Stephen Foley: China syndrome strikes America

AS AN advertising pitch, I can't see it going down well with America's car buyers. Changfeng, the state-controlled Chinese car maker which hopes to start shipping its SUVs to the US next year, unveiled its latest model with a so-bad-it's-hilarious video at the Detroit Motor Show.

Amid the Eighties-quality graphics and a spot of homage to Chairman Mao, the video's centrepiece was military parade footage proudly presenting the Liebao as the "state car for leaders' inspections". Little call for that in the Midwest, I fear.

But titter ye not. Ten years ago, this company was No 7319 Factory of the Chinese People's Liberation Army, and it is not joking when it says it has "realised leapfrogging growth". Li Jianxin, the first Chinese car boss to unveil a new model at this show, may have provided comic relief in Motown, but his presence underlined why the mood is so sombre in the American car industry.

It's that g-force again: globalisation. The old, august American car makers face more competition than ever. International rivals have more of their manufacturing in low-cost countries and assemble their US cars using a younger, cheaper, Southern workforce.

This year is the 50th anniversary of the first Japanese attempt to crack the US, when Toyota began importing the Crown. That vehicle generated as many gags as the Liebao, but now most American citizens reckon the Japanese make the best cars.

By 2010, Toyota will be the world's biggest car maker, surpassing General Motors, owner of Chevrolet, Cadillac and Buick. This blow will be felt most keenly here in Motor City, home to the Big Three - GM, Ford and Chrysler.

Actually, I've got to stop calling them the Big Three. Chrysler, which merged with Daimler-Benz in 1998, was always a distant third and last year Toyota zoomed past it in number of cars sold in the US. The Japanese giant will almost certainly overtake Ford in the US this year, too.

In 2006, a thumping 70,000 US car company workers agreed to take redundancy. Factories are closing across the US. And still the companies are losing money and market share, and losing out in the technology race. It's a deathly spiral. The US car companies have barely half the home market, compared with almost two-thirds at the start of the decade. Toyota has the top-selling car, the Camry, and hybrid, the Prius. Now that fuel economy has moved up buyers' priorities, the US car makers are further disadvantaged.

The outlines of a recovery plan are clear. Unions are willing to relinquish some pay and benefits. The car makers are collaborating on technologies. And lobbying might yield government help.

But the threats to a recovery are just as clear and more plausible. Toyota's stand in Detroit gave pride of place to its new Tundra pick-up truck, moving on to the last piece of profitable turf still dominated by US car makers. A strike or a bad sales year could knock GM or Ford to the point of bankruptcy. And all the while, the Japanese are rampant, the Koreans are building a presence, and the Chinese... well, they are realising leapfrogging growth.

motoring@independent.co.uk