Magazine article Newsweek

China: The Next Invasion; Chinese Cars Are Coming, for Better or Worse

Magazine article Newsweek

China: The Next Invasion; Chinese Cars Are Coming, for Better or Worse

Article excerpt

Byline: George Wehrfritz

Two decades after Japan took the U.S. auto market by storm, here comes China. Dozens of Chinese automakers are eyeing the U.S. market, with some hoping to arrive as soon as next year. That may be too optimistic. While the Japanese cracked a slumbering and protected U.S. field, the Chinese face a deregulated and highly competitive market, dominated now by the Japanese. Most analysts expect the first Chinese to arrive, yes, but not until 2009, at the earliest. Here are some of the leading contenders, and their strikingly different strategies and prospects:

The leader of the Chinese pack is Geely Automotive Holdings, says Tina Jantzi, manager of North American forecasting for J.D. Power Automotive Forecasting. Its strategy borrows heavily from Asian predecessors: establish a foothold with affordable economy cars and build brand confidence from there. Geely is building a U.S.-based executive staff led by American John Harmer, and this year sent 6,000 subcompacts to Puerto Rico as a test market. J.D. Power predicts that the first Geely will not reach the United States until mid-2009, and that sales will reach just 7,500 cars in 2010.

One downside to Geely's strategy is that larger cars and SUVs are much more profitable. Chery Automotive, China's third largest-selling brand after GM and VW, has teamed up with Malcolm Bricklin--the impresario who brought Yugos and Subarus to the United States--to move straight into the high-margin categories. (Brilliance, another Chinese firm, has a similar plan, claiming that its $20,000 sedan will compete with Lexus in terms of quality. …

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