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China wants to enter the U.S. car market, but a rough road lies ahead

Russ Mitchell, Los Angeles Times on

Published in Automotive News

"Over the last 10 years, the quality of Chinese vehicles in China, as measured by Chinese consumers, has gotten dramatically better," he said. And GAC quality "has been the best of the Chinese brands" based on surveys of new-car owners on vehicle condition and performance.

GAC stands for Guangzhou Automobile Group. Statistics vary by source, but the company tends to rank ninth or 10th on lists of China's biggest automakers. Located near the concentration of Japanese auto suppliers in Southern China, GAC was an early adopter of Japanese quality standards, analysts say.

Whether the quality proves good enough for the U.S. market is yet to be determined. Yu Zhang, managing director of Automotive Foresight in Shanghai, calls GAC a "dark horse" in the U.S. market with great potential.

GAC made a splash at the recent Detroit Auto Show, with a spot covering 2,400 square feet on the main floor of the exhibition hall, a first for a Chinese car company. It was more than a token display: six vehicles were shown.

Sexy models remain a fixture at auto shows in China, and they appeared onstage in Detroit at GAC's appointed showtime. Two tall, slim young women in svelte red dresses stripped covers off several GAC cars, including the Enverge electric concept car, which GAC intends to introduce to the U.S. market following its SUV debut.

First, though, the company must establish a U.S. dealer network. In March, GAC executives will fly to Las Vegas, where they'll glad hand potential distributors at the National Automobile Dealers Assn. annual convention.

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Dealers have been teased by Chinese automakers before, most notably in 2005, when a colorful publicity hound named Malcolm Bricklin (best known for the Yugo) announced plans to import five vehicles from Wuhu, China-based Chery Automobile. But quality wasn't up to snuff, too few dealers signed up, investors dropped out and the deal died.

"Entering the U.S. market is like swimming in water that is too deep. We are scared of drowning," Chery President Yin Tongyue told a Reuters reporter at the time. "We need more time to prepare. U.S. technology and U.S. consumer habits are too different."

American car buyers tend to be brand loyal, and it has historically been difficult for newcomers -- particularly from overseas. Last year, Ford, GM and Ram pickup trucks topped the bestseller list, followed by the Toyota Camry, the Nissan Rogue and the Honda CR-V.

The Japanese and Koreans both struggled to gain a foothold in the U.S., but now the Asian brands, with 46.3 percent market share, are neck and neck with U.S. automakers, at 44.4 percent. European companies account for the remaining 9.3 percent, according to Motor Intelligence.


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