DETROIT — China’s GAC Motor vowed Monday at the Detroit auto show to sell cars to Americans by the fourth quarter of 2019, posing an increasingly realistic possibility that a Chinese automaker will finally reach the U.S. market.
[Nathan Bomey | January 15, 2018 | USA Today]
Although various Chinese auto companies have made similar promises in the past that never came to fruition, GAC is edging closer to the U.S., having already established a joint venture in China with Fiat Chrysler Automobiles.
To be sure, GAC’s route into the U.S. remains unclear. Without a dealership network, the company would likely have to partner with an existing automaker, invest heavily in its own stores or even sell online.
It’s also unclear whether the company can meet the stiff auto-safety hurdles required to sell cars in the U.S.
Still, GAC appears determined to get here.
GAC Motor President Yu Jun said the company would establish a North American sales division to serve as the legal division through which it will enter the U.S. market. And the company is opening R&D centers in Detroit and Los Angeles after already establishing one in Silicon Valley.and GA4
Americans have already demonstrated that they’re willing to purchase vehicles made in China. General Motors has had success by importing the China-produced Buick Envision, for example.
But will Americans buy a Chinese automotive brand?
“Of course the process can be challenging, but I believe good products have no borders,” Yu said. “As long as our products have high quality I believe U.S. consumers will recognize our products.”
Asked whether the company plans to pursue a partnership with Fiat Chrysler to sell cars in the U.S., Yu said “lots of our partners and suppliers expressed their interest in helping us along this process,” including Fiat Chrysler, Delphi and Continental.
“Over the long term we’ll eventually build our own dealership network but in the short- term it’s more efficient to partner with existing networks,” he said.
Fiat Chrysler CEO Sergio Marchionne acknowledged that the company has had discussions with GAC, which is officially known as Guangzhou Automobile Group.
“They want to come to the U.S. and they have been public on this. We are talking to them if and how we can help GAC accomplish that in the U.S.,” Marchionne said. “But we can’t guarantee them economic success.”
Marchionne batted down talk about the possibility that GAC could acquire pieces of Fiat Chrysler, including the Jeep brand, or the whole thing.
“None of this is designed to impact on the independence of FCA,” he said.
Automakers are taking Chinese interest in the U.S. seriously.
“It’s not a question of if, it’s a question of when,” Toyota North America CEO Jim Lentz said in an interview.
GAC Chairman Feng Xingya told the media at the Detroit auto show that the company sold a record 2 million units worldwide in 2017.
The company’s entrance into the U.S. market could raise political hackles. President Trump has bashed U.S.-China trade as imbalanced and criticized auto companies for importing cars.
But in a sign of GAC’s increasing political savvy, the company convinced Michigan Gov. Rick Snyder to appear on stage at its press conference at the North American International Auto Show. Snyder posed for media photos with GAC officials.
The company also showed off its design and technological prowess with the introduction of a new electric crossover concept vehicle called the Enverge.
GAC said the vehicle would get more than 370 miles of battery range.
IHS auto analyst Tom Libby said GAC’s press conference was much more polished than in the past and that the company’s U.S. ambitions are “realistic” despite the lack of an existing sales channel.
Entering the U.S. might require selling at a discount to gain market share. But GAC’s Yu said, “It’s not our strategy to sell at low prices.