Chinese Car Brands Narrow Gap on Foreign Rivals in Terms of Quality

Will local, "Made in China" vehicles one day surpass foreign car brands in the Chinese market?

There's a big possibility they can, according to a study conducted by J.D. Power.

And its prediction? Chinese local car makers will catch up--or even surpass--many of the popular global car brands by 2020.

This wasn't something expected, back when the study was started almost two decades ago.

According to J.D. Power, the gap between foreign and Chinese-made local brands were huge when they started their survey in 2000. In their report, there were 834 problems found per 100 vehicles they studied--or around eight defects for each car. But this year, they've closed the gap to 112 problems, which is a mere 13 points higher than many mass-market, foreign-made cars.

Rise of China’s Automotive Industry

It's something global nameplates should be nervous about. More than two decades ago, driving American cars like Cadillac, Jeeep, Lincoln, and even Tesla were major social status boosters in China. And those locally-made "Made in China" vehicles were the last option for those who didn't have enough money to buy an imported vehicle.

But now, this belief is fast losing steam. Chinese car makers are catching up not just in interior comfort and finish that many of the established brands boast about, but also in technology as well.

For instance, Chinese car maker Geely Boyue can now sync with Apple Car Play so the driver can ask directions to the nearest gasoline station.

Roewe RX5 created a connected car that runs Internet services on YunOs--Alibaba's operating system.

And even Tesla has something to be scared about. Engineers from Changan Automotive led their autonomous car to 1,200 miles on a highway just last year.

With all these innovations happening right now, which local brands should foreign car manufacturers watch out for? They should pay close attention to Changan Automobile, Great Wall Motors, and Geely Automobiles.

Another company to look closely into is BYD.  Not only did it achieve the highest ranking on J.D Power's Quality study in 2011 and 2013, financial heavyweights like Warren Buffet, Samsung, and Bill Gates have invested in the company, and are now part of its prestigious shareholders.

It’s about "who gets the profits"

Michael Dunne, a car consultant, and author of "American Wheels, Chinese Roads" believes that local car makers' surge in quality is "the beginning of the end of Detroit in China."

A case in point: General Motor's Shanghai factory is known to have higher internal quality standards compared to its U.S. counterparts.

This increase in competency has created a new trend where local auto makers are making more revenue developing their own instead of selling vehicles from their foreign partners.

Dunne explained: "Previously the logic was, 'Why invest billions in creating an all-new Chinese product when you can make fat profits--right now--selling Buicks?' But now the new thinking is, 'Why work hard to sell a Chevy when I can offer our own brand and keep 100% of the revenues?'"