By on May 13, 2014

Great Wall Haval H8

Once the darling of investors amid ambitions of taking on foreign automakers such as Jeep with its line of SUVs, Great Wall Motors’ recent fall from grace on the back of the upscale Haval H8 may be a sign Chinese automakers are not yet ready to move from production of cheap transportation.

Bloomberg reports production of the 200,000 yuan ($32,100 USD) SUV, aimed at the likes of the Volkswagen Tiguan and Ford Kuga, was suspended indefinitely earlier this month amid quality concerns regarding “knocking noises” from the six-speed automatic transmission at high speeds. The second delay of the H8 — the first occurring earlier this year after local press panned the SUV in test drives — sent Great Wall’s stock price down 17 percent, while seven analysts cut their ratings of the automaker due to perceived weaknesses in the overall local industry from the suspension. Oriental Patron Financial Group analyst Vivien Chen, one of the seven, explains:

We believe the event indicates domestic automakers haven’t met requirements to upgrade to be a high-end vehicle maker. The event definitely hurt customers’ perception of H8, and hurt company image.

The suspension is the latest stumbling block for Great Wall, having faced a recall with Chery of 23,000 units from Australia in 2012 when banned asbestos parts were found in some models. In addition, 2013 exports fell 22 percent to nearly 75,000 units due to currency challenges in Japan and South Korea. Locally, the automaker is faring better, having moved almost 112,000 SUVs over its competitors so far in 2014, though the market overall fell 2.5 percent in April to 37.1 percent for local automakers, the eight consecutive month this has occurred.

Despite the setbacks, Macquarie Group analyst Janet Lewis believes Great Wall and the rest of the Chinese automakers may be able to learn from the experience as they move forward toward selling their wares to developed markets such as the United States, though they all still have a long road ahead of them, as Sanford C. Bernstein analyst Max Warburton points out with Great Wall:

The company faces monumental challenges in trying to move up a league in the automotive world, and the problems faced by the H8 confirm Great Wall is struggling with technology. Serious questions will now be asked about Great Wall’s growth potential.

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18 Comments on “Great Wall’s Descent A Sign Local Industry Not Ready For Primetime...”

  • avatar
    Big Al from Oz

    I really think the Chinese must learn from the US and UK experience.

    You just can’t build $hit and have people buy them. Especially when there are better vehicles made in a country by outsiders.

    The UK ended up having most of it’s industry owned by foreign countries.

    The US is lucky that the US taxpayer bailed out the UAW and some of the auto industry after years of the Detroit manufacturers supplying $hit to the US people.

    The Chinese need to focus on quality. Hmmm……sounds a little like GM at the moment.

    • 0 avatar

      @Big Al from Oz
      This is what I have been saying for sometime, Chinese manufacturers are building to a price point, that the Chinese are happy with, but do not seem to realize, that their lack of investment and development, makes their products inferior to the foreign completion. British Leyland all over again.

  • avatar

    Don’t H8, congratulate.

    And fix your ridiculous vehicle names, ask any English speaker and they’d tell you this is a bad name for a vehicle. Next they can build the NGR-H8.

  • avatar
    Volt 230

    They can’t even make decent wheel bearings how the hell you expect them to make cars good enough for the West?

    • 0 avatar

      They make transmissions that are good enough for Ford. The US Chevrolet Equinox started receiving Chinese engines almost a decade ago too.

      • 0 avatar
        Kyree S. Williams

        I’ll bet those were Chinese-built engines, not Chinese-engineered ones. The Chinese are perfectly capable of building anyone else’s designs to spec. It’s with Chinese engineering that things seem to fall short. Mister Kreindler wrote a TTAC article about a year ago that noted the fact that there are only two wind tunnels in all of China, and that not testing a Chinese-market car in a wind tunnel is acceptable because most people don’t leave the city or drive over bridges at high speed. While that may work for China, it won’t work for the rest of the world…especially here in sensational America, where a few horror stories are enough to ruin a product/brand’s reputation. Also, China seems to have problems with meeting rudimentary regulations in other parts of the world. GM, Toyota, Nissan and some other automakers *are* having issues with airbag deployment, but you probably won’t find asbestos in their products. Ultimately, the Chinese are still overcoming the barriers of modern engineering, but they’ll get there eventually…

        • 0 avatar
          George B

          Kyree, my experience with Chinese engineers working for a major contract manufacturer was reasonably positive. They knew my employer demanded the product meet spec. and manufacturing quality requirements and they delivered. They will eventually learn to do the product development of new cars. Working their way up from parts to subsystems and learning manufacturing QC.

  • avatar
    Volt 230

    Under American supervision, I suppose. Ditto for name brand tires and such, the build quality is better than your run of the mill, unknown brand stuff.

  • avatar

    Asbestos parts in cars? In 2012?

    Dammit China, stop putting toxic substances in your products. The babies who don’t get sick and dogs who don’t die will thank you.

  • avatar

    The asbestos is being replaced with the lead they used to use in toy paint and the sulfur they used to put in drywall. It will instead be used as a substitute for melamine in infant formula.

  • avatar

    Until they have a uniform rule of law, fixing one company or one industry isn’t going to make it work out. Every judge is a feudal lord, and unless the council of kings is angered enough to off him, his word is law. We can hate on government regulation, but it’s total absence is a bit of a challenge, especially if your competitors are less ethical than you are.

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