Commentary: Are The Chinese Coming?

GAC Trumpchi crossover
Photo by Randy Stern

Normally I would not pay attention to the National Automobile Dealers Association's annual confab. There are a few people I know that attend this every year on various sides of the business.

I will bet you that they had some inkling of a bit of news that has seeped out of the Moscone Center in San Francisco this past weekend. Or, not.

To explain the headline, a Chinese automaker announced the first group of dealerships that will sell their vehicles in the USA. That company is called Zotye. And, yes, you have not heard about this company before.

It is one of the newest automakers on this planet, established in 2005. Zotye International Automobile Trading Co., Ltd. Is headquartered in Yongkang in Zhejiang province. Its location is near the China Sea, which enables easy access to export their wares to global markets – an advantage in the automotive business. Currently, Zotye vehicles are sold in 29 countries, including China.

Zotye has already established a beachhead in Lake Forest, California – which is in South Orange County. The distributor, HAAH Automotive Holdings has created Zotye USA as the marketing arm for these upcoming vehicles. Their aim is to establish a network of 300-325 dealers in the top 100 markets across the USA by the end of 2020.  

Back at the North American International Auto Show in Detroit, GAC announced their intentions to enter the USA market by 2020, as well. They have been at that show for several years now trying to test the marketplace to see whether they can enter it, if at all.

GAC announced the opening of their North American sales office in Irvine, California. They have also had a design studio in California, along with R&D facilities in that state and in Southeastern Michigan. It appears that GAC is further along in establishing its USA presence than Zotye. Keeping in mind that Guangzhou-based GAC has been around since 1955 and is the sixth largest automaker in China, selling in 16 markets worldwide.

It is unclear which products both Zotye and GAC will enter the USA market with in 2020. It would appear that they want to sell SUVs and Crossovers, since they are what drives this market. Zotye has been showing their T700 Crossover, a compact model with a 1.8-liter turbocharged engine. It is unclear what the final specifications will end up being by its arrival in 2020.

GAC has showed various vehicles over the years that would be attractive to American consumers. The GS8 SUV was seen at NAIAS, however one could clearly point out several items from what appears to be the Hyundai/Kia parts bin on the GS8. Funny, I did not see that GAC had a joint venture with Hyundai or Kia in China…

That is the one thing any Chinese automaker should be aware of before entering the North American market. Any of us with knowledge of automobiles and brands could easily point out several aspects and the vehicle and question the origin or a certain component.

With that said, I am very surprised that no one had contemplated importing any of the MG Cars lineup stateside. The outgrowth of SAIC's empire includes the once mighty Morris Garages brand that once produced the most popular roadsters in the world. Nowadays, MG makes crossovers.

It is those crossovers that are helping MG's growth worldwide. They opened up shop in Australia just recently and will be selling vehicles in India later this year. So, why not North America?

Another issue that was brought up by the announcements from Zotye and GAC was the frustration we had with Ford when they decided not to import the new generation Focus as a ruggedized hatchback to compete against the Subaru Crosstrek. The global plan was to import these vehicles from China. Ford's management ended up cancelling the program – along with three other car lines – because of the threat by the current administration in Washington to increase tariffs on imports from China.

There had been some negotiation regarding tariffs between the USA and China. Some have said that the tariffs will be less enabling continued or better trade between these two nations. Perhaps it is the reason that we are seeing Zotye signing up dealers at NADA and GAC getting more serious about selling vehicles here.

To further address the tariff question, we must look at what is already available from China. There has to be a reason why Volvo, Buick, and Cadillac continue to sell Chinese-made automobiles in this country. And, what if negotiations over tariffs go awry? How will that affect current vehicles sold here and the plans made by Zotye and GAC to arrive here in 2020?

If we look ahead to 2020 when these new brands establish their dealership networks, the one question that needs to be asked is whether consumers will accept these new vehicles. In 1986, we took a chance on Yugo. We were enticed by the $3,995 base price of these small Serbian hatchbacks that were partly engineered by Fiat.  

If potential consumer interest is there, should the floodgates open up to let these Chinese brands sell their wares stateside? That all depends on tariffs. Once that is settled, maybe it would be price? What about quality? These are questions that must be answered before the first Zotye or GAC dealership opens up for business in 2020.

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