Too big to fail

Last Friday, General Motors told more than 1,100 dealers that they would be losing their franchise. The day before that, Chrysler said much the same thing to 789 dealers. As two of the erstwhile Big Three scramble to make the necessary cuts, shutting down factories, killing off brands, cutting salaries, and laying off thousands of people, you can’t help but wonder if this is IT: the demise of Detroit. Decades of iconic wheels like the Chevrolet Camaro and the Chrysler Town & Country rolling off into an uncertain future as the parent companies do what they have to do in order to survive.

It’s remarkable how quickly the world turns. Two decades ago Fiat couldn’t live down all the jokes about Italian reliability; today they’re laying down the terms on how it will save Chrysler. Five years ago the status symbol among SUVs was the Hummer, the take-no-prisoners star of Desert Storm and the vehicle of choice of Governor Arnold and every other movie star with manhood issues. Today, few politically-conscious customers would be caught dead in one, and the Hummer brand is going the way of the dodo.

While the American car industry is floundering, and with substantial collateral damage among the South Korean and Japanese brands that depend on the American economy, we are witnessing the first signs of an impending tidal wave from China.

Just this weekend I had the chance to spend considerable time in one of their brand’s small cars, and the impression I went home with is that in a few years they will become as ubiquitous and accepted as Kia or Hyundai. Out of China’s dozens, if not hundreds of automotive brands, Chana and FAW are among the most credible. Distributed by Focus Ventures in the Philippines, Chana’s lineup consists of small cars and microvans while FAW’s is a line of small trucks patterned after the Isuzu Elf and the like.

Our ride-and-drive fleet consisted of a Benni (a 5-door hatchback) and the Starlight and Star II microvans. The Benni looks like a cross between a first generation Honda Jazz and a Chevrolet Aveo, the Starlight a Suzuki microvan, and the Star II a Suzuki APV. No wonder: Chana started out building vehicles as a subcon for Suzuki.

Leisure activities aside, the drive took us from their Pioneer showroom to Clark and back. I was assigned to the Benni, and while I’d be lying if I told you the drive was spectacular, neither was it disappointing. Taking the Benni and its siblings in context, they provide a driving experience that delivers on most buyer’s expectations while coming in at attractive price points that probably get even better with financing.

For example, the Benni comes with electric power steering, a driver’s side airbag, ABS, a nice Pioneer head unit with iPod connectivity, and a lot of headroom and kneeroom for its size. It even comes with an engine! And while it won’t be winning any awards for refinement, it does the job of pulling the Benni around at a reasonable pace, and Chana assures us that they have lots of spare parts in inventory. Fit and finish is perhaps several years behind comparable models from Kia or Hyundai, but the average fleet buyer will probably care more about the pricing. Over a day’s worth of driving, the car (a 9,000+ km test unit) felt comfortable and respectable, and at the very least it did not feel like it would fall apart at any moment.

Stopping over for lunch at their newest dealership in Pampanga, I got an inkling of how they plan to grow the business: slowly but surely, forgoing the sexy, sporty models in favor of affordable, business-oriented products like refrigerated vans and small cargo trucks. Pampanga, for example, needs refrigerated vans for its meat industry, so a Chana that serves that need would be ideal. Thousands of small businesses too need a no-frills truck to move cargo, and rather than buy “chop-chop” Japanese surplus microvans with converted steering racks they could turn to a brand-new Chana. Buyers like these are not really brand-conscious as they are price-conscious, and so long as the manufacturer can provide credible aftersales service then a sale is highly probable.

It’s a business model that’s unlikely to fail so long as the Japanese, American, and Korean brands cannot respond in kind with their higher production costs. Even as the American car industry feels the pain of consolidation and downsizing, you can be sure that Chana is just the beginning. There will be more Chinese brands and models gobbling up market share here and around the world in the next few years.

Here are some of you Backseat Driver reactions to Lester Dizon’s “Test Cases”…

I totally agree with you on how some individuals are taking advantage of their positions to promote themselves in preparation for the presidential elections. But I’d have to disagree on how you think about the elevated u-turns at the Kalayaan-C5 intersection. This intersection has improved a lot since its construction, even though it is a bit unorthodox, I think the important thing to remember is it WORKS! – ado54

These early campaigners will defend themselves with the argument that they do not violate the Election Law because they are not yet candidates since they haven’t filed their candidacy yet. And even if they want to file, filing of candidacy is not yet open. So there you have it! By the time the campaign period is on, the more they don’t violate anything. Correct me if I am wrong about that provision in the Election Law that prohibits “candidates” not “individuals” from early campaigning. You will be charged only if you are a candidate and it’s not yet time for election campaign but you are already campaigning. If it is not yet time for election campaigning, how can you become a candidate since of course filing is not yet open? The members of Congress who passed this law were all idiots just taking us for a ride. – takuri

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