Chinese carmaker returns to Detroit; delays market plan

Michael Wayland
The Detroit News

Guangzhou Automobile Group Co. is delaying plans to enter the U.S. market by at least a year, according to executives with the Chinese automaker at the Detroit auto show.

The delay shouldn’t come as a shock. No Chinese brand has been able to sell vehicles here. Stricter safety and emissions standards as well as a lack of a franchised dealership network have stood in the way.

Add recent uncertainty looming over the industry regarding promises of renegotiating trade deals and implementing higher tariffs on vehicles imported to the country by President-elect Donald Trump, and the business proposal gets even harder to justify.

Guangzhou unveiled three vehicles during a Monday press conference at the North American International Auto Show. It was the company’s second press conference at the show in the past three years. Guangzhou is the most recent Chinese brand to come to the Detroit show, which has somewhat been a revolving door for Chinese brands.

The company believes it can become the first China automaker to enter the U.S. marketplace in the next two years, according to company President Feng Xingya.

“For the export of our products,” he said Monday through a translator. “I hope it will be by 2018. But undoubtedly, we will export our products into the U.S. no later than 2019.”

Guangzhou executives did not elaborate on why they postponed plans to enter the market in 2017. Xingya said the company is in talks with companies to sell its vehicles through their dealership networks. He declined to name what companies Guangzhou is in talks with.

Guangzhou has joint ventures or partnerships in China with several automakers with already-established dealership networks including Fiat Chrysler Automobiles NV, Toyota Motor Corp. and Honda Motor Co., according to executives. Under the country’s laws, a foreign automaker must partner with a Chinese automaker to operate in the country.

It was reported in April 2016 that the Chinese automaker had hopes of Fiat Chrysler would provide “support and help.” Fiat Chrysler at the time declined to comment on the report.

Fiat Chrysler CEO Sergio Marchionne on Monday said Guangzhou is not a part of its discussions to potentially supply the automaker passenger cars, which it stopped producing domestically last year in the United States.

Marchionne said the automaker has put the partnership plans on the back burner, as it — like the entire auto industry — waits to see if Trump will deliver on his campaign promises regarding trade.

“Given all the tweets that are going around … let’s find out what happens as a result of president-elect coming in and how he views imports coming into the country,” he said. “Let’s put everything on the back burner for the time being.”

Trump during his campaign pledged to impose a 45 percent tariff on imports from China if elected. He promised up to 35 percent tariffs on vehicles from Mexico.

China-built vehicles already are driving on U.S. roadways, but car buyers wouldn’t know it by their badges. General Motors Co. and Volvo — which is actually owned by Chinese multinational company Geely Automobile Holdings Ltd. — both import China-produced vehicles into the U.S.

Volvo began importing a version of its S60 Inscription from China to the U.S. in 2015. The Swedish automaker also announced plans last year to move production of its S90 flagship model to China from Sweden and export the sedan to global markets including Europe and the U.S.

The EnSpirit Concept at the GAC  press conference at the North American International Auto Show at Cobo Center in Detroit on Monday

GM in May began importing the Buick Envision luxury SUV from China to the U.S. Envision sales in the U.S. last year totaled more than 14,000. GM also will import the Cadillac CT6 Plug-In hybrid electrics from China starting this spring.

Johan de Nysschen, president of Cadillac, indicated in an interview Monday that a trade war with China would not be good for Cadillac, GM or “America Inc.”

“Cars are very important for China, we should also remind ourselves of the massive exports that take place in the form of components, from the U.S. to China,” he said. “And if you look at the dollar value we export, (it’s) way more than we import.”

GM earlier this week said its sales in China rose 7.1 percent last year to set a new annual sales record in the country, its largest sales market.

The Detroit automaker and its joint ventures sold 3.87 million vehicles last year, as GM’s Cadillac, Buick and Baojun brands all set sales records in China. The 2016 results break the previous record set last year and accounted for a third of GM’s total global sales.

Several industry experts have said they expect automakers to continue to heavily invest in China, while keeping vehicles being imported from the country to a minimum.

“I don’t think we’ll see tons of cars made in China imported to the U.S., but I think we’re going to see an increase in cars in China and people driving,” said Cox Automotive President Sanford Schwartz.

mwayland@detroitnews.com

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