DETROIT - It’s one of the most viewed displays at this year’s North American International Auto Show, but it’s not one of the huge spectacles of glitz and glamour put on by the Big Three U.S. automakers.
Instead, China’s Geely Automobile Company has a rather ordinary display featuring a small silver sedan outside the main show room of Detroit’s cavernous Cobo Center. But its presence in Detroit is by no means unimportant.
“This is the first Chinese automobile to participate in the Detroit Auto Show, so we’re unique,” said John Harmer, vice president and COO of Geely-USA. “As auto shows go, this year isn’t dramatically different from last year — the most significant change is that Geely is here.”
Until recently, Chinese vehicle exports were limited to buses and trucks. But now China’s manufacturers have been busy upgrading their technology and production to compete overseas and they are ready to do business in the massive U.S. automobile market with low-priced vehicles aimed at U.S. consumers.
That might be good news for cost-conscious Americans, but analysts say it could be bad news for Detroit’s Big Three, now struggling with sagging U.S. sales and busy laying off workers and closing down factories to cut costs.
The silver “CK” sedan on show here in Detroit is about the size of a Honda Civic and a forerunner of the vehicle that will eventually go on sale in the United States. It gets 25 miles per gallon in the city and 35 miles on the highway, and Geely says it will be very competitively priced when it goes on sale — below the $10,000 level.
Pricing is an important advantage for Chinese carmakers like Geely. They plan to offer low-priced cars for American consumers and undercut their American and Asian rivals.
And Geely is just one of several Chinese automakers planning to sell vehicles in the United States.
Malcolm Bricklin, who famously brought low-cost Yugos to the United States in the 1980s, pushed back his date for importing cars made by Chinese manufacturer Chery Automobile from the start of 2007 to the end of that year. The cars are expected to cost around $20,000 and compete with luxury names like BMW and Mercedes.
“Now the dealers are involved, and they’re going to tell us the things they want in the cars. The time line will change only from the input of the people we say we want input from, which is the dealers,” said Bricklin, founder and president of importer Visionary Vehicles, on the sidelines of the Detroit Auto Show this week.
“Now it’s pretty much around the end of 2007,” he said.
Geely faces its own competition in the U.S.— Honda, Chevrolet and South Korea’s Kia all make cars in the same price bracket. But Geely-USA’s Harmer, who is an attorney by trade and has never worked for an automotive company before, plans to sell 25,000 cars in the U.S. in his first year, and 100,000 by 2013, and he’s confident of his company’s success.
“This is huge, but we can do it,” he said. “25,000 is our first year goal, but we actually think we’ll do better than that, and we’ve had a number of potential distributors come to us at the Detroit auto show and say they are anxious to become a distributor.”
One issue for Chinese carmakers is the perception that their products are not up to par when it comes to safety and reliability. It’s a perception problem that Harmer plans to deal with through aggressive marketing.
“I’ve had a number of people come up to me and say, ‘John, how can the Chinese make a quality automobile?’ And I tell them I know they can because I know their engineers, and many of them have trained here in Detroit and spent five or 10 years with a major U.S. automobile manufacturer. So they know their industry and they know engineering standards,” Harmer said.
Geely has four factories in China and is the nation’s sixth-largest manufacturer. It has yet to sign up any U.S. distributors, but when it does it expects to firstly sell vehicles on the west coast of the U.S. and then move to the East, eventually building up a national distributor network.
Bricklin’s Visionary Vehicles aims to sell 250,000 Chery cars in the United States in the first year through 250 dealerships nationwide, raising sales to 1 million vehicles annually by around 2010.
Bricklin said he expects to have 100 dealers — some with multiple showrooms — signed up by the end of next month and all 250 sites ready and financed by March, putting in place the sales network needed to introduce the cars, which the entrepreneur said will “redefine the price of luxury.”
Bricklin has said this week in Detroit that he is willing and eager to help Geely succeed in the United States through his 50 years of experience in the auto industry.
“Anything we can do to help them do a good job is what we want because we don’t want Chinese cars to come in and start a bad reputation,” Bricklin said. "'Anything that somebody does that says 'Chinese is bad' could hurt us."
Reuters contributed to this report.