CHINESE AUTOMAKERS WON’T RUSH TO U.S.

China watch: CHAMCO booth on show floor

February 5, 2007—Chinese automakers are unlikely to make any significant push into the United States or other developed countries before 2009 or 2010, Global Insight analyst Ashvin Chotai told the NADA International Roundtable at the convention today. There will likely first be joint ventures between Chinese and foreign companies, such as the deal between DaimlerChrysler and Chery for a small car to come here in 2008. Oil availability is an unknown that could constrain Chinese production.

Meanwhile, CHAMCO Auto (China America Cooperative Automotive, Inc.) showed its entry-level truck at the convention, attracting a lot of dealer interest. Dick Inukai, Dick’s Country Dodge, Hillsboro, Oreg., was talking to CHAMCO reps at the booth but wasn’t sure whether he would consider a Chinese franchise. “It depends on the quality.” His manager was interested in the idea of an entry-level truck for $13,000, but said “the fit isn’t that great.”

J.D. Power and Associates analyst Michael Dunne told reporters at the J.D. Power roundtable before the convention that CHAMCO’s parent ZX is a small company that makes less than 40,000 units a year. He considers it unlikely that ZX would export vehicles to the United States within the next few years.

Both analysts agree that there are still problems. “Some of these companies are very naïve when they announce how many cars they’re going to export” before they can meet U.S. emissions and quality regulations, said Chotai. Plus, the labor cost savings is not as substantial as some observers think—and it’s shrinking as a portion of the total cost.

Chinese vehicle exports totaled only 343,000 last year, Chotai said—mostly small trucks. Chery is the farthest along of any Chinese automaker in its export plans, the analysts said. Others to watch include Changan, Geely, FAW, and Great Wall.