Can Geely meet quality demands of U.S. buyers?

[Variance]

The $10,000 Question

Can Geely provide the quality U.S. consumers demand?

By CHARLES CHILD | AUTOMOTIVE NEWS

AutoWeek | Published 03/20/06, 2:28 pm et

DETROIT - Geely's first car in the United States will have an eye-catching sticker - just $10,000, the company's top U.S. executive says.

But can the car overcome China's reputation for low-quality manufactured goods? Good question, says John Harmer, COO of Geely USA Inc.

Harmer commissioned a study of news reports about Geely (pronounced JEE-lee) after the company showed a car at the Detroit auto show in January. Poor quality was mentioned frequently.

Moreover, China is widely blamed for job losses at U.S. factories. When Geely starts selling in America - scheduled for fall 2008 - Harmer plans a public relations campaign to counter China's mixed image here.

"We know there's a problem," he says. "I wish I had an answer."

Harmer, who is from Salt Lake City, is an attorney by trade. Last week in suburban Detroit, he provided more details of Geely Automobile Holding Ltd.'s plans:

>> The car. The $10,000 Geely will be a "basic, functional auto," Harmer said. But product planners are aiming for power windows, air conditioning and a compact disc player that plays one disc at a time. The least expensive 2006 car sold in the United States is the Chevrolet Aveo, which starts at $9,890, including the destination charge.

>> U.S. safety and emission standards. Last year, Harmer brought a batch of Geely cars to the United States for testing. They met some U.S. standards, such as the roof crush test, and fell short on others, such as side-impact protection. Geely engineers are busy designing the U.S. car to meet all standards.

>> Distribution. Harmer is choosing entry ports on the East and West coasts. The first dealerships will be near the ports. He has received franchise requests from about 200 dealers. He plans to sell cars in Canada, too.

Harmer turned down a proposal from an unnamed national "megaretailer who wants to get into the auto business."

"We don't want to be the pioneer" of a new type of auto retailing, he said. Harmer has no business experience in auto retailing other than Geely.

He plans to start slowly, then build sales in the United States and Canada. He is aiming for 5,000 in 2008 and 100,000 by 2012.

Harmer acknowledged that Geely has a daunting task to provide the quality expected by U.S. consumers.

Geely has an ally in the Chinese government. National pride is at stake, so the government will not let Geely be another Yugo, Harmer said. The poor-quality sedan from the former Yugoslavia flopped in the United States and was withdrawn from the market in 1992. The government will permit Geely to export only if the car meets certain standards, he said.

Harmer spoke last week at a meeting of the Society of Automotive Analysts.

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