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Zotye’s U.S. push

– by Alysha Webb

LOS ANGELES – Zotye USA has made an impressive start laying the groundwork for selling a China-made vehicle here in the U.S. Now it must follow through by bringing in a vehicle which finds a market with U.S. consumers.

“The most important part of our (U.S.) strategy is to be focused on how the customer wants to purchase a vehicle and interact with our dealers,” Robert Pradzinski, senior vice president of sales for Zotye USA, tells CBU/CAR.

At the National Automobile Dealers Association (NADA) show in San Francisco in January, Pradzinski said 19 dealers had signed a Letter of Intent to distribute Zotye vehicles, and another 40 to 45 were “in process.” Recruiting, he said, was through word of mouth.

HAAH Automotive Zotye

More recently, he tells CBU/CAR, Zotye USA has appointed dealers across the country with representatives in 14 major markets. “We’ll have more information on how the dealer network is growing in coming months,” says Pradzinski.

Those dealers include Ron Fornaca, who with his family owns Subaru, Hyundai, and Toyota dealerships near San Diego, California.

The number one reason they signed on to distribute Zotye in the U.S. was the company behind it here, he tells CBU/CAR.  Zotye USA was formed by California-based HAAH Automotive Holdings in October 2018.

“The people in HAAH Automotive, we have a long background with them from Hyundai,” he says. “I believe in what they would present us.”

HAAH Automotive Holdings is the U.S. distributor for Zotye Automobiles through its division Zotye USA.

Based in the southern California city of Lake Forest, HAAH Automotive was formed in 2016 for the express purpose of winning distribution rights for foreign brands. Zotye is the first brand for which it has obtained distribution rights.

HAAH Automotive chairman and CEO Duke Hale is a long-time auto industry executive whose past positions include vice president customer service and parts for Jaguar Land Rover North America and COO-President of American Isuzu Motors.

In recent months, Zotye USA has hired an additional handful of experienced auto executives, including Pradzinski, whose previous jobs include vice president of sales for Hyundai Motor America. Other recent hires include Gordon Dickie, senior vice president R&D, engineering, manufacturing and aftersales, who previously worked at Ford and Mazda; senior vice president of marketing Jan Thompson, who previously worked at Toyota/Lexus, Nissan/Infiniti, and Mazda; and vice president of marketing Susan Bland Norton, who previously worked at her family’s dealership group and for Chase Auto Finance.

The HAAH headquarters is near Fornaca’s dealerships, and Fornaca and his brothers went there to see the Zotye T700 SUV.

“We sat in it, the fit and finish was nice. It was shocking,” says Fornaca.  

Potential dealers checking out the Zotye SUV at 2019 NADA in San Francisco

No haggle, no hassle

Zotye makes much of its “No haggle, no hassle” sales approach. It compares itself to consumer goods retailers such as Apple and Amazon and aims to offer a wide array of options for vehicle purchase.

For example, says Pradzinski, if the customer wants to complete the sale online, “we will meet that to the greatest extent possible under the laws in the state in which the customer resides.”

Zotye USA will also offer the traditional dealership experience.

“Our goal is to provide the customer a full set of options when it comes to the purchase experience so buying a car will be tailored to their needs and wants,” he says.

Dealers that have signed agreements to sell Zotye vehicles in the U.S.:
[ Irv Stein ] a Volvo dealer, along with Jack Stein, Ben Stein and Noah Sullum, plans two stores in Berwyn, Pa., and Doylestown, Pa
[ Jeff Stoops ] a Buick-GMC dealer, plans a store in Indianapolis
[ Randy Stoops ] a Buick-GMC dealer, plans one store in Muncie, Ind.
[ Roger Scholfield ] a Honda dealer, plans one dealership in Wichita, Kan.;
[ Mary Margaret Latham ] a dealer with Volvo, Subaru and Hyundai stores, plans one Zotye store in Wilmington, N.C.
[ Larry Battison ] a Honda dealer, will open two stores in Oklahoma City
[ George Doetsch ] a Ford-Lincoln dealer, plans three stores in the Howard County, Md., Baltimore and Washington area; Elkton, Md.; and the Annapolis, Glen Burnie and Dundalk, Md., area.
[ Ron Fornaca ] a Subaru dealer, plans one store in San Diego
[ Sam Brnovich ] a former Hyundai Motor America executive and CEO of BWI Auto Ventures, plans six stores in Sarasota/Venice, Fla.; Port Charlotte/Fort Myers, Fla.; Las Vegas; Los Angeles/Chino Hills, Calif.; and Bakersfield, Calif.
[ George Whitlow ] a Lexus dealer, will open a store in Richmond, Va.

As for financing, Hale said at NADA, “We have begun to evaluate finance options and have a third party finance expert putting together options.”

Besides its have-it-your-way shopping experience, Zotye USA sees value for money as an important selling point for U.S. consumers.

“There is an affordability crisis” in the U.S. auto market, Hale said at NADA. The Japanese and Korean brands have moved upmarket, he said, leaving a “void” for an affordable brand such as Zotye.

To be sure, vehicle prices are at an all-time high in the U.S. market. According to Kelley Blue Book, the average light vehicle transaction price in February was $36,590, up 2.8 percent compared to the same month in 2018.

“There is definitely room in the U.S. for a value brand,” Ian Beavis, chief strategy officer for global automotive consulting agency AMCI, tells CBU/CAR.  

Pradzinski says the price of its vehicles will be “very attractive to customers.”

But U.S. consumers demand more than just a good price, says Beavis. They have higher expectations and lower tolerance for poor quality or treatment then when, say, Hyundai, entered the U.S. market.

“Zoyte needs to clearly differentiate every aspect of their marketing, buying and ownership experience plus set realistic sales goals to have any chance of success,” says Beavis.

One thing Zotye USA dealers won’t need to invest in to differentiate their product is a fancy dealership. Mindful that dealers would be reluctant to spend millions on a facility to sell an unknown brand, Zotye USA isn’t asking for facilities that meet any image program. Fornaca will use a former Subaru dealership he owns and is selling used cars out of now as his Zotye dealership.  

Larry Battison and daughter Courtney at Zotye booth at 2019 NADA

Larry Battison, owner of Battison Honda in Oklahoma City, OK, was at the bare bones Zotye booth at NADA. He has signed on as a distributor. Not having to build a facility “is what excited us about Zotye,” said Battison.

He plans two Zotye sales locations, one on an extra piece of property he owns in Oklahoma City and one in a “small space in a shopping center” in Norman, OK.

Zotye USA says the first model sold in the U.S will be an SUV. It hasn’t identified the model, which was developed at parent company Zotye’s headquarters in Hangzhou. There are hints it might be the Zotye T600 SUV, which has been sold in China since 2013.

But, says Pradzinski, “the model was developed with the knowledge that the U.S. market could be one of the markets in which it could be sold.”

The T700 model in the stand at NADA is not the one that will be imported, says Zotye.

Any light vehicle sold in the U.S. must meet strict safety and emissions standards. Zotye has hired Global Vehicle Services, a firm based in Orange, CA, to oversee the process, known as homologation.

Zotye has started the process and “it continues to proceed very smoothly and while there are areas that will need to be addressed, we are discussing those with our partner Zotye Automobile and see no difficulties in completing homologation in time to sell our vehicles at the end of 2020,” says Pradzinski.

Zotye’s goal by then is to enter 80 top U.S. markets with 300-325 sales points.

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