- The Washington Times - Wednesday, January 11, 2006

Chinese companies are racing to enter the U.S. auto market.

One manufacturer previewed this week at the North American International Auto Show, and another plans to hit dealerships by the end of next year.

“For sure, nobody needs another manufacturer, if all we were going to do was manufacture another car. But we are going to make a dramatic change in the price [structure] of higher-priced cars,” said Malcolm Bricklin, the 66-year-old chief executive of Visionary Vehicles, a New York City company that has long-term plans to sell 1 million cars a year built by China’s Chery Automobile Co. in the U.S.

Mr. Bricklin plans to introduce midlevel cars, competitive with Japanese and Korean sedans and crossovers, to the U.S. by the end of 2007, he said yesterday from his New York office. Cherys, which will be sold under a yet-to-be-determined name, will be priced about 30 percent less than competitors.

Geely Automobile, one of Chery’s competitors in China, is aiming at the market’s budget end. The company previewed a prototype four-door sedan in Detroit this week — the first showing by a Chinese company at the annual industry event — and plans to start selling in the U.S. in 2008.

“Geely will bring to the people of the United States a safe, high-quality, family-friendly automobile that can be purchased for less than $10,000,” Shufu Li, Geely’s chairman, said Monday in Detroit.

The small car, called the 7151CK, is a mainstay of the Geely line in China but is not high-enough quality for the U.S. Independent reviews of Geely models have complained of cheap interiors and rickety transmissions.

“There will have been many improvements over the design and engineering that you see here,” Mr. Li said.

The Chinese cars would have to meet U.S. safety and emissions standards, as well as consumer expectations.

J.D. Power and Associates said in December that there is a significant quality gap between Chinese and international brands.

“The success of Chinese domestic brands in global markets largely depends on how fast they catch up to multinational [manufacturers] in the area of quality, reliability and durability,” said John Humphrey, senior vice president and managing director of J.D. Power Asia-Pacific-China operations.

A line of cars by Geely, based in Hangzhou, China, debuted internationally last year at Europe’s premier car show in Frankfurt.

“They were pretty sorry specimens,” said George Peterson, president of AutoPacific, an industry research firm in Southern California. “But once the Chinese start coming in, they will start chewing away, especially Geely, at the lower end of the lineup.”

Chery has not shown at U.S. or European auto shows, but Mr. Peterson said he had been impressed with the company.

“Chery is the real deal,” he said of the government-owned company based in Wuhu, China.

Maryann N. Keller, an independent industry analyst, said lower quality means the most viable strategy for China would be one used previously to break into the U.S. market by Germany’s Volkswagen, Japan’s Toyota and South Korea’s Hyundai — starting with an inexpensive, low-end car and slowly building up a brand, then introducing higher-end products.

Geely is following that model, while Chery’s plans are more ambitious, and riskier.

“For good or bad, it’s going down in the record [book],” Mr. Bricklin said.

Mr. Li did not specify how many cars Geely would try to sell in the U.S., but the company’s goals reportedly are more moderate than Chery’s.

The biggest U.S. automaker, General Motors Corp., sold 4.52 million vehicles in the U.S. last year, while Toyota’s U.S. sales reached 2.26 million vehicles.

Mr. Bricklin, who made his fortune importing Subarus and made his name building a gull-winged sports car and selling Yugos, said the company will build autos that rival luxury models BMW and Mercedes in quality.

Chery has tapped companies such as Pininfarina, an Italian engineering firm behind the Ferrari, Maserati and Volvo models, to style its entrants to the U.S. market. Western companies also are designing the engine and interior, he said.

U.S. automakers have clashed with Chery. General Motors, which has struggled with sagging U.S. sales but has posted record sales in China, sued Chery, saying it had pirated one of GM’s designs. The U.S. automaker also has protested that the Chinese company’s name is too close to Chevy.

GM settled the patent case, but forced Chery to choose another name for its U.S. models. Mr. Bricklin said the company has not decided on the new name for the U.S. market.

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