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By Terry Kosdrosky
Last Update: 7:30 PM ET Jan 10, 2007

DETROIT (MarketWatch) -- Amid the hype surrounding Chinese-made vehicles at this year's North American International Auto Show, one small, private group is vying to be the first to bring them to the U.S.
China America Cooperative Automotive Inc., known as Chamco Auto, hopes to start selling a compact pickup truck and a mid-size SUV built by Hebei Zhongxing Automobile Co. Ltd. in North America by late 2007 or mid-2008.
Chamco, of Parsippany, N.J., is holding its own little auto show in a hotel ballroom down the street from the main auto show here. The ballroom is decked out in a Chinese motif, with just the two vehicles displayed.
The starting price will be around $13,250 for the pickup and $13,750 for the SUV, said Richard Kalika, executive vice president for sales and dealer development. Chamco said their dealers are guaranteed a 20% pricing advantage over any comparably equipped competitor, including other Chinese vehicles, for five years.
The private company knows it has several hurdles to overcome, including meeting U.S. emissions and safety standards - factors that so far have stumped Chinese auto makers. Several minor, cosmetic changes also are being made to make the vehicles acceptable to U.S. buyers. The cup-holders, for example, are miniscule and few in number by Western standards.
They also have competitors. A host of Chinese auto makers and private firms hope to bring Chinese-made cars to the U.S. market, giving U.S., Japanese and Korean auto makers low-priced competition in an already cutthroat market.
DaimlerChrysler AG's (DCX) Chrysler Group signed a letter of intent with Chinese auto maker Chery Automobile Co. to produce a subcompact car for world markets, including the U.S. Meanwhile, Changfeng Group displayed its wares at the auto show this year.
General Motors Corp. (GM) Vice Chairman Bob Lutz said earlier this week at the auto show that he doesn't expect cars built in China to make a serious dent in the U.S. market for at least three to five years. GM Chief Executive Rick Wagoner said that Chinese-built cars, generally thought to be lower quality than those built in more mature markets, would not be readily accepted by the American public as they are built today.
Such comments aren't dampening the enthusiasm of Chamco's two top executives, both of whom admit they aren't "car guys." Chairman William Pollack's background is technology and Chief Executive Veechwin Li's background is in consumer products.
Chamco's top executives, who have hired several industry executives to work with them, say they have the right structure in place to build, ship and distribute the cars for sale.
Dealers, for now, must become equity partners in Chamco. Suppliers, such as those that will handle shipping the vehicles, also are pushed to accept equity in the company in return for accepting lower prices. Li said that's one way Chamco has been able to keep costs low.
Further, Chamco and Zhongxing Auto have the opportunity to own stakes in each other. Zhongxing also must give Chamco a priority on orders.
"All of us have skin in the game," said Li.
Chamco has been quiet for some time. Pollack said the company didn't want to build up expectations until it had a finished vehicle to show dealers and customers. It also hasn't gone outside for funding yet.
But the hype over competing Chinese vehicles actually helps Chamco's business case, Pollack said.
"It makes it clear that Chinese vehicles are coming, and not in 2010, but in 2008 and 2009," he said. "When dealers see the Big Three lining up behind Chinese manufacturers, it makes people feel comfortable."
Chamco said it will have a display at the National Automobile Dealers Association meeting next month in Las Vegas.
So far, Chamco has 13 dealers who have "written in checks" to become partners and sell the vehicles, verbal commitments from 15-20 dealers and another 25 doing due diligence, Li said.
The goal is to start with 150 dealers in 60 major markets. Li said he expects annual sales volume to reach 75,000 in the first years, which averages to about 500 vehicles per dealer. Chamco is expected to import a Zhongxing-made sedan and crossover utility vehicle later.
"Five hundred is a good number to start with," Pollack said. "We want each of our dealers to be profitable from day one."
Li said Chamco still isn't sure what brand name will hang over the dealerships.
"We don't know yet how consumers feel about a product closely associated with China," he said.
Though the 2007-2008 goal is ambitious, it isn't set in stone. Achieving at least a four-star crash rating and meeting U.S. quality standards are just as important as speed to market, said Kalika.
"If we have to push the car back for quality, we will," he said.
Kalika said he expects the company to sell every vehicle they produce.


· Registered
1,278 Posts
Very interesting article.....

But Admin I'm surprised that you started a new thread on CHAMCO, the would-be importer of Zhongxing.

Just last Saturday a thread was started by Ash entitled
"New Jersey company plans to sell Zhongxing in US by 2008"

Anyway I was surprised to see that one, Chamco is not displaying those models at the show in the lobby like Geely did last year. I had read they might do it. And two that unlike Changfeng, Zhongxing is not displaying their own vehicle as a vehicle manufacturer.

Awhile back Zhongxing had also signed a memorandum of agreement with a Honda dealer on the west coast, for exclusive distribution rights, but I haven't heard anything about that deal advancing further.

Now I am anxious to see those (self-developed?) sedan and crossover models that Zhongxing plans to introduce in the future.
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