Chamco to bring Chinese SUV, pickup to US around '09

[Flybrian]

No immigration bill needed
Chinese automaker looks to come to U.S. through Mexico

By Todd Lassa | Link to Original Article @ Motor Trend

Chinese pickup trucks and SUVs built in Mexico? Chamco Automotive, the company set up to import ZX Auto's products into the U.S. next June, plans to announce on Thursday that it will open a factory in Tijuana in 2009. That factory will supplement production of four-cylinder, $13,250 base-price SUVs and pickups from China. Chamco, which recently hired Steve Saleen to help with the homologation process and with development, plans to sell the ZX models, probably under the name Jhong or Jhong Auto, beginning in June 2008. Chamco has more than 30 of its necessary 150 initial investor/dealers signed up, and has just about signed all the dealers it needs in Mexico and Canada.

Despite GM Chairman Rick Wagoner's solid argument that Chinese automakers won't come very soon to the U.S., Chamco's chances look pretty good. The Mexican plant is a smart move in that it establishes ZX Auto as a global automaker, one that happens to be based in China, rather than one that relies on China for cheap labor and relies on China to buy its products. Of course, that means it's still controlled under the Chinese government. If Chamco can pull this Mexican factory off -- note that it's still a rather big "if" -- it will answer Wagoner's first point as outlined in Angus MacKenzie's blog.

If it works, ZX can use the still-huge American auto market as a way to grow its Chinese business.

So where's the advantage in building ZXes in Mexico? Chamco Chairman and CEO Bill Pollack, a candid guy as car company execs go, says that workers in Mexico will earn about $6,000 to $8,000 per year. Slave wages here for sure, but well above the $1,300 annual average in the Chinese factories. That adds $600 to $800 in cost per car, he says, but much of that can be made up in transportation and logistics costs.

ZX Auto is in the right place to open a Mexican factory because it's still a rather nascent automaker. It built just 32,000 cars and trucks last year, Pollack says, and has since bought a second Chinese factory. As far as Pollack and I know, ZX's Mexican plant will be the first joint venture with a Chinese producer, at least in the auto biz. Chamco's position as 50/50 partner in that Mexican plant mirrors the way China does business with Western or Japanese and South Korean automakers. SAIC, for example, owns half of the factory with GM that builds Buicks for the Chinese market.

The name "Jhong" is a kind of spelling out of the first name in "ZX." (Chinese characters don't directly correlate to our alphabet, so the translations are largely phonetic.) The SUV and pickup won't use their Chinese model names, either. Too bad for the pickup, which is called "Grandtiger" there. Its SUV, "Landmark," is also the name of a motion picture theater chain in the U.S. Send in your suggestions for model names, and we'll pass the best of them on to Chamco.

In Mexico, they will be called "Toreador" and "Matador" (no fears of AMC lawyers knocking on Chamco's door), although Chamco hasn't determined which will be which. The trucks already are certified in Mexico, and Pollack expects them to be on sale there in about four months. Before U.S. sales commence, they'll get a quality upgrade, he says, and a new Chinese-built engine with a 25 more horses. The current 2.2-liter engine makes 141 horsepower and apparently is Mitsubishi-based. ZX can quickly adapt such changes, Pollack says, because its factories are low-volume. The truck and SUV are -- how does one say it? -- inspired by old Japanese models.

In the U.S., ZX/Chamco/Jhong will emphasize value, of course, priced about 20 percent below the competition. Pollack expects the two models to launch with at least average quality levels. He's determined not to replicate Hyundai's early mistakes in this market. Volume of 75,000 vehicles seems reasonable for the first full year of sales here, although a boost in dealers from 150 for the first two years to 400 in years three, four and five sounds highly ambitious. That initial volume is well above Isuzu here, yes, but still only 75 percent of Suzuki's volume and 65 percent of Mitsubishi's. Chamco plans to import a sedan and a crossover in 2009, and expects Hyundai-like growth.

So place your bets. Chamco wants to sign up the remaining 115 or so of its initial dealers next week in Las Vegas, and then it has 11 months to get trucks and SUVs to those dealers. It seems the most rational Chinese auto import plan so far. Will ZX really be the first one here?

[FAPTurbo]

Bring 'em on.

If that's what they want to send us... they'll definately be leaving with their tails between their legs.

[Bigmikelakers]

Nothing special, looks just like a 90's Montero.

[MyerShift]

Yuck. Good riddance to the thought of having bad rubbish.

[FAPTurbo]