More MBS CoverageTRAVERSE CITY, MI – U.S. automotive engineers take note: More than half of the assembly line workers in automotive joint venture plants in China are graduate engineers.

That was one of the more startling revelations of a series of statistics-filled presentations in a panel discussion on the Chinese auto industry during Friday's Management Briefing Seminars here.

Asked after his talk if that was an accurate percentage, Jun Ni, a professor at the University of Michigan College of Engineering, confirms the information.

How is it graduating engineers in China's universities are seeking jobs on the line in plants owned jointly by Chinese and foreign auto makers?

"Those are high paying jobs," Ni explains. "The average engineering graduate earns $300 to $400 a month, but in the joint venture plants they can earn $800 a month or more."

Ni also says studies show Buick Regals produced by General Motors Corp. and Shanghai Automotive Industry Corp. are of higher quality than those built in the U.S.

He allows, however, that perceptions may differ widely. In China, the Regal is considered an expensive upscale car, while in the U.S. it's viewed as a more mundane, mid-priced offering.

As expected, each of the five panelists sees a bright future for China's auto industry, with some slower growth periods, price wars and economic hiccups.

Linda Ban of IBM Corp.'s Global Industrial Lead Institute for Business Value, which has researched how the Chinese view their automotive future, says China is forecast to overtake Germany as the third largest global automotive producer (behind the U.S. and Japan) by 2007. It will account for nearly a third of worldwide vehicle output by 2012, she says.

Neither Ban nor the other panelists venture an opinion on when, where and by how much volume Chinese cars will show up in significant numbers in foreign markets.

However, Denton J. Dance, senior director at J.D. Power & Associates, says Chinese auto makers likely won't make a large-scale export drive until they are sure quality and appeal can meet foreign market expectations.

"They want affordable cars" for export, "but they don't want to sacrifice quality," he says.

Based on J.D. Power research in China, Dance says quality steadily is improving, although it still lags behind the U.S. by a wide margin.

In J.D. Power’s initial quality study conducted in China in 2001, buyers reported an average of 350 concerns per 100 vehicles during the first 90 days of ownership. That has been reduced to 265, but it still is more than twice the U.S. average. Dance says part of that difference may be cultural. The Chinese are very picky buyers, he says.

The course of the Chinese auto industry will be importantly influenced by three factors, the panelists point out: Infrastructure, fuel price and availability, and pollution.

"The government is the key to infrastruture and pollution, but fuel is based on market conditions," says Ban.

Adds Ni: "Pollution can be worked out by the government, but oil availability may slow down. They're working on hybrids and natural-gas vehicles to improve fuel economy."