're looking at bringing to the U.S. once they meet safety and emissions standards, with a target date of 2009. Wall Street Journal drove an A1 in China last August and came away impressed: "the A1 performed admirably… the ride was surprisingly smooth and quiet.. At 100 miles an hour, there was only a slight vibration in the steering column." They noticed a few quality problems but decided "for such an inexpensive car [around $7K in China], it is hard to complain." There's no word yet on how inexpensive it'll be after it makes the trip across the Pacific.

While there's not much joy in Motown, new car sales are hopping in The People's Republic of China. Chinadaily reports new car sales are up 22.83 percent this year, for a total of 5.66m units year-to-date (YTD). Sedans are the biggest seller, with 4.24m units sold so far this year. MPVs accounted for 203k sales, while SUVs clocked-in at 319k units. The best-selling models are the Jetta (FAW-Volkswagen), Santana (Shanghai Volkswagen), Buick Excelle (Shanghai General Motors), Camry (Guangzhou Honda), QQ (Chery) and Xiali (FAW Tianjin). For comparison, the U.S. car industry racked-up 7.2m cars and 7.5m light trucks YTD. That said, U.S. "light trucks" include MPVs and SUVs, which are counted as passenger cars in China. The rest of the vehicles sold as light trucks in the U.S. are sold predominately for commercial purposes in China, and aren't included in "new car" sales numbers. So now you know.

As we've been saying for years, China is only going to allow foreign automakers to do biz in The People's Republic as long as it takes them to figure out how to do it themselves. Hence the law stipulating that all carmakers setting-up shop in China must do so as part of a joint venture with a Chinese company. And the China half of these companies are already preparing for divorce. Guangzhou Automobile Industry Group, currently shacked-up with Toyota AND Honda, is the latest Chinese automaker to strike on its own. As WardsAuto reports, Guangzhou is readying an as yet undeclared model under an as yet unannounced brand name. "Construction of a research and design center and vehicle plant site already is under way in Guangzhou’s Payu district. The Chinese auto maker will invest some $916 million, including $404 million on the R&D center and $512 million on production facilities in order to launch its own brand of passenger cars by 2010." It's only a matter of time before the Chinese government games the market to favor their "independent" domestic automakers. 

Forbes reports that GM's joint venture with Shanghai Automotive Industry Corporation (SAIC) is spawning yet another joint venture: Shanghai OnStar Telematics Co. The partners plan to offer the same range of services for OnStar's international debut that are available to North American customers. Although the Chinese government exercises iron-fisted control over technology and communications, OnStar president Chet Huber is optimistic they won't have any problems. Probably not, especially once the government finds out the OnStar can track citizens' movements and eavesdrop on their conversations. Anyway, Kevin Wale, president of GM China Group has equally high hopes: "We expect OnStar to have a similar impact in China as in the U.S." Thank goodness for that — thousands of Chinese can sleep safe in the knowledge that one day soon they'll never have to worry about locking their keys in their cars again.

As a Conde Nast Traveler writer, I drive all over the world. After reading Peter Hessler’s article in the November 26 issue of The New Yorker, I think I’ll give China a miss. Hessler’s adventure began at a Chinese driving school, where instructors teach drivers to start in second gear (first is too easy). The preferred clutch technique? Set the parking brake hard, shift into first, and let out the clutch whilst gunning the engine. “By the end of the day, you could have fried an egg on the hood,” Hessler reports. The writer passed his Chinese driving test by slowly driving 50 yards down a deserted street. Later, a Chinese friend banged-up Hessler's Jetta because he didn’t realize that the vehicle extended beyond the windshield. A Chinese passenger usurped the rear view mirror. “I’ll tell you what’s behind you,” he assured. On the road, headlights, windshield wipers and turn signals are almost never used; they’re considered a “distraction.” There’s lots more, but we now know why China accounts for three percent of the world’s cars– yet racks-up 21 percent of its traffic fatalities. They can’t drive.

We've been saying for almost a year that U.S. and European automakers need to watch their backs when dealing with their government-owned Chinese joint venture partners. Now that GM is paying a quarter billion dollars to hand over all their hybrid research set up an environmental research center in the military dictatorship known as The People's Republic of China, the Gerson Lehrman Group is sounding the same alarm. Jack Lifton says GM's "business model based on a shortsighted belief in mainly short term solutions to long term problems" has "led them to their latest mistake with regard to the Chinese OEM automotive industry." After decades of building up the Chinese auto industry, they now "have to bring to China as a gift the latest technology required for cars made to be sold in the American and European markets" to sell their products in the Chinese market.  If a Chinese company should offer to buy Ford or even Chrysler in the near future, "we should thank GM for so generously giving China a good part of the technology it will have needed to close the [market] gap." Ruh-roh.

Gas prices are rapidly going up in China and the people of the People's Republic aren't happy. China Car Times has a list of just a few of the [printable] comments made in various Chinese publications about the situation: "Socialism is great – prices rise, but our wages don't!" "I hope it goes up to 10rmb a liter, this way we'll all ride our bikes again and loose weight." And the aforementioned "Lets go to the Middle East and steal their oil!" In other news related to the Chinese fuel crisis, some areas are reporting short supplies resulting in fuel rationing with long lines, and at least one person has been killed in fighting over line jumping at a fuel station. The situation is bound to get worse as auto sales continue to outpace China's refining capacity.

GM has announced that it will begin exporting its Chinese-made Cadillac SLS (a.k.a. STS stretch) to the Middle East in the first quarter of 2008. Huliq reports Shanghai General Motors Co. Ltd will debut the SLS in Dubai at the Middle East International Auto Show later this month. This will be the first export deal for the Chinese Caddy, which went on sale in the military dictatorship known as The People's Republic of China in March. Cadillac GM Jim Taylor believes the SLS "will be just as successful with luxury car consumers [in the Middle East] as it has been in China." There are no plans to bring the the big Caddy cruiser stateside. Meanwhile, GM's Chinese sales rose by 128 percent year-to-date. [Spin alert: the actual number of vehicles sold may be quite small.]

Up until now, The People's Republic of China taxed vehicles based on weight and through tolls. (You didn't think Chinese motorists were tax-free did you?) Now they're eliminating tolls and other road taxes in favor of a fuel tax. Apparently this radical idea will mean that people who drive more will pay more and those who drive less will pay less. The China Car Times isn't over the moon about the cutting edge concept. While they repeat Beijing's claim that the new system will push car companies into developing "other alternative fuel cars," they also believe "the driver gets pinched in the pocket and has to take public transport… Clearly the Mandarins in Beijing have not taken public transport in China in the last decade and the last place I'd like to be on a Monday morning is on a packed diesel fume spewing bus with my nose pushed firmly in someones arm pit." The tax takes effect next March.