Tuesday, March 28, 2006

China exports take aim at Australia


CHINA'S car-makers will target Australia as the Chinese auto boom turns bust, a Shanghai-based automotive analyst says.Excess capacity in the auto sector and government pressure to export would see Chinese vehicles sold here within three years, Paul French, founder of business information firm Access Asia, said this week.
"Basically, they've been ordered to export. All China's car-makers have massive overcapacity at the moment and if they can't shift their cars the government's going to slap some limitations on them," he said. "The government has now said that it's going to control output and several new plants have had quite strict limits put on their licences. Prices are falling to silly levels and car-makers are losing a significant amount of money."
He said the lack of barriers to imports meant Australia would become a testbed for Chinese exports to the west.
"From China's perspective you guys look pretty good," Mr French said. "America is a problem because of the unions, Europe is a problem because of the welter of anti-dumping actions and trade sanctions in the European Union. There are nasty rows already around shoes and textiles, and it's broadening."
Last year China became a net vehicle exporter for the first time and two makers, Geely and Chery, have announced ambitious export programs. Geely will begin US sales in 2008 and Chery will start next year. Spy shots of a Chery SUV testing in the UK recently appeared in specialist press overseas.
But Mr French said joint ventures between Chinese and foreign firms were under even greater pressure to export and could sell through the existing sales channels of their Western partners.
Australia's 1 million annual sales made it one of the most significant national markets outside the US and Europe, Mr French said, with similiar levels of buyer affluence and expectations. "Australia would appeal to a lot of people as a good western market test case. For Chinese exporters it's a place to gain experience before taking on the big markets."

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Friday, March 24, 2006

China's saloon cars output in first two months surges by 83%


Beijing: China's saloon cars output in the first two months of this year surged 83 per cent to 604,700 units as compared to the same period last year, the government said here today.The revenue of China's saloon car manufactures also jumped 38.2 per cent during the period, with over three times as many profits as the previous year, the National of Bureau of Statistics (NBS) said.Stimulated by the Chinese government's favourable policies, the low-emission cars were under spotlight for the first two months of this year. The government has also announced that from April one, cars with an engine of two litres will enjoy lower sales tax of three per cent compared to the five per cent now.Sources from the NBS said the low-emission car output during the January-February period in China's major auto bases located in Shandong and Guangxi all doubled that of the same period of last year.The output and sales of local-brand saloon cars also grew rapidly, said the NBS. China's Chery Company has jumped to second position in China's top 10 auto brands, surpassing many noted foreign auto brands.But the NBS said the profits of auto companies in the first two months of this year is not beyond expectations, as the benchmark profits in the same period of last year was the lowest in recent years.The NBS predicts that China's auto companies will face a low-speed growth in profits in the second quarter, but their profits will increase.
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Wednesday, March 22, 2006

Chery and Geely crack into top five in auto sales

Chery and Geely, China's two domestic automakers, broke into top three and five in passenger car sales in January and February this year, according to statistics from Department of Machinery & Electronic Products of Ministry of Commerce.
Chery sold 41,641 vehicles in January and February, a 111.5-percent jump from the same period a year ago. Geely sold 35,508 vehicles, an increase of 120.8 percent from a year ago.
The rest of the top five are Shanghai GM, Shanghai VW and Beijing Drive Your Way.
Statistics show China produced 1.051 million vehicles in January and February, of which 769,000 are passenger cars and 282,000 are commercial cars, up 42.3% from a year ago.

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Tuesday, March 21, 2006

Geely Automobile on pace for US vehicle launch

BEIJING, March 20 -- Domestic automaker Geely Automobile Holdings Ltd. is on schedule to market vehicles in the United States by early fall 2008, despite potential difficulties passing strict U.S. testing standards, Geely's top U.S. official said.

Geely USA chief operating officer John L. Harmer said Friday the automaker was "pleasantly surprised at how well we did" in preliminary efforts to meet U.S. federal standards.

Harmer, speaking at a Society of Automotive Analysts conference in Detroit, said the automaker's cars have undergone preliminary quality, emissions and safety tests, but he declined to disclose the car's actual performance. He said Geely hasn't begun the official testing that is required by the U.S. National Highway Transportation Safety Administration and the Environmental Protection Agency.

Two weeks ago, news reports emerged saying Geely had failed U.S. procedures. The automaker denied that, but the news still raises speculation that Geely will have a tough time meeting its 2008 U.S. target. U.S. federal emissions and crash standards can force automakers into costly and lengthy testing procedures.

Harmer acknowledged Geely's current products do not meet U.S. requirements, but he said the automaker already is exporting vehicles to Middle East and Eastern European markets where there are "no requirements" at all. Harmer said Geely, one of the most successful Chinese automakers selling in China, has begun setting benchmarks for the generation of cars it eventually will export to the United States. However, the company is still establishing a "process" for correcting its cars' "deficiencies" in order to meet U.S. standards, he said.

Harmer said Geely cars will be very, very basic, but will be "worthy" of meeting U.S. customer expectations. He said the cars will retail in the United States for about US$7,500.

Geely made a splash in January when it showed off a small sedan at the North American Auto Show in Detroit. Despite the onslaught of new products from major automakers, Geely's small car attracted a lot of attention, Harmer said.

Geely has conducted market research on the product it showed at the auto show, Harmer said. He said a quarter of people surveyed felt the quality of a Chinese car is the top concern that could stop them from actually buying a Geely.

Geely is racing with at least one other Chinese automaker, Chery Automobile Co., to break into the U.S. market. Chery's effort is led by longtime U.S. auto executive Malcolm Bricklin, who has delayed his launch plans amid difficulty signing up dealers and other hurdles.

"We don't care who's first," Harmer said. Instead, Geely cares about developing a car U.S. consumers will embrace and the Chinese Government will clear for export, Harmer said. He insisted Geely "will not be embarrassed" by a poorly executed export.

Geely has talked to more than 200 U.S. dealers or interested entrepreneurs who have approached the company about selling its vehicles. Harmer said Geely is close to establishing West Coast and East Coast ports, after which the company will start mapping its retail network.

Geely also is initiating talks with auto-parts suppliers with U.S. operations about sourcing parts to China for U.S.-bound automobiles.



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Saturday, March 18, 2006

Chinese automaker eyes Detroit

BY MICHAEL ELLIS

FREE PRESS BUSINESS WRITER
Detroit could be home to another automaker -- one that builds cars in China.

China's Geely Automobile Co., which plans to sell vehicles in the United States by late 2008, is considering Detroit for the site of its North American headquarters. Geely (JEE-lee) unveiled its CK compact sedan at January's North American International Auto Show in Detroit.

Geely's North American operations are based in Salt Lake City, home of former California Lt. Gov. John Harmer, who is heading the U.S. expansion.

"I've come to grips with reality that Salt Lake is not the place to try to have Geely headquarters," Harmer said. "Obviously Detroit is presumably the most logical place."



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China's Geely Plans $7,500 Sticker, 2008 Launch for U.S.

DETROIT — Geely, the Chinese automaker that turned heads with its display at the North American International Auto Show here in January, is inching closer to a U.S. market launch.

Chief operating officer John Harmer told the Society of Automotive Analysts that the company plans to enter the market in the fall of 2008 — or sooner.

The company is targeting a $7,500 sticker price for its first U.S. product and hopes to sell about 5,000 copies of what he calls a "very, very basic" small car that would nevertheless meet U.S. regulations for safety and emissions. The company turned over 12 cars for U.S. testing last July and Geely plans to start by selling cars in Puerto Rico as a test market for several months.



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Geely hoping to launch in U.S. by fall 2008

By CHARLES CHILD AUTOMOTIVE NEWS

AutoWeek Published 03/16/06, 4:30 pm et DETROIT -- Chinese automaker Geely wants to start selling cars in the United States by fall 2008, Geely USA Inc. COO John Harmer said Wednesday.

Harmer said his goal is for the car to have a sticker price of $10,000, not $7,500 as we reported earlier. In an earlier interview, Harmer said his sales goal for the first year is about 5,000 vehicles.

"It will be a basic, functional auto," Harmer said at a meeting of the Society of Automotive Analysts here.

But he noted that the vehicle would be equipped with power windows, air conditioning and a single-disc CD player.

Harmer said Geely is working to have its vehicles meet U.S. safety and emissions standards.

He also said Geely USA plans to sell vehicles through existing dealers.

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Tuesday, March 14, 2006

China's Automotive Market Soars by 19% in 2005

China's demand for passenger cars increased 19 percent in 2005
* Shanghai GM obtained 7.6 percent of total market share in 2005;
Hyundai Elantra vehicle registrations increased 92 percent

SOUTHFIELD, Mich., March 14 /PRNewswire/ -- China's automotive market
maintained steady growth in 2005 to reach almost 3.8 million new vehicle
registrations, a 19 percent increase compared to 2004, according to
R. L. Polk & Co.
GM passenger cars captured 14.2 percent of the segment's market share,
with Volkswagen following closely at 13.3 percent of passenger car market
share. Nissan's passenger cars, ranked 13th in 2004 market share, grew an
impressive 58 percent to move into eighth place in 2005 with 4.1 percent
market share.


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Auto Legend Plans To Import Chinese Cars


Imagine a car with an interior like a Rolls Royce, the speed of a Corvette and it gets 50 miles per gallon. And, imagine is costs less than $20,000.

It's the latest venture by Orlando native and international auto icon Malcolm Bricklin, WESH 2 News reported.

Foreign-made cars are nothing new in this country, but a Chinese-built vehicle has never been sold in the U.S.

Bricklin aims to change that by opening 250 car dealerships selling Chinese-build cars and sport utility vehicles beginning in two years.

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Saturday, March 11, 2006

China's Lifan to enter India


Chinese conglomerate, Chongqing Lifan seems to have finally charted out an entry strategy for the Indian market. The diversified group, which is among the largest motorcycle makers in the world, is planning to set up three joint ventures in India for making two wheelers, refrigerators/air conditioners and engines. According to sources, the company plans to assemble these products in India and each of the joint ventures will be with a different local partner. The company is in the final stages of signing an agreement with a leading North India based industrial house for its two wheeler joint venture.

The assembly unit for the two wheelers and engines will come up in Haryana. The company is expected to start by assembly of 125 cc and 150 cc bikes. Lifan has already received permission from the Foreign Investment Promotion Board (FIPB) to set up a facility in India. Further, Lifan has already been in talks with several local players to supply engines from its proposed unit.

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Friday, March 10, 2006

Chinese rally makes car and retail stocks pricey


HONG KONG (Reuters) - China's automobile and retail stocks are now expensive by global standards after a strong run this year, but steel and metals firms may still be attractively priced compared with their peers.

The MSCI China Index <.MSCICN>, which tracks China stocks traded in Hong Kong and New York, is up 13 percent so far this year. China's domestic market has also emerged from a four-year slump with the benchmark Shanghai Index <.SSEC> up 10 percent so far.

"Even for the most bullish investors, it is probably worth doing a check on whether stocks have been overbought," said Credit Suisse China research head Vincent Chan, adding that Internet, consumer goods and financial stocks are the most overbought while independent power producers the least.

Automobile production capacity exceeded demand by 2 million units last year, causing vehicle profits to fall by 38 percent. But that does not prevent bourgeoning Chinese auto makers from enjoying a hefty price premium over established names abroad, partly on the prospect that Chinese brands will make inroads in foreign markets.

Brilliance China (1114.HK: Quotazione, Profilo) trades at 43 times forecast 2006 earnings while Qingling Motors (1122.HK: Quotazione, Profilo) trades at 25.

By comparison, German luxury car maker BMW (BMWG.DE: Quotazione, Profilo), which has a China joint venture with Brilliance, trades at 11.1 times earnings, while Nissan Motor (7201.T: Quotazione, Profilo) of Japan trades at 10.9, and South Korea's Hyundai Motor (005380.KS: Quotazione, Profilo) at 10.8.

High expectations have made China's auto stocks vulnerable. Brilliance skidded 10 percent after disappointing the market on Monday by forecasting an operating loss on its Zhonghua sedan.



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Toyota in China: Full Speed Ahead



Who will be the biggest rivals for Toyota in China? Will it be local players?
China is a sizeable auto market, so it can have several local players. It seems to me that the pure, privately [funded manufacturers] like Geely or Chery are the ones to watch, and Hyundai [of Korea]. [The challenge] will be both international and local.

Are you concerned about profitability in China?
One thing in China is that there are no price increases for the near future -- it's always downwards. Everyone looks at China as a growing market, so they prepare more capacity. That means there's always some overcapacity somewhere and pressure on prices. China used to be a very profitable market for everybody, but now it's becoming like any other market.

But you're confident Toyota can succeed in China?
We're a minor player in the China market, with a 3.5% share, but we're one of the few manufacturers where demand exceeds supply. Even though we see big potential for growth, we will make sure we're not in a position of overcapacity. That will be a very key element. And as long as you retain the quality, treat dealers as partners, and avoid oversupply, the results will come. The race for the Chinese market is just around the first corner.

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Monday, March 06, 2006

Asian Cars: Auto Manufacturers to Watch


The Asian automobile manufacturing market is much broader than many American consumers understand it to be. Beyond Honda, Hyundai, Toyota, and other household names there are quite a few automakers that are growing in size and respectability in their own markets. Two of these companies have already committed to selling their models in the U.S., but there are three others worth knowing about and watching.
Starting in 2007, two Chinese automobile manufacturers will be exporting cars to the U.S. and Canada. Geely Automobile Company and the Chery Automobile Company are part of the first wave of new Asian automakers preparing to serve the U.S. market. I won’t go into more detail about these two manufacturers, so please read a related article I wrote titled, “Chinese Cars: Redefining the Market,” to learn more about them.



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China's First Auto seen exporting 20,000 vehicles to Russia in next 2 years




BEIJING (MarketWatch) -- China's First Auto Works Group plans to export more than 20,000 vehicles and auto parts to Russia in the next two years, the official Xinhua News Agency reported over the weekend, citing an unnamed company source.
FAW exported more than 1,000 vehicles to Russia in 2005, the first year the Chinese company entered the Russian market, the report said. That accounted for just a fraction of FAW's total exports of 14,256 autos last year, according to the report.
"Our target is to turn Russia into a regional core base for FAW's auto exports," the report said, citing Li Weidou, general manager of FAW's import and export unit.
FAW's products exported to Russia include cars and medium- and heavy-duty trucks, the report said.
FAW is China's largest auto group by sales. It has 30 wholly owned units and 17 part-owned units, including Shenzhen-listed FAW Car Co. (000800.SZ). It has joint ventures in China with Japan's Toyota Motor Corp. (TM) and German carmaker Volkswagen AG (VOW.XE).
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Thursday, March 02, 2006

US to try to raise Tariff on Chinese Cars


The Chinese government slapped a 28 percent tariff on American-made cars, but the U.S tariff on Chinese-made cars is only 2.5 percent.

The disparity in the tariff prompted Rep. Walter B. Jones, R-3rd District, to introduce a bill in Congress Wednesday aimed at leveling the playing field for domestic auto manufacturers.

The bill, co-sponsored by Rep. Dale Kildee, D-Mich., would prevent imports of passenger cars from China until U.S. and Chinese tariffs are equal.

“China has enough trade advantages already,” Jones said Thursday in a press release that cited examples including currency manipulation, intellectual property rights violations, heavy government subsidies, and lower worker pay and environmental standards.

“The tariff disparity just gives China another unfair advantage — an advantage that threatens the job of every worker in the U.S. auto industry,” he said.

Two Chinese manufacturers — Chery and Geely — have announced plans to begin exporting low-priced, Chinese-made cars to the United States as soon as next year with plans to eventually sell 250,000 cars annually in this country.

Geely reportedly plans to enter the U.S. market by 2008, and anticipates sales of 100,000 by 2012, and other manufacturers already exporting vehicles from China to Europe and elsewhere may also soon export Chinese-made vehicles to America.



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China's Lifan Auto to Buy Brazilian Engine Plant


BEIJING-Chongqing Lifan Group, one of the leading domestic motorcycle makers, said it plans to buy an engine plant in Brazil to speed up the research and development needed to make its own cars.
The private company, which received government approval to start making cars in China in December, is the only bidder for Tritec Motors Ltd in Campo Largo, Brazil, which is now owned by BMW Motors Corp, according to company officials who declined to specify the purchase price.
Tritec Motors is a US$5 million joint venture formed by BMW and DaimlerChrysler Corp, producing one of the most technologically advanced and fuel-efficient engines.

The engines are used in BMW's Mini Coopers and in DaimlerChrysler's PT Cruisers and Dodge Neons.

"After the purchase, we plan to buy the whole production line, take it apart and ship it back in pieces. It will be re-assembled in Chongqing City in China," said a marketing department executive surnamed Lu.

"We hope to acquire more core and advanced technology and shorten our time for developing our own engines as we've come to the market later than others and the cost of doing it ourselves would be too expensive."

Lu added, "We are exploring a different way of developing our own cars."

Other private Chinese automakers create their own technology or borrow it from their foreign partners.

Lifan currently uses imported engines in its first model, the Lifan 520. Its next three products, however, will make be powered by the new engines. Buying the engine plant is only the first chapter in Lifan's plan to build its own cars and catch up with other domestic automakers such as Chang'an Group, Chery Automobile Corp and Geely Automobile Corp.

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Wednesday, March 01, 2006

Oddly Named Brilliance Produces Attractive New Sedan


Will Chinese-Built Cars Pose a Real Threat to Mainstream Automakers and If So, When?

What is it with the names of Chinese carmakers and their vehicles? Geely, Chery, and Great Wall Motors are probably more unfamiliar than outright odd, as is smaller player Brilliance Auto. Brilliance (Brilliance China Automotive Holdings Ltd, see www.brillianceauto.com - sold through the "Zhonghua" and "Zunchi" brand names in China - www.zhonghuacar.com) named its stylish new sedan Jinjue, which translates into "Triumphant Horse" or, better yet, "Winning Gold", the latter potentially chosen to pay tribute to high flyer Han Xiaopeng, winner of an Olympic gold medal in the mens freestyle aerials competition, or speedy superstar Meng Wang, multi-medal winner of the womens short-track speed skating event, and Chinas first gold in a Winter Olympics.

The Jinjue, Brilliances second passenger car, could win over North American and even picky European buyers if launched in western markets, on styling alone - the automaker already sells a larger model in Europe having been designed by Giorgetto (Giorgio) Giugiaros ItalDesign. With another link to the Olympics, the new model was designed in Italy by ItalDesigns rival, the world renowned Pininfarina; design house to many Ferrari sports cars and other top-level vehicles.

Another positive on Brilliances side is its strong relationship with BMW, which bodes well for the Jinjues prospective performance. Yes, Brilliance received technical assistance from the Bavarian automaker when developing its Jinjue, thanks to a relationship that has resulted in the BMW Brilliance Automotive Limited division, 49.01 percent owned by BMW (see www.bmw-brilliance.cn) and responsible for building the German automakers 3-Series, 5-Series and 7-Series sedans, plus the Z4 sports car and X5 crossover SUV; no doubt reason enough for the Jinjues designers choosing to pay homage by mimicking the Teutonic brands double-kidney grille. The entire car, grille included, looks closer to a number of previous BMW assets, mind you; some Rover-MG sedans.

The Jinjue, having been built on a shortened version of Brilliances near full-size model, measures 183 inches in length. Like the larger car, the Jinjue uses a total of four Mitsubishi engines, mostly supplied by Shenyang-Mitsubishi, ranging from 1.6- to 2.0-liters in displacement. While small by North American standards, Mitsubishi has an excellent reputation for engineering powerful little engines, which should result in the Jinjue having reasonably strong straight-line performance. If the Jinjue, or any other Brilliance models were sold in North America, the Mitsubishi relationship could spawn a V6-powered version.
Brilliance hopes to increase sales from 17,500 units to a total of 30,000 this year, and believes its new Jinjue will push it over the top. This said Brilliance has been openly critical of the Chinese government, stating in a press release that "the implementation of macro-economic policies and austerity measures in China has resulted in a significant slowdown in growth in domestic demand for automobiles," pointing to a top-down effort by the Chinese authorities to reduce the number of automakers through direct intervention rather than waiting for the markets to take their natural course and, through attrition, thin out Chinas overpopulated assortment of automakers.

Brilliances strategic partnerships with BMW and Mitsubishi should save it from heavy-handed Chinese autocracy, mind you, which makes it a good bet for continued global expansion. And incidentally, BMW, Mitsubishi and Giugiaro arent the only strategic partnerships Brilliance enjoys, having built relationships with Toyota for the development and production of its lineup of passenger vans (www.jinbei.com.cn), and Porsche for engineering and prototype construction of its new sedans, Johnson Controls for seat and interior component manufacturing, FEV for design, engineering and prototype construction of engines, and TRW Automotive to design new safety and airbag systems.

Look for Brilliance to show up at a major North American auto show, just like Chery, through Malcolm Bricklins Visionary Vehicles, and Geely have gone before. No doubt, the stylish Jinjue will get a more favorable response than its rather frumpy Chinese forerunners.
strategic partnerships with BMW and Mitsubishi should save it from heavy-handed Chinese autocracy, mind you, which makes it a good bet for continued global expansion. And incidentally, BMW, Mitsubishi and Giugiaro arent the only strategic partnerships Brilliance enjoys, having built relationships with Toyota for the development and production of its lineup of passenger vans (www.jinbei.com.cn), and Porsche for engineering and prototype construction of its new sedans, Johnson Controls for seat and interior component manufacturing, FEV for design, engineering and prototype construction of engines, and TRW Automotive to design new safety and airbag systems.

Look for Brilliance to show up at a major North American auto show, just like Chery, through Malcolm Bricklins Visionary Vehicles, and Geely have gone before. No doubt, the stylish Jinjue will get a more favorable response than its rather frumpy Chinese forerunners.


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Fears rise for MG deal

Storm clouds are gathering around the historic deal signed last week by MG Rover's new owner, Nanjing Automobile Corporation (NAC), to bring car production back to the Longbridge plant.

Although the Chinese firm sealed a deal with St Modwen Properties - owner of the Midlands site - for a 33-year lease, Auto Express understands that there is a clause within it which allows the company to leave Longbridge by 22 August if it "cannot build a viable business at the location".

At present, Nanjing's intention is to build the MG TF on a 105-acre section of the 469-acre site. Body presses will be brought from storage in Coventry, and the original TF line restored - a process expected to involve around 600 people. This number is tipped to grow to 1,000 if the venture is a success after full production starts in2007

Development of the site will also be expensive, although it's understood Birmingham City Council has already contributed £300,000 to help with the initial clear-up. Despite this grant, Nanjing will need to attract new businesses to Longbridge to spread the costs. NAC UK chairman Wang Hongbiao said: "I am delighted we've reached an arrange-ment with St. Modwen Properties. This means that we can move forward with our business plan to build cars at Longbridge." Birmingham City Council leader Mike Whitby added: "As a result of this deal, we have created hope and opportunity for the people of Longbridge and Birmingham. We have also safeguarded the MG brand in Birmingham, and I would like to congratulate both NAC and St Modwen for their efforts in managing to bring this tremendous deal together."
Dan Strong



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Mazda 3 Goes Into Production in China

CHONGQING, China — Changan-Ford has begun assembling the Mazda 3 at its plant here in China's largest inland city, with sales to begin in late March.

To date, Mazda vehicles have been produced in partnership with another Chinese automaker, First Auto Works. FAW and its subsidiaries assemble versions of the Mazda 6 and Premacy, as well as the old 323 Familia. Last year, Mazda sold a record 133,000 cars in China, up 50 percent from 2004, and has targeted annual sales of 300,000 units by 2010.

Changan-Ford builds the Ford Focus, which shares its basic chassis design with the Mazda 3. To cement its new alliance, Mazda, which is controlled by Ford, is expected to take a minority stake in the Changan-Ford joint venture. The partners also are constructing a new factory in Nanjing to build Ford and Mazda vehicles for the Chinese market, beginning in 2007.

Although the Mazda 3 will be produced by Changan-Ford, it will be sold through the FAW-Mazda sales network. Eventually, Changan-Ford will take an equity stake in the FAW-Mazda sales compact.


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Chinese Autos Aimed At Mainstream Market

By Gordon Fairclough
The Wall Street Journal
Wednesday, March 1, 2006; Page D01

BEIJING -- Malcolm Bricklin, the man who brought Americans the Yugo, wants to sell U.S. consumers a new line of cars made in Wuhu, China. But this time, Bricklin says that instead of going after bargain-hunting buyers with cut-rate compacts, he will aim squarely at the middle of the market.

Working with Chery Automobile Co., a state-owned enterprise that is one of China's fastest-growing automakers, Bricklin plans to introduce to the United States made-in-China sedans and sport-utility vehicles priced at $19,000 and designed to steal customers away from cars such as Toyota Motor Corp.'s Camry and General Motors Corp.'s Buick LaCrosse.


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The 66-year-old entrepreneur, who got started in the auto business by importing Subarus from Japan in the 1960s, signed an agreement in 2004 to become Chery's exclusive North American distributor.

Under the deal, Bricklin had to raise $200 million to invest in Chery and assemble a network of U.S. dealers. He now has the money in hand, he said, and nearly 40 dealers have ponied up at least $2 million each in exchange for sales rights and stakes in Bricklin's company, Visionary Vehicles LLC. Bricklin said he expects to sign up 200 more by the end of May.

"China is coming," Bricklin said in an interview.

China recently reached a milestone, becoming a net exporter of vehicles for the first time. Should it succeed in exporting passenger cars in significant numbers, that could strain trade tensions between the United States and China and heighten the competitive pressures on struggling U.S. carmakers.

But getting a foothold in the United States won't be easy. There are high regulatory hurdles. And skeptics question whether U.S. car buyers will pay nearly $20,000 for a car from a relatively untested Chinese maker with no history of selling in the United States. It took Korean automakers such as Hyundai Motor Co. about a decade to gain a significant following among U.S. consumers.

Chery, for its part, is keeping quiet about its U.S. plans. A company official acknowledges that Chery is in talks with Bricklin. But Kan Lei, the Chery vice president in charge of preparations to enter the U.S. market, said: "We are not in a position to say anything yet."

Founded in 1997 in one of China's poorest provinces, Chery has risen to prominence on the Chinese automotive scene by producing small, cheap cars that have earned it a reputation as a copycat. Chery's best-selling QQ, a subcompact, looks almost exactly like GM's Chevrolet Spark.

GM's South Korean affiliate, which designed the Spark, sued Chery in 2004. The companies settled the case last year without disclosing the terms. GM and Chery declined to comment on the settlement. Bricklin said that, as part of the agreement, Chery agreed not to use the name Chery -- just one letter away from Chevy -- on cars sold in the United States.

Industry watchers, however, contend that Chery's knockoff days are over. The company has hired Italian design firms Pininfarina SpA and Bertone Group to help it launch a new line of vehicles. Some, including a racy hardtop convertible, are being developed especially for the U.S. market. Chery also has enlisted AVL List GmbH, of Austria, to help it make engines.

"Chery will be a formidable competitor. They have the ambition, they have the leadership and they have the money," said Michael Dunne, president of Automotive Resources Asia, an industry consultant.

Chery has big ambitions. Last year, the automaker sold nearly 190,000 cars, more than twice as many as in 2004. In 2005, Chery also exported 18,000 cars, mostly to the Middle East. The company says it aims to sell more than 300,000 vehicles overseas annually starting in 2008.

Bricklin is aiming to have Cherys on sale in the United States by late 2007 or 2008, depending on how quickly the company can improve quality.

Chery executives are more cautious about timing. Zhang Lin, a former DaimlerChrysler AG executive who now heads Chery's international operations, said he doesn't want to predict when his company's cars will hit the U.S. market. "We're still in the very preliminary stages," Zhang said.

At the moment, Zhang said, Chery is focused on Russia, where it will begin assembling cars this year, as well as the Middle East and Southeast Asia


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Brilliance Zunchi to Roll off Production Lines in Egypt Soon

SinoCast Via Thomson Dialog NewsEdge)SHENYANG, Feb 22, 2006 (SinoCast via COMTEX) --Brilliance China Automotive Co., Ltd. will see new vehicles roll off production lines under its CKD project in Egypt next month, according to Liu Zhigang, president of the Shenyang-based automaker.

The model to hit market is Zhonghua Zunchi. The company also plans to put the Splendor into Egypt in the wake of the launch of this model.

Brilliance allegedly intends to market the models of Zunchi and Splendor to 23 countries in the Middle East via its Egyptian partner BAG.

According to the agreement signed last April, BAG would start to install the production lines for manufacturing of Zhonghua sedans from the three months ended in December.

Mr. Liu Zhigang said that his company plans to boost the export of light coaches and Zhonghua series of sedans to 30% by 2010. At present, it has extended its export markets to more than 40 countries and territories in Asia, Africa, North America, South America and Oceania.


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The Chinese are Coming? Geely has '08 U.S. target, knows it won't be easy


DETROIT - China's Geely Automotive Holding Co. plans to begin importing two models into the United States starting in 2008, but executives acknowledge they face hurdles. "The basic demands are safety, emissions and a service network," says Geely Chairman Li Shufu. "The United States market has higher demands than the Chinese market. What will determine when we start exporting is if can meet those demands." Geely is showing a mid-sized sedan at the show. A future generation of the model will be the first to be imported, Li says. It will be priced at less than $10,000, he says. The model already is being produced in China. The second model will be Geely's Beauty Leopard sports car, says John Harmer, COO at Geely USA Inc. Harmer says Geely will start recruiting dealers in a year and has received inquiries. "We anticipate we can sell 5,000 cars in our first year and 100,000 a year by our fifth year," he says. Geely sent 12 of the sedans to a testing lab in Virginia last July to determine what modifications need to be made for the United States. "We were pleasantly surprised we did as well as we did," Harmer says. The required modifications will all be made by Geely engineers in China, Li says. Geely engineers designed and developed both models, he says. Chery Automobile Co., whose cars entrepreneur Malcolm Bricklin aims to begin importing in 2007, has hired engine expert AVL List GmbH of Austria and Italian design house Bertone, among other foreign firms, to help prepare cars for export. Geely's Li admits that Chinese engineers don't know enough about American buyers' tastes yet to design a car for this market. That's one reason why the automaker brought its sedan to Detroit. Says Li: "We are researching consumer tastes here right now."

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Chinese Dragon at Detroit's Gate

SYNOPSIS: In light of China's rise and the prospects of soaring oil prices Congress faces two options: help Detroit save itself now or bail it out later. The Chinese debut at the Detroit Auto Show with Geely, a mid-sized sedan planned for sale to budget-conscious American families for less than $10,000 by 2008, should be viewed as the opening shot in what is likely to be a clash of titans between the American and Chinese auto industries, one that could send Detroit to the ropes. With their market share sliding, their bonds downgraded to junk and their quarterly reports showing 10-digit loses, the Big Three - DaimlerChrysler, Ford and GM - are facing a challenge far more formidable than the Japanese onslaught of the 1970s. With 1.3 billion people, an economy growing at a sustained rate of 8-10 percent a year and with a middle class larger than the entire population of the U.S., China is car crazed. Millions of Chinese with growing disposable income can now abandon their bicycle in favor of a family car. As a result, China’s auto market is growing by leaps and bounds and it is by far the world’s fastest growing. In 2003 demand for automobiles soared by 75%. Last year it slowed down to a sustained growth level of around 15%. China is already the world's fourth-largest car market with sales of 2.3 million cars in 2004 and it is projected to overtake Germany by the end of this year and Japan by 2010. It will not be long after that China passes the U.S. For now, China’s auto industry sells most of its cars domestically, but this is about to change soon. Honda is already selling in Europe 200,000 Chinese made automobiles every year. Toyota is building a plant that will shortly manufacture the highly successful Prius. The Chinese Nanjing Automobile bought the British MG Rover and is planning to build under the MG marque sports models and small and medium sized vehicles. And now Geely. Despite the fact that a Chinese auto worker earns 20 times less than an American and the health benefits are nowhere near those in the U.S., American automakers believe that the quality and appeal of their products will defend them against China. It is an industry sport to deride the Chinese cars as unattractive and years behind the market. And indeed China still has a way to go before it can produce cars of quality comparable to that of the Big Three. But the quality gap is closing rapidly. China trains four times as many engineers as the U.S. while systematically violating patent laws and replicating technologies. The Chinese allow foreign automakers to operate in their country only through joint ventures with domestic manufacturers. This allows them to learn new manufacturing techniques and to gradually improve the quality of their products. China’s auto industry is also pushing into advanced green and high efficiency technologies. It could take as little as a decade for China’s auto industry to become competitive with Western manufacturers not only in terms of cost but also in terms of quality and fuel efficiency. Detroit’s dismissive approach toward the Chinese resembles a similar attitude toward Japanese pioneering technologies in the 1990s. While the American manufacturers gorged on short term profits from gas guzzlers, far sighted Asian manufacturers broadened their product mix and took the kinds of technology risks that their American competitors were unwilling to accept. GM and Ford laughed openly at Toyota's hybrid technology and derided the "$20,000" subsidy per car that Toyota allegedly invested in early production. Today, with unprecedented profits and long customer waiting lists for their hybrid cars Toyota is the one laughing. The U.S. automakers failed to recognize the huge and growing customer demand for hybrids. Their public rebuke of what is becoming this century's primary drive train is, in the words of former assistant secretary of energy Joseph J. Romm, "one of the biggest blunders in auto industry history." GM’s answer to the mounting challenge from Asia is the fuel cell vehicle, a much-touted technology which still faces daunting technical, economic and infrastructure issues. Despite growing consensus that the hydrogen fuel cell vision is not likely to come into practical use for at least another 25 years - a recent MIT report predicts that the fuel cell cars will not be commonly used before the middle of the century - GM is still committed to produce 1 million fuel cell cars powered by hydrogen. With its staggering losses it is not clear whether GM could stay in business long enough to see the first hydrogen car rolling out. In light of China’s rise and the prospects of soaring oil prices Congress faces two options: help Detroit save itself now or bail it out later. Based on the 2005 Energy Policy Act Congress prefers the latter. But continuation of the laissez faire policy toward the industry could be a risky gamble which could end up costing taxpayers dearly. A recent report by the University of Michigan's Transportation Research Institute shows what could happen if oil prices remain high while Detroit automakers continue with their current business strategy. The study projects a decline in sales volumes of between 9 and 14 percent, the closure of 14 auto factories, primarily in the Midwest, and the loss of close to 300,000 jobs. Last year’s announcement by GM and Ford on plant closedowns and layoffs as well as the Department of Energy’s projection that oil prices will remain over $50 a barrel for many years to come validate the study’s predictions. In post-Katrina America no one expects Congress to sit idly by while tens of thousands of angry unemployed autoworkers riot in the streets of Dearborn, particularly not in an election year. To avoid the bailout of the century Congress should seek new ways to help Detroit to maintain its competitive edge against an emerging Chinese auto industry. This can only be done by encouraging domestic manufacturers to produce and consumers to purchase, U.S.-made hybrid vehicles, plug-in hybrid electric vehicles, advanced diesels and flexible fuel vehicles which can run on alternative fuels like electricity, biodiesel and alcohols like ethanol and methanol. Failure by Congress to push Detroit to offer cars that fit the changing realities in the global oil market will leave Americans no choice but to buy the $10,000 fuel-efficient-made-in-China cars that will soon be coming to a Wal-Mart near you. Gal Luft is executive director of IAGS and Co-chair of the Set America Free Coalition.


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China's Geely 2005 sedan sales surge 50 pct to 150,000 units

BEIJING (AFX) - Geely Holdings Group, China's largest privately-owned automaker, said it sold more than 150,000 sedans in 2005, jumping 50 pct from a year earlier. The company said in a press release that the surge in sales was mainly due to technology innovation and the low prices of its economy cars. Geely this month became the first Chinese automaker to attend the Detroit auto show. According to statistics released last week by the China Association of Automobile Manufacturers (CAAM), the country's total auto sales were up 13.5 pct at 5.76 mln in 2005, while passenger car sales rose 21.4 pct to 3.97 mln units.

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Chery Determined to Make a Worldwide Name for Itself

WUHU, China — The title of "China's Economic Person of the Year" was bestowed on Chery president Yin Tongyue last year for good reason. The ambitious auto executive outlined some serious targets for this year at a dealer meeting. Chery sold 189,000 cars in 2005, with the popular small QQ accounting for 61 percent of sales. The company aims to sell over 281,000 in 2006 and to introduce nine new models, including the A520 that was shown at Detroit and a companion vehicle known as S21. Among them will be a seven-seat minivan, the size of a Chrysler Voyager, to be launched in March. This one, which had the working title of "B14" but will be called the "V3-series," is powered by a 2.4-liter, six-cylinder engine. It is reportedly destined for the North American market. There will also be a mini MPV to be introduced in July and the successor to the QQ, which comes out in October. A light commercial vehicle of the type that is hugely popular in Europe will be another of Chery's future products. It bears the working name of "A18." This type of vehicle is less well-known in China, but local production of the Volkswagen Caddy should change that. More details about these and other new models are sure to come soon. What this means to you: Look closely and you will see the start of a new chapter in the global auto industry.

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Historic: Chery to Bring First Chinese Car to America Soon

ANHUI, China — Chery has launched its new A520 sedan in China, but the big news is that a modified version is reportedly planned for sale in the United States. Visionary Vehicles, the company planning to launch the vehicle, made that announcement this week. The "A5" part of the car's name refers to the model, while "20" means it has a 2.0-liter, four-cylinder engine. While the mechanical underpinnings of the car are based on the existing Seat Toledo-based platform, the sheet metal — designed by Bertone of Italy — is brand-new. The powertrain was developed with assistance from Austrian engine specialist AVL. Visionary Vehicles says the car is intended to compete with such cars as the BMW 330i and the Audi A4 at an "anticipated MSRP" of $19,000. Inside Line believes the A520 will be derived from the A5, especially as Chinese media reports suggest that there will be an A530 with a six-cylinder engine later on.







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