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Chinese cars to arrive in the U.S. much faster than Hyundai

DETROIT – The question that has been asked time and again since 2006 during the annual North American International Auto Show (NAIAS) is: When are the Chinese coming?

The same question was raised by the audience during the 3rd annual U.S.-China Automotive Forum organized jointly by the Michigan Economic Development Corp. and CCPIT-Auto on January 11 at the Cobo Center in Motown, the showground for the annual international automobile trade show.

Titled “Building the Industry across the Pacific Ocean,” the forum featured Michigan Governor Rick Snyder, CCPIT-Auto chairman Wang Xia, Chicago Chinese Consulate commercial counselor Shu Lumei, Detroit Regional Chamber president Sandy Barauah, U.S.-China Automotive Exchange (USCAE) executive vice president Lisa Gray, Center for Automotive Research president Jay Baron and CEDC’s Automotive Office senior vice president Kevin Kerrigan.

Governor Snyder met with a group of journalists from China before the forum. Delivering an opening remark to the forum, Snyder praised the city of Detroit for coming out of bankruptcy and the U.S. auto industry’s recent strong recovery.

“There is no industry in the world more exciting than the auto industry,” Snyder told 150 attendees at the forum. Since taking office, Snyder had led four delegations visiting China to build up the commercial relationship between the world’s largest emerging economy and the State of Michigan. As a result, “Michigan is now home to more than 100 Chinese companies, which have made more than $1 billion of investments in recent years,” he said, including a $140 million aluminum wheel plant in Greenville to be built by CITIC’s Dicastal.

Wang Xia told the audience that by the end of 2014, 215 China-invested auto related enterprises had been set up in the U.S. for a total of $1.46 billion. “Five of these companies are engaged in vehicle R&D and production and the rest are involved in automotive parts and components manufacturing and trade,” Wang said. “This illustrates that China’s auto industry has entered into a new stage of development. It will definitely take Sino-U.S. cooperation to a new era.”

Addressing the question when Chinese cars would come to the U.S., panelist Yuan Zhongrong, vice chairman of GAC Group, said that he needed to be very “cautious” in answering the question because “I don’t really know whether you really welcome us in the U.S.”

“But it is a dream for us,” Yuan said. GAC Motor participated at NAIAS in 2013 with only one concept car. It is exhibiting three cars at NAIAS 2015, one concept, one Trumpchi GA6 being sold in China, and a new launch of a compact SUV, the GX4. “This is our 2nd appearance in Detroit. Our intention is to let everybody see and get to know GAC products and our capabilities.”

“Remember what happened to Hyundai back in 1986 when their cars were rejected by the U.S. and had to ship all the cars back to Korea from California?” FCA China president Jack Cheng responded to the question. “But their cars are now all over the place in the U.S. China will be here much faster than Hyundai.”

In fact, Volvo Car Corp., now owned by Chinese private carmaker Geely Group, is likely to ship Volvo cars made in Chengdu to the U.S. soon, according to a Volvo public relations manager, Chen Yu, on January 11. She did not specify when the first shipment would be made and how many. At Volvo’s press conference at its stand on January 11, Hakan Samuelsson, CEO of Volvo, said that Volvo’s new S60 Inscription is being made at the company’s plant in Chengdu, China. The S60 Inscription is known as the S60L, with longer wheelbase. Volvo’s lead product manager Lex Kerssemakers told the media at the press conference that it is a luxurious model with “natural high-end materials” and features “the most legroom in premium cars.”

Panelists discussed the future of the global automobile industry development and the potential U.S.-China cooperation in the automotive sector. Yuan, who was formerly chairman of GAC-Toyota, believes that the U.S. is an innovative country that created the Internet. But the market development or the commercialization of Internet applications are happening in China. This will create an area of cooperation. “The age of intelligence driving and IOT (Internet of things) is coming fast. The global auto industry is now entering into 4.0, which involves flexible R&D, intelligent manufacturing and the emergence of an Internet eco-system.

Jack Cheng agreed with Yuan and said the auto industry in China is witnessing a new paradigm change. The younger generation has moved from the PC to mobile terminals with all kinds of apps on their smart devices. “We are witnessing an e-commerce revolution in China,” he said. “The emerging market is no longer emerging but is becoming a developed market. This is especially true for global suppliers who are working with local OEMs to help develop Chinese brands. We should see growing technology exchanges between the U.S. and with such exchanges, it will not be long for us to see the true China cost.”

John Fleming, Ford executive vice president for global manufacturing and labor affairs, believes that with the technology advances in China and China’s move into the digital age, it will impact North America.

Addressing a question of market consolidation in China, Yuan said the U.S. used to have as many automakers as China does today but ended up with only three left. “The same will happen in China,” he said. “We don’t know who will be left. But we believe consolidation will happen within the next 10 years.” Yuan also believes that local Chinese brands will be able to compete in the market. Despite the fall in market share of local independent brands over the past three years, Chinese-branded SUVs still dominate the market, he said. “Right now JV enterprises are aircraft carriers and very strong. In comparison we are only battleships. But we have confidence to compete in the market.”

 

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