China is where, in one form or another and for one reason or another, old cars are shipped. Many cars are recycled for their steel, while others find their mechanicals and tooling reused. Rarely, however, do these reanimated corpses stray outside China’s borders and the vast automotive smorgasbord therein. Those automakers that venture outside of the People’s Republic, such as MG and Haval, offer what at least superficially appears to be a modern product. And then there are exports like the FAW F1, a resurrected 1987 Daihatsu Charade.
Long before Western and Japanese automakers invested heavily in the Chinese market, the many Chinese automakers relied predominantly on cast-off tooling. For example, Audi 100s become Hongqis. The practice has continued in recent times – the 2000 Etsong Lubao QE6400 Ruby was an Austin Maestro, for example – but most of China’s biggest sellers look as modern as anything from the west. In such a thriving market teeming with competitive cars, Chinese companies are finding it harder to flog the cars of yesteryear.
Hongqi L5: the most expensive Chinese car
FAW Group (formerly First Auto Works) is China’s oldest automotive company, one of China’s Big 4 automakers—the others are Changan, Dongfeng and SAIC. FAW owns the Hongqi luxury marque – the first domestically produced passenger car was a Hongqi – and also has joint ventures with Volkswagen, General Motors, Mazda and Toyota.
There are lots of modern cars driving out of FAW factories, but there are also a lot of Tianjin-FAW Xiali N3s. These are more popular in smaller cities and rural areas of China than in the cosmopolitan, Buick and Volkswagen-loving metropolises. The Xiali N3 range, first launched in 1995, is little changed from the featured FAW F1 which is itself little changed from the Daihatsu Charade from whence it came. Tianjin-FAW also sells an assortment of modern-looking cars riding these equally ancient mechanicals. How peculiar that the Charade became so much more prolific after its run as a Daihatsu, its mechanicals and body used also by other Chinese companies like Beijing Hualian and Anda’er.
How did one of China’s least impressive exports end up in Mexico? The launch of FAW in Mexico was the brainchild of a Mexican company called Grupo Salinas. Founded in 1906 as a furniture company, by the 1990s Grupo Salinas had diversified into entertainment and retail. A group of shareholders had ambitions to tap the Mexican car market which, by the mid-2000s, accounted for around a million sales annually. Grupo Salinas identified a gap at the low-end of the market for buyers seeking something simple and reliable, and so the company sought out a Chinese partner.
After negotiations with other automakers, Grupo Salinas decided on FAW Group. The plan was to set up a factory in Michoacán so FAW vehicles could avoid the hefty import duties imposed by the Mexican government. This meant a $100 million investment had to be made and 50,000 vehicles had to be manufactured each year or else any imported vehicles would be subject to duties of 50%, making the budget-oriented cars prohibitively expensive.
The FAW range opened with the F1 in hatchback and sedan variants. There was also the F4 sedan…
…and the more modern-looking F5 sedan. Don’t be fooled by the vaguely contemporary looks—it and the F4 were simply rehashed Charades but they were priced to sell and were aimed directly at low-income consumers. To keep running costs low, the F1 was equipped with a 1.0 three-cylinder engine with 64 hp and 65 ft-lbs; other FAW models had a larger 1.4 four-cylinder.
Fit-and-finish issues, including a misaligned glove compartment lid, are visible even in photos
Financing and insurance were offered by Grupo Salinas’ banking arm, while cars were sold directly by Grupo Salinas-run stores, not by dealer franchises. Sales began in 2008, with Mexican production scheduled to commence in 2010. The F1 range started at around $MX70,000, or just under $MX100,000 in today’s money. For comparison, the cheapest car on sale today in Mexico – the Chevrolet Spark Cargo – is priced at around $MX110,000. These Chinese cars were cheap, but they had to be.
It seemed like a match made in heaven: Grupo Salinas was able to diversify and take a share of the bustling Mexican car market, while FAW obtained a beachhead in Central America from where it could expand into other parts of the region. The state of Michoacán also would be a big winner, with many new jobs available at the new factory. Production capacity would be 100,000 units a year, with a planned factory expansion intended to double that.
Alas, the Global Financial Crisis of 2008 came and shattered these hopes. Fewer people were buying cars, especially not low-income earners. Additionally, the new Chinese cars weren’t trusted by Mexican consumers and FAW also found their cars would not meet US safety and environmental standards, dashing their hopes of expanding north. The initial investment in the Michoacán factory was $150 million but nothing else would be invested: development was stopped and the FAW brand was withdrawn.
The Chinese have mostly stayed out of Mexico since; the only Chinese automaker presently in Mexico is BAIC. You would think it would be easiest to target the low-end of a market and price your cars like they’re at a Black Friday sale at Wal-Mart but, as FAW learned, low-income consumers are much less likely to buy new cars during economic downturns. And it doesn’t help when the product you’re foisting upon them is a tinny, decades-old, low-quality car with a mysterious badge on the hood.
Álvaro Cuervo-Cazurra and Miguel Montoya’s report on The Grupo Salinas-FAW Alliance, which can be found here.
For an exciting trip down the Chinese car market rabbithole, I recommend visiting CarNewsChina.com, a website that specializes in both news and historical features.
Curbside Classic: 1989 Daihatsu Charade – Treat And Retreat
Curbside Classic: 1997-99 Daihatsu Applause – *sound of crickets in audience*
I remember the 1987 Charade as being a pretty decent little car. Cars haven’t really got much better since the 80’s – they’ve become better at passing emissions tests, and become more idiot proof ( so you can text and drive at the same time) and become more loaded with kit and hence less reliable. But not better as cars.
Obviously , one of the best features of the 1987 Charade was that it was built in a Daihatsu factory….
I would take strong exception to your statement. Clearly, you have not driven a modern small car.
I drive a small car, a 2015 Kia Rio, and it is a very basic, cheap car. It is also a car with good ride, handling, power and economy.
It is in every way clearly superior to a car from 30 years ago. It is stronger, safer and has loads more power.
It has not had a single warranty issue, and was delivered perfect.
It will do 0-100 km/h in 8.5 seconds and get 8.0L/100km in city traffic, and it has no problem cruising at 130 km/h.
That is A LOT better than a 30 year old car.
Well it’s a basic Kia, so there isn’t too much to go wrong, and it’s practically brand new. If it is still without problems in 5 years time then fine. When I drive modern cars, large or small, I marvel at all the tech and I tend to wonder who’s going to be able to fix it when it goes wrong, because the main dealer is going to struggle with it.
I won’t have it five years, but should anything go wrong in that time, the warranty will cover it.
Have you actually driven a modern small car?
Do you even understand what a “basic Kia” is these days?
In regards to the 2010 Soul+ (no options) my sister owned, that entailed a full suite of equipment including ESP+TRAC, full power (door locks, windows, and mirrors), keyless entry, cruise control, 6-speaker AM/FM/MP3 head unit with auxiliary input jack, trip computer, outside temp display, A/C, and alloy wheels. Hardly low tech. She owned that car for 4 years and 99,000 miles with zero problems. Plenty to go wrong, yet nothing did. The best part is, when she sold it to a private party after those 4 years at the end of 2013, she still got back over 50% of the original purchase price. Don’t let a name like Kia fool you.
I’m sure Kia technicians would have little problem repairing their products, should the need arise.
2012 Kia Forte Koup EX in our driveway. It actually just passed its 5th birthday as we bought in late November of ’11. One problem, within the first few months of ownership, a trim piece fell off. Dealership re-attached it. Flawless since then, 5 years, 63,000 miles. Maybe “basic” for a newer car but it does have satellite radio, bluetooth, keyless entry, and a lot of other goodies, and they’re all carrying on quite nicely. My wife loves it and will probably replace it with another Kia eventually.
When it does need service, I have little doubt that one of the three Kia dealerships in the Richmond metro area will be able to do competent work.
If the FAW f1 had been available in Canada at say, half the price of your Kia, would you have given it a look.
Your switch to Kia from your old Honda Fit was more about value than dissatisfaction with the older car.
Yes but buying a Kia nowadays isn’t even necessarily a budget-minded decision, considering most Kias are on par with Japanese and domestic rivals and you can buy $60k K900s and $40k Sorentos.
They still often have an edge in pricing though, which is nice. But I don’t think many people would go, “Hmmm, I can save $2k by buying a Rio instead of a Fiesta. OOOH, but I can save $7k by buying a Tianjin-FAW Xiali X3, I think I’ll do that”
That’s what FAW found in Mexico. You can put a low price on a car but if it’s old and crappy, you probably won’t find many takers.
That Forte did not cost me any less than a comparably equipped Civic coupe would have. Some people would summarily accuse me of having made the wrong decision in that case, but I drove both, liked how the Forte drove better, liked how the Forte looked better, and it had a longer warranty. No contest, really, even without a price premium.
Granted, the 2012 Civic was part of the half-generation that was pretty universally panned by reviewers as being inferior to the previous generation, so that may have had something to do with it. But that was the current model at the time I was shopping.
Honda’s excuse for the 2012 Civic fail was, they thought buyers would accept de-contenting in the wake of the 2008 Crash. Sounds like Deadly Sinful thinking; at least they bounced back, and it was still found reliable by otherwise disappointed CR reviewers.
Interesting that Mexico had protections on it’s own market, while grabbing so much of their patron’s market to the north. Japan redux.
I see no problem with older models having second lives in poorer counties. As normal safety and emissions standards are added, it gives companies like FAW the incentive to learn more than cheap assembly. An efficient reliable car like the Charade is a fine basis. As long as parent Toyota is getting paid for their intellectual property.
I’m not comfortable with poorer countries having weaker emissions and safety standards, even if it does mean a much more commercially viable list price.
All cars? I’ll be waiting for the 1969 Coronet 500 to go to China.
And the early morning fog err, smog brings back fond memories of working in Henan..
A college roommate of mine had a (then new) Charade. I remember it as feeling quite solid and easily one of the best assembled with quality materials competitors in the very small car class of the day. It just didn’t feel as cheap as it was. It got totaled a couple of years later when she hit a bear (!).
The Chinese car market is so interesting, the first time I was there a few years ago I was astounded by the variety and sheer number of cars, both of familiar makes as well as very unfamiliar ones. I was obviously aware of the market there but somehow clung to the picture I had mentally developed in grade school where we were taught that everybody in China just rides a bicycle. My, how times have changed. Cars and trucks everywhere and predominantly electric (as opposed to gasoline-powered) scooters too.
I remember a TV news article on the first privately owned car in china. I think it was 1981, not so long ago in the larger scheme of things.
A chicken farmer and his wife were sufficiently successful they imported a used Toyota Cressida from another country. Who knew it would metamorphise into the world’s largest auto market so quickly.
Well, there you go, I guess Frau Graziani in my grade school was correct, being as that was in the mid 70’s. A Cressida is always a good choice and I’m sure gave them years of good service but curious in that Toyota still does not have a large presence in China.
Maybe it’s popular prejudice in China against Japanese. At a tourist attraction there, a coworker was invited to jump a long queue of Japanese. Despite the Korean & Cold Wars, Americans seem much more welcome in China. US support during WW2 is doubtless a major reason.
It’s strange; while Asia is integrating economically & culturally, deep historical resentments remain in play. Maybe someone can correct or elaborate on this.
In China and Korea, the Japanese are used as a political scapegoat, kind of like Latinos in the USA. It does have a little twist, though: when either government is about to do something REALLY corrupt, even more than usual, the Japan Hate will begin. Once the dirty work is done, it is reigned in, to be brought out the next time its needed.
Oh, and all the traffic tickets get forgiven at the same time.
not the best analogy, canucknucklehead… as far as i know, latinos never invaded or committed atrocities in the u.s.
Yet us Americans never did, Safe as Milk? I understand his point. We are getting a bit off subject here, so maybe it is best to just move on?
What might be wise for Chinese marketers to do is not use their native language for brand & model names unless it phoneticizes well in Western languages (e.g. Chan, Yang). As the Japanese & Koreans figured out, Latinization & neologisms work fine.
My poor barbarian western brain can’t get a grip on “Tianjin,” “Hongqis” & “Xial.” BTW, Korea rejected the Chinese writing system in favor of the more phonetic Hangul, invented during the reign of Sejong the Great.
“Hongqi” is something like hong-chee.
I can’t recall if anyone has published a study of the car buying habits of poor people. 25 years ago, someone asked Roger Smith what GM was planning to counter the Yugo threat. Smith commented buyers would rather have a 2 year old Buick instead of a new Yugo.
Although he sounded flippant and dismissive, he was correct. There is a limit where hardworking people of limited means won’t want to drive a badge of poverty.
I would think the car-buying habits of poor people might rest primarily upon where they can obtain credit, as it’s rather hard to maintain good creditworthiness when you’re worrying about how to keep food on the table and the electricity turned on while paying down a car note.
And that quote isn’t far from the truth for a lot of people even if you’re not poor. If you’re not putting super high miles on the car yearly and can deal with a year or two less of warranty, going for a 2 year old car, especially CPO, lets someone else take the depreciation hit and gets you into something much nicer.
Chris, there is no credit market in China for low income people.
Chinese people all have savings, and I mean ALL Chinese have a substantial stash. This is because there is no social safety net in China.
The vast majority of Chinese make car buying decisions the same way you do: by careful research. The majority of Chinese buyers would never buy a used car. I highly doubt CPO even exists in China, and I don’t know anyone Chinese who has ever bought a used car.
I might add that driving in China is a complete waste of time. There is an excellent subway system in most cities, a comprehensive high speed rail network that is cheap and taxis are also dirt cheap. If we ever need a car there, we hire one with driver for the day.
Roger Smith’s mistake (one of many) was that he didn’t seem to realize that he was not in the business of manufacturing and selling 2-year old Buicks. While his answer may not have been incorrect it may have served him and his company better to have actually given the question some thought and then develop a legitimate world-beating small vehicle in-house in order to, you know, actually profit off of someone making that choice.
I’m not saying that GM’s products were worse than Yugos, lest anyone get that impression.
The other thing about Chinese motorists is that they are what we call aspirational consumers – to own a car is to show that you’ve “made it” in economic terms. So they’re not going to be folks who are struggling to pay the bills.
Yes, in many Chinese cities, driving yourself is a big PITA, expensive and often not all that convenient. The explosive growth in vehicles has led local municipalities such as Beijing, to limit (ineffectively) new car registrations by parceling them out through auctions.
You can always find someone else to drive you, whether by bus, train, or taxi, and not for much money. So it’s more of a face game as they say.
Chinese cars and utes have been imported into New Zealand Great Wall utes were selling quite well competing mostly on price with Japanese/Thai products they are priced slightly above Mahindra so bargain basement, We have Chery cars in reasonable numbers I see them regularly a new one is some 16k so priced in the used JDM arena but you get a brand new car, the one pictured has given its owner no issues since she bought it and it has all the usual creature features, Dongfeng have a joint venture with PSA who shipped an entire factory over handy for me I can get cheap but good parts for my Citroen it currently runs Chinese front rotors and pads they work fine.
What is the green car behind, a Landcrab?
A Humber of some sort would be my guess.
Humber Super Snipe, early 60’s model
Interesting they build them RHD as they have made no impact on the UK market considering smog and safety standards are not far off our own?. Perhaps a Romanian Dacia as cheap and basic as us Brits whant to Go. £6k with out a radio!.
A 1964-7 big Humber (probably a Hawk, though maybe a SuperSnipe).
China, that country where the 90’s Ford Transit was sold forever.
But the love of the Chinese for Japanese engines meant the death of the single most iconic diesel engine ever mounted on a van: the Ford 2.5 DI
How that engine could withstand the sheer beatings it did is a question that still bugs me. I bet every European (especially British) CCer can immediately recognise a ’90s Transit coming by hearing that deafening whirr from the 2.5 DI…
Nice post! I carried the idea of an article about Chinese cars, but this author did it first. I own the 2013 FAW V5 for 3 years, and all I can say, this is a nice find for its price! Reliable and comfortable enough. One day I will try to submit my own consummer report here. See also: http://www.drom.ru/reviews/faw/v5/81734/
More about the car: 1.5 VCT-i 5 speed, with Comfortable Plus package. Actually, this is a hardly upgraded 2000 Toyota Echo.
Not a bad basis to start from. I ran same you Yaris for some months. One of the best little cars on the market for the time.
So how much money is the cheapest new car in Russia Yuri.? Here in the UK its £6000 for the basic Dacia Sandora. They sell well as realy a previous generation Renault Clio.
Re: mark hobbs
Actually, newcar market in Russia depends much on region. It starts from RUR 303.900 (~ GBP 3.750) for Lada Granta Saloon 1.6 8v 87 hp 5-speed Standard. http://www.lada.ru/cars/granta/sedan/prices.html
My 2013 FAW V5 costed contemporary ~ GBP 7.600.