Chinese automakers are slowed in drive to sell in U.S. market

Written on January 15, 2009

Detroit — Chinese automakers looking to make the jump to the key U.S. market are facing increasingly strong headwinds, including a global financial crisis that has slowed growth where they already sell cars and sapped the potential for partnerships that would ease their expansion.

But BYD Auto Co. and Brilliance Auto are making China’s most prominent appearance yet at this year’s North American International Auto Show — sandwiched between General Motors Corp. and Ford Motor Co.’s displays. And they remain interested in eventually selling in the U.S., although that looks to be years away.

"We will start to develop sales and distribution networks in North America," Wang Chua-Fu, chairman and president of BYD, said at a news conference Monday, the second day of media previews at the Detroit show. He said plans call for U.S. manufacturing facilities "when it is appropriate."

Henry Z. Li, general manager of BYD’s auto export trade division, said the company has set a target of 2011 to sell two models that it’s showing in Detroit — the e6, which is an all-electric crossover with a 250-mile range, and the F6DM, a plug-in hybrid sedan. By then, he said, BYD hopes to sell the Chinese-built vehicles in a market that’s recovered from its current slide.

"I think the most important thing for us is to bring the right product and that product can prove itself," Li said. "It’s the product that builds the brand. It’s not the brand that builds the product."

U.S. auto sales tumbled to 13.2 million in 2008, down 18 percent from 16.1 million in 2007 saving payday loans. Some analysts predict this year’s sales will hit 10.5 million, making the prospect of bringing new Chinese vehicles into that market much more daunting.

"The U.S. for a long time was sort of seen as the combination of the Holy Grail and the cash cow," said Rebecca Lindland, an auto industry analyst with the consulting firm IHS Global Insight. "You could come here and, as the world’s largest single market, you could make a lot of money here. …

"Suddenly, we are not a cash cow and it is a very expensive market to participate in."

Jesse Toprak, executive director of industry analysis for the Edmunds.com automotive website, said he sees potential for Chinese automakers to sell in the U.S. — especially those looking to market relatively inexpensive, smaller vehicles. But the Chinese will face a skeptical public.

"In this time of economic uncertainty, consumers tend to make safer choices. They don’t know about the quality of the Chinese vehicles," Toprak said. "Initially, I think it’s going to be an uphill battle for them."

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