Chinese automakers are looking west

Roland Jones Business news editor • Profile • E-mail

The Shanghai auto show kicked off this week with up-and-coming automakers showing off sedans, trucks and SUVs in the world’s fastest-growing automobile market. But as the global automotive industry looks east, China’s carmakers have their eyes fixed firmly west — on the U.S. market.

With names like Chery, Geely and Shanghai Automotive Industry Corp., China’s small but ambitious automobile companies are not well known here in the United States but could one day become household names, just like Toyota, Honda and Nissan.

“[Chinese automakers] are all still establishing themselves in terms of products, quality and manufacturing — the very things that go into running a successful automotive company,” said Tim Dunne, director for Asia Pacific Market Intelligence at market research company J.D. Power and Associates. “But they all have exporting visions, and everyone wants to know when they’re coming to the United States.”

As China’s economic growth has exploded, the nation's auto market has vaulted from near obscurity 10 years ago to the second biggest in the world in 2006. It grew by 35 percent last year, making it the fastest-growing in the industrialized world, and it is expected to become the world’s biggest automotive market by the end of the decade, according to some estimates. More conservative forecasters say China will not become No. 1 until 2015 or 2020.

Chinese vehicle manufacturers are in their relative infancy by U.S. standards, usually only 7 or 8 years old. Many are getting help from foreign automakers in joint ventures with the likes of  General Motors and Volkswagen, who because of ownership restrictions in the country must partner with local automakers to build and distribute cars.

In fact, the burgeoning Chinese automobile market is a boon for automakers like GM, bringing in hundreds of millions of dollars a year in profit at a time when they are unable to make money in the North American market, the world’s largest.

But competition is intense, with some 25 automakers selling their wares in China, including brands rarely seen in the United States, like Fiat, Peugeot and Citroen.

Last year, some 7 million vehicles were sold in China, compared with 16.5 million in the United States, 6 million in Japan and between 2 and 4 million in European countries like Germany, France and Italy.

About 27 percent of the China sales were of Japanese bands, while Chinese brands made up 26 percent of the sales and European cars accounted for 23 percent of sales. U.S. brands made up 14 percent of the sales, and Korean brands the remaining 10 percent.

Chery Automobile, which sold just over 300,000 vehicles in China last year and exported 50,000, is widely seen as the leading Chinese brand.

Chery partnered with auto importer Visionary Vehicles, run by entrepreneur Malcolm Bricklin, to sell its cars in the United States by 2007, but after disagreements over finances, design and delays, the deal broke down. Chery still intends to sell vehicles in the United States and is reportedly pursuing its own export plans. Late last year, Chery signed a deal to build small cars under a Chrysler nameplate to be marketed in the United States and Europe.

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