Chinese Cars At Show Look Good, But Are Still Not Ready For The U.S.
By The Post, Tierney
Published on 12/2/2006 in Wheels » Wheels National
AA stroll through Hall 1 of the Beijing auto show confirms what industry experts say about China's carmakers: Some are making impressive strides in the design and finish of their newest models, but they're not quite ready to compete in the U.S. and European markets.
China's automakers seem to have come to the same realization and the most intrepid are quietly scaling back their plans.
Geely Automobile Co., a private Chinese carmaker, recently delayed plans to export cars to the United States and now doesn't expect to start before 2009.
Chery Automobile Co. originally set out to export cars to the United States in a venture with entrepreneur Malcolm Bricklin but is now negotiating deals with blue-chip automakers. It has signed a deal to supply small engines to Italy's Fiat Auto. Chery also is in talks with DaimlerChrysler AG about building a small car for the Chrysler Group.
China's largest carmakers were cautious from the outset. Shanghai-based SAIC Motor Corp., China's largest passenger carmaker through its joint ventures
with General Motors Corp. and Volkswagen AG, has begun producing its own-brand car, the Rover-based Roewe 750. For now, it's focusing on its domestic market and hasn't laid out an export strategy.
However, SAIC is laying the groundwork to become a serious global competitor.
It became the first Chinese automaker to buy a foreign car company when it acquired a controlling stake in South Korea's Ssangyong Motor last year. Although Ssangyong was a troubled company and a minor player in the Korean market dominated by Hyundai Motor Co., its lineup of sport utility vehicles complemented SAIC's growing expertise in the car business. Ssangyong also has a big export network, selling vehicles in many countries, including Britain and Germany.
In June, SAIC hired the former chairman of General Motors China Group, Phil Murtaugh, to manage its overseas activities. Murtaugh is widely credited for helping to transform GM China into a leading player in the Chinese market by forging good relations with its venture partners and reading market trends correctly.
Now executive vice president of SAIC, Murtaugh spends most of his time working on Ssangyong to develop new products and sales channels. “This year will be a struggle, but I feel good about Ssangyong's prospects because of the advantage of the synergies with SAIC,” he said .
SAIC and Ssangyong have already begun to develop vehicle platforms which they'll use jointly, with the first models built on those underbodies expected to appear within four years.
The two automakers also will pool their components purchases, and SAIC will have access to Ssangyong's export network. “The benefits go both ways, both to SAIC and to Ssangyong, in all three areas,” Murtaugh said.
For now, SAIC isn't rushing to export vehicles.
“We have plans to export, but that's not a priority today,” he said. “We don't feel it makes sense for us to start exploring other international markets when we have the hottest market here that we know the best.
But if that market starts to cool, SAIC will be ready to look elsewhere.