Bad tires now come with a car
July 3, 2007
The Wall Street Journal reported today that DaimlerChrysler and China’s Chery Automobile are moving ahead with a plan under which Chery will build Chrysler automobiles for export to the U.S. and Europe. This announcement comes just a week after the U.S. recalled 450,000 Chinese radial tires that lacked a safety feature that keeps tires from flying apart.
China’s Chery got its start in 1997 when they stole GM’s Chevy design and began building the QQ. Since then they they’ve grown rapidly — sales are up 41% this year. By “borrowing” other company’s designs they are able to keep development costs low and sell a cheap car.
Last fall U.S. tire distributor, Foreign Tire Sales, began hearing complaints about bad Chinese tires, but said that the disintegration of the tires and subsequent accidents and deaths of some U.S. drivers was coincidental. A lawyer for the firm said that no real proof exists that the tires are defective. “Just because they fall apart doesn’t mean that the driver isn’t at fault,” said attorney Izzy Huo Garbonzo. “Americans just drive too fast.”
Eventually the Chinese manufacturer, Hangzhou Zhongce admitted that by excluding “gum strips” on the tires which hold them together, they could save money and better compete with other tire manufacturers.
The U.S. Government decided that the responsibility for the tires problems was the importers not the Chinese manufacturer so the U.S. importer has to pay (it may bankrupt them). The Chinese company is off the hook.
The new Chinese Chryslers will be able to be built cheaply and if they use the bad tires, should be able to compete very effectively in the U.S. This has the new owner of Chrysler pumped.
Cerberus Capital Management executives believe that their investment in Chrysler will pay off quickly. “Using the Chinese business model of theft, deception and faulty material we should be able to sell dirt cheap cars, especially to poor Americans, and turn a fast profit,” said Cerberus chairman John Snow. “This Chinese business model is a real hoot.”
© 2007 Inebriated Press