When Chinese car brands hit American roads, you will have a few extra thousand bucks in your pocket.
In 2021, the average price for a new vehicle in America was around $47,000, and a used car cost around $27,000. These figures are out of control and only getting worse when considering the median American’s salary is around $54,000 a year. It’s unrealistic to maintain these prices over time, and there must be a more affordable option in the future.
Chinese brand vehicles are the solution to solving the current fiscal challenge Americans are facing because they offer cars with cheaper prices and similar quality to other Asian-manufactured brands, such as Hyundai and Toyota.
American consumers who are in college or active in the workforce often prefer purchasing Asian vehicles rather than domestic American brands, due to superior build quality and reliability. Recently, traditional American sports cars have also become undesirable due to high gas prices. Although American brands are more competitive in the SUV space, Toyota sold around 221,000 RAV4s in 2021, making it the most sold SUV in America. Four out of the five most-sold SUVs in America in 2021 were Japanese; the Jeep Wrangler finished in fifth place at around 118,000 sold.
If Chinese brand vehicles were available for purchase at local car dealerships, Americans might quickly consider purchasing them when factoring in far lower price stickers. Most Americans are unaware of how popular Chinese car brands currently are, considering they have not yet hit American roads and are not advertised. Once they pass federal regulations and tariffs are removed, this could quickly change.
Chinese car brands are selling significantly worldwide despite not yet being on American roads. China’s largest car brand, Changan International Corporation (CIC), sold around 2.3 million vehicles in 2021. Geely was the Chinese brand close behind with around 2,000,000 vehicles sold in 2021. Compare this to the well-known Korean automaker Kia, which sold around 2,700,000 vehicles in 2021.
Chinese brands are selling almost as many cars as other Asian brands; however, they have been excluded from the American marketplace due to American protectionism. Unnecessary tariffs and barriers to entry into the American free market simply drive up prices for consumers, causing inflation. Protectionist tariffs are also regressive, meaning they affect Americans struggling fiscally the most.
The challenges Chinese brands face include passing safety standards set by the National Highways Traffic Safety Administration (NHTSA) and emission standards from the United States Environmental Protection Agency (EPA). Once American tariffs and protectionism are removed, Chinese brands will have to be able to prove to the EPA they are up to admissions standards and that they are safe enough for American roads to the NHTSA.
The reason a consumer would switch from owning a Japanese or Korean vehicle to a Chinese-manufactured vehicle would almost always be based on price. Chinese vehicles would provide more choices for Americans without breaking the bank. Especially in terms of extra features compared to imported vehicles today — which charge large margins for any model above the base model.
Geely’s new 2022 Emgrand is a sharp-looking and solid sedan starting at around $14,000. The vehicle looks like a mix of the popular Honda Civic from Japan and Hyundai Elantra from South Korea. Geely’s Emgrand competes in the compact class of sedans with an almost identical length, width, height and wheelbase to the Honda Civic. The standard Emgrand has a four-cylinder 1.5 liter naturally aspirated engine and an 8-speed CVT with 102 horsepower. The Emgrand averages between 23-50 mpg depending on city or highway driving. Although the Emgrand clearly has an inferior engine to the Honda Civic, the starting price is around $9,000 less. New Civics can easily top over $30,000 for just the base model with a few additional options pertaining to the different trims the model comes in.
Chinese brands also participate in the hybrid and electric vehicle markets. Tesla sold around 900,000 electric vehicles (EVs) in 2021. In 2021 Chinese automaker Build Your Dreams (BYD) sold around 600,000 EVs and plug-in electric vehicles (PHEVs). Most Americans have never seen or heard of an EV or PHEV from BYD despite the current wave of emerging models of electric vehicles. The basic Tesla Model 3 now starts at a costly $43,000 with 272 miles of standard range. The similar BYD Han is much more affordable at around $31,000 and has a higher range of around 300 miles. In terms of transitioning to an electric vehicle for a slightly lower quality vehicle, it may be essential for Americans to have these more affordable options available, which will undercut the well-known options today and force companies to lower their prices.
America imports around 6.5 million vehicles a year, whereas China imports around 2.5 million vehicles a year. But China produced around 26 million vehicles, whereas America produced around 9 million vehicles in 2021. China produces far more vehicles at a cheaper cost, which could benefit the average American: American cars can’t be produced for the same quality and price due to higher labor costs. China also recently cut their import tariffs in 2018 on all imported vehicles, which previously forced all Chinese citizens who were not extremely wealthy to buy a domestic vehicle. Due to cheaper labor costs, China can simply make much greater volumes of slightly lower-quality vehicles with more affordable final price stickers.
Former President Donald Trump imposed a 25 percent tariff on all imported vehicles in America, but it has not had much impact. New and used car costs have sharply increased but supply remains low. Basic transportation needs often force Americans to finance or lease a vehicle rather than buy it, causing prolonged financial struggles. Having a car payment every month crushes the average American and college students’ purchasing power, rather than simply being able to pay cash to own the car.
Americans should consider the economic benefit of Chinese vehicles over other Asian imports. Chinese brands such as BYD, Nio and Xpeng are currently producing impressive EV, PHEV and hybrid vehicles that all rival Chinese and Korean vehicles. Changan, Geely, Great Wall, SAIC, Chery and Dongfeng are all Chinese automotive companies that are making more vehicles that are already on the global market. Instead, consumers will continue to miss out on these deals and be forced to spend more money on a car that’s similar to other expensive Asian-manufactured brands.
Until America opens its market to Chinese carmakers, the options remain limited for American consumers looking to save on a car.