Serving the World's Largest Emerging Automobile Market
Home > News Analysis > Cheap cars are cheap cars

Cheap cars are cheap cars

by Fu Xuefeng

Owners of the Chevy New Sail are recently complaining in their forum about incidents of rear wheels falling off, which happened either during normal driving or during a traffic accident. Through the online forum owners have discovered that the reason was the same: broken brake drum.

According to some analysts, the brake drums were defective in design. In addition, the rear wheels on the Sail were missing the flange. Without the flange, the brake drum was weakened and easily broke off.

Many of the Sail owners have thus for the first time learned about the function of the flange, a steel plate used in between the drum and the axle. It is not only stronger than the drum which is made of cast iron but also ensures wheel safety. People suspect that the manufacturer did not use the flange in order to save on cost.

As many of the old Santanas were also built without the flange on rear wheels and there have been rare cases of wheels falling off, the issue with the Sail could have been the result of defective brake drums.

The flange in the brake assembly has been standard equipment even on cheap cars. It is simply not an appropriate practice for the manufacturer to remove the flange to reduce cost. Wheel falling off a motor vehicle is a serious and deadly matter and it is inexcusable for a manufacturer to do so. Owners of the New Sail are now worried, not knowing if one day they would experience the same mishap.

Putting drum brakes on the rear wheels instead of disc brakes saves cost. Shanghai-Volkswagen has done it on the Polo. To reduce cost of the New Sail, Shanghai-GM decided to eliminate the flange. These are two of the best of examples that show how carmakers are making drastic measures in reducing manufacturing cost. As a result, the Polo has been downgraded from a cultural gem to a popular small car and the New Sail is now positioned from the launch as a cheap car.

These two cars with reduced equipment sell very well because of their low price, ranking No. 3 in their respective car segment. While the Polo can still be considered a “world car,” the New Sail is a typical “China car.” World cars are being downgraded to China cars in China and the New Sail seems a successful pioneer in this regard.

China is an emerging market. While there are buyers who readily throw out millions for a car, the vast majority of consumers can only afford inexpensive cars with mediocre quality. It may not be easier for a carmaker to develop a cheap car than a good one. The key is how to reduce cost while maintaining basic quality. Manufacturing tycoons such as GM and Volkswagen have been trying to learn from Suzuki in an effort to make small and cheap cars. Not that they don’t know how to do it, but their small cars are too expensive.

Leading automakers have been unable to control the cost of small cars. An important reason is their quality standards and concern about brand image. They want to maintain the same kind of vehicle quality for big or small cars. In China, small cars made by multinational carmakers have run into the so-called problem of “excessive quality.” 

This may have become history by now. Volkswagen has finally learned how to control the cost of the Polo, giving up its image of an “exquisite small car.” GM has moved even faster by simply setting up a price target for its low-end Chevy cars in order to create a cheap model in China.

Such cheap cars are in fact quite popular because of their multinational logo, fashionable styling and a price tag comparable to Chinese makes. It does not really matter if customers complain about the use of poor materials or reduced equipment because they believe that consumers are paying for what they get. For the use of an outdated cable gas pedal on the Sail, for example,  owners even come onto the manufacturer’s excuse by saying that the cable “improves on acceleration!’’ Other Sail owners do not even want to believe in the news about falling wheels: “A big global company such as GM could not have made such a silly mistake.”

When Chinese consumers purchase a cheap car, what they want is a functional vehicle with which they can drive around. They do not entertain expectations about advanced technology or superb performance, keeping even a blind eye toward issues of safety.   

GM can afford to be liberal minded in China in launching a cheap car. Thanks to its many vehicle marques being produced here, it can afford to try it out with a low-end brand, the Chevrolet. Failure would not necessarily hurt its other brands.

Volkswagen has been experimenting first with the Polo followed by a series of other “China-style” cars — the Lavida, New Bora, New Santana and New Jetta. Although some of them are not small, they are all low-cost and low-priced. They have been launched with different quality standards. If the Golf is a typical Volkswagen car, then these can be described as “China-style VW cars.” 

The Japanese seem to be still stubborn. Neither Toyota nor Honda has developed a car specifically for the China market. Japanese media has suggested to Japanese carmakers that “cheap markets demand cars with super cheap prices and only ordinary quality. Japanese carmakers should act fast in making a fundamental transformation in their production method in order to halve the price of their cars.”

An example that has been referred to in the media is the Brio developed on the basis of the Fit. Honda has been able to reduce the starting price of the Brio in India to an unprecedented ¥45,000 ($7,377) a piece. The Brio loses some high-speed performance and comfort and uses cheap parts and components. Honda has done its best in terms of cost control but the Brio is still significantly more expensive than the popular car model in India that sells for only ¥33,000.

Some analysts believe that the Brio’s quality is still “excessive” with such features as overloading safety and Honda’s drivability.  For a country where even rearview mirrors can be omitted on cars, Honda can do much more in further liberalizing its mind and develop even cheaper models to open cheap car markets.

Toyota seems to be working on the same direction. It has reportedly divided the current global markets into two levels. The first is Europe, North America and other developed markets. And the second is emerging markets. Customers in different markets are believed to have different needs and they must be treated differently. Low-priced vehicles are to be developed and sold in emerging markets. 

JV cheap or low-priced cars such as the New Sail and the New Santana are now launched in China. Although they are still called a Chevy or a Volkswagen, the quality level of these cars is obviously a far cry from what is normally perceived of these brands. We will most likely see large numbers of Chinese style Toyotas and Hondas in the future. The reason is very simple: they will be positioned as cheap cars.

Consumers must realize the simple altruism that you pay for what you get. Chinese consumers will have a choice as to whether to buy a “world car,” or a cheap “China car.” 

 (Rewritten by Wayne Xing based on author’s blog on

| | | | | | |

Leave a Reply