China to take 2007 auto show by storm

[Flybrian]

Link to full article @ DetNews.com

China to take 2007 auto show by storm

Three carmakers have big plans for Detroit displays

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YPSILANTI -- Chinese carmakers hope to make a big splash at the North American International Auto Show in January after a tentative debut early this year.

Three Chinese automakers are negotiating for display space at the 2007 show in Detroit and hope to start shipping vehicles to the United States in two to three years, the show's organizers said recently at a planning conference.

Robert Thibodeau Jr., co-chair of the North American International Auto Show, said Hunan Changfeng Motor Co. Ltd., Great Wall Motor Co. Ltd. and Hebei Zhongxing Automobile Co. Ltd. are likely to display vehicles, joining Geely Automobile, which staged the first Chinese car exhibit at a U.S. show early this year.

"It's exciting," Thibodeau said. "It's the thing of the future."

In January, Geely displayed a small sedan, the 7151 CK, in a booth in the Cobo Center concourse, outside the main hall only during the press preview.

Although the $10,000 CK did not meet U.S. safety and emission standards, it drew crowds of curious executives, consultants and reporters eager to see what the Chinese were capable of producing.

The Chinese are now developing their auto industry with the hope of following in the footsteps of the Japanese and South Koreans to become big exporters in the United States, the most profitable auto market in the world.

Geely, a privately owned carmaker, hopes to start selling vehicles in Puerto Rico next year and on the U.S. mainland in 2008. Another automaker, state-owned Chery Automobile Co., also plans to sell cars here in 2008.

Geely, Chery and the three carmakers preparing to bring cars to Detroit are not among China's largest automakers, but they are among the most aggressive in an industry that is still in the early stages of a shakeout.

Changfeng, Great Wall and Zhongxing could begin shipping vehicles to the United States as early as next year, although 2008-2009 is more likely, said auto dealer Richard Genthe, who was co-chairman of the 2006 show.

"They are very cautious," said Genthe, who traveled to China recently to meet with auto executives. "They are making sure that when they come, they come with products that are up to our standards."

He said Detroit show officials had proposed a pavilion for all of the Chinese carmakers, but the companies rejected it.

"They want to stand on their own two feet," Genthe said. "They don't want to come and do an informational booth."

The trio is likely to get 20,000 square feet in the Michigan Hall, in the Cobo Center's lower level, he said.

ZX officials said earlier this year that they hoped to ship 40,000 vehicles to the United States annually, beginning in late 2007. The company is preparing U.S. versions of its Landmark sport utility vehicle and Grand Tiger pickup.

ZX plans to display an SUV and a pickup in Detroit, said Ray Dreyfus, vice president of Chamco Auto, a New Jersey company that will import the vehicles.

"That's definitely our plan," he said.

ZX has not completed the display design but has tentatively reserved about 5,000 square feet at Cobo Center, he said.

Changfeng introduced a cross-over vehicle at the Shanghai motor show last year, while Great Wall exports pickups and SUVs to markets such as eastern Europe.

Genthe spent 11 days in China in May and June, touring auto plants and meeting with executives. With PowerPoint presentations, video clips from the show and an aid to translate his best auto dealer sale pitches, Genthe tried to convince the Chinese that they need to be in Detroit.

Most of them didn't speak English, but they were all aware of the auto show in Detroit, Genthe said.

He described the procedures to obtain display space and bring models to Detroit. "We are providing them with the opportunity so they can get an idea of what it costs to display at our level," he said.

China's automakers are approaching the U.S. market with modest sales targets -- as did the Koreans and the Japanese before them.

But after bumpy beginnings and unimpressive early vehicles, leading Asian carmakers are now formidable competitors in the U.S. market.

Great Wall Motor Co. Ltd. is China's largest private carmaker, with capacity to produce 300,000 vehicles a year. It exported 10,000 cars and trucks from January to April to the Middle East and Africa.

State-owned Hunan Changfeng Motor Co. Ltd. makes SUVs sold under the Liebao brand. It expects to produce 200,000 vehicles in 2007.

Hebei Zhongxing Automobile Co. Ltd. produces six pickups and SUVs, and exports vehicles to the Middle East, Asia and Africa.

[Drew Dowdell]

Maybe Hyundai/Kia should be worried.

Toyota is eating GM, Hyundai is eating Toyota, the Chinese will eat Hyundai.

[regfootball]

Maybe Hyundai/Kia should be worried.

Toyota is eating GM, Hyundai is eating Toyota, the Chinese will eat Hyundai.

EVERYONE IS EATING EVERYONE ELSE..........

[Hudson]

Why is it assumed that Hyundai will get "eaten?" When Hyundai first arrived, they competed against used cars. Over the past 20 years, they've moved upmarket, believe it or not. They're a mainstream player now.

When the Chinese arrive, they're not automatically going to come in at the bottom rung...although Great Wall, Zhongxing, Changfeng, and Geely are poised to do just that. Bricklin (cough, cough) is talking about bringing in Chery at a higher level than these other manufacturers.

If Great Wall, Zhongxing, Changfeng, and Geely arrive as low-end players (as they probably will), the first companies affected will be GM and Ford. Not as a direct assault on sales, but on an assault on resale value of their used products...just like when Hyundai arrived 20 years ago. GM and Ford have the highest sales in the US and the highest fleet sales, all of which fills (sometimes overloads) the used market...and these vehicles will be the primary competition for new cars from brands like Geely. Residual values of used cars will fall causing higher leasing prices, lower demand, and lower profit on (primarily) GM and Ford products.

Don't expect Hyundai to be the first one hurt. Toyota and Honda weren't the first ones hurt when Hyundai arrived.

[Flybrian]

That's if anyone buys these cars. Remember Daewoo.

[CARBIZ]

Although the entry of more players into an already crowded market is not good news for any OEMs, Hyundai is still seen as a cheap, entry level manufacturer, at least in this market.

Nobody who is going to fork out $20,000+ is going to seriously consider a Hyundai. They may consider a 60 mo. Hyundai lease because the payment appears cheap, but who would pay cash for a vehicle that is nearly the same price as a Cobalt?

After all, it has been more than 20 years since the Pony debacle and Hyundai still only has 4.2% market share (Canadian market, according to desrosiers) and I warrant that if you take the Toronto market out of their sales, they would have a lot less market share because it is mostly SouthAsians and Asians who are buying them here.

[Moto_08]

Yea like Flybrian said Daewoo i'm not saying this will really happen but a possibility at least some of these Chinese cars won't be successful. It's hard for me to imagine these cars actually being good cars in the next 20 years but same happened to Hyundai, Toyota etc. maybe just maybe history will repeat itself again although the Chinese cars are ugly ripoffs hopefully that will be resolved just like what happened to Hyundai.