The leader of the Chinese pack is Geely Automotive Holdings, says Tina Jantzi, manager of North American forecasting for J.D. Power Automotive Forecasting. Its strategy borrows heavily from Asian predecessors: establish a foothold with affordable economy cars and build brand confidence from there. Geely is building a U.S.-based executive staff led by American John Harmer, and this year sent 6,000 subcompacts to Puerto Rico as a test market. J.D. Power predicts that the first Geely will not reach the United States until mid-2009, and that sales will reach just 7,500 cars in 2010.
One downside to Geely’s strategy is that larger cars and SUVs are much more profitable. Chery Automotive, China’s third largest-selling brand after GM and VW, has teamed up with Malcolm Bricklin–the impresario who brought Yugos and Subarus to the United States–to move straight into the high-margin categories. (Brilliance, another Chinese firm, has a similar plan, claiming that its $20,000 sedan will compete with Lexus in terms of quality.) Bricklin envisions a line of Chinese-made cars that will compete with Mercedes, BMW, Lexus and Jaguar, but sell for 30 percent less. Bricklin has five Italian-inspired designs in the works, including a retractable hardtop roadster that wowed critics at the Shanghai Motor Show this year. However, the company’s crossover SUV, already in production, failed to gain five-star U.S. safety ratings. It is now under redesign, delaying Chery’s American debut, which was originally scheduled for late 2007.
A dark horse is Nanjing Automotive, the only China contender that plans to build cars in the United States. Nanjing bought the remains of MG Rover last year and plans to build an updated version of the classic British roadster in Oklahoma, with a target production rate of 12,000 to 16,000 cars a year, starting as early as 2008. The head of the U.S. operation, Duke Hale, says the MG name will give him a jump on Chinese rivals that are not exactly household names here.
True, they’re not. But some of their allies are. Shanghai Automotive Industrial Corp. is a joint-venture partner of both GM and Volkswagen in China; it aims to launch a full line of vehicles from cars to minivans and to export 45,000 cars by 2010. Thats if its partners don’t do so first. In a final twist, analysts say, its conceivable that the first Chinese-built car to reach the United States may come from a plant run by a famous Detroit name like GM, Ford or Chrysler.
