Chinese automaker aims for piece of US market

Detroit, January 11:

Chinese automakers will soon be a force to be reckoned with in the US market now that pioneering private carmaker Geely has made a commitment to launch a low-cost sedan in 2008.

Geely said it expects to sell 25,000 vehicles in its first year in the US market and increase sales to 100,000 vehicles within five years. The vehicles will be priced at less than 10,000 dollars. “We’re confident and we’re not afraid of competition,” John Harmer, chief operating officer of Geely USA, said during a press conference yesterday on the final day of press previews at the Detroit auto show. Geely was the first Chinese automaker to present itself at the Detroit auto show.

“It’s very bold that the first show they come to is the Detroit auto show,” Rebecca Lindland, an analyst with Global Insightsaid, “It’s like setting a stake in the ground and saying we’re coming.” Geely produced about 140,000 vehicles in 2005,of which about 10,000 were exported to 30 countries Latin America, Eastern Europe and the Middle East. The company has said it plans to export 1.2 million vehicles in 2015.

A number of foreign automakers have failed to successfully penetrate the massive US market which consumed nearly 17 million vehicles in 2005. “There’s so much demand in China I don’t know if a strong business case can be made if you look at how expensive it is to penetrate the US market,” Global Insight’s Lindland said, “There’s a tremendous amount of logistical costs. Purely geographically it’s enormous — who’s going to service them?”

Geely has not yet established a dealer base in the US. However the automaker would be open to a joint-venture with an automaker already established in the market, Henry Xiong, regional sales managers, No-rth and South America, said.

“Some of them have come to us, not only from America but from Europe,” he said. Geely is not the only Chinese automaker looking to enter the US market. A US-based distributor for Chery, China’s eighth largest carmaker, has already signed up more than 25 dealers in hopes of introducing the brand in the middle of 2007.

General Motors chairman Rick Wagoner said that it will be years before Chinese automakers make major inroads in the overcrowded US market.

GM cuts prices

DETROIT: GM Corp has lowered its prices on a wide range of vehicles which account for 80 per cent of the company’s sales in the US. Under the new ‘value pricing’ plan, suggested retail prices ha-ve been lowered by as mu-ch as $2,500 on all Chevy, Buick and GMC models and most Pontiacs. The aim is to reduce the use of costly incentive progra-mmes and allow custom-ers who price shop on net to have a clearer view of true cost of vehicles. — AFP

Hyundai to build next plant

SEOUL: Hyundai Motor, South Korea’s top automaker, said it has secured initial approval to build its second engine plant in China. “The Chinese government promised to endorse our plan to build a wholly-owned engine plant in the Chinese province of Shandong,” Hyundai Motor vice-chairman Kim Dong-Jin said. Hyundai Motor, which is now producing 1,500cc and 1,800cc engines at its existing plant in Beijing, plans to set up the second factory as soon as final approval from China is forthcoming. — AFP