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Coming: Cheap Chinese Cars at Costco?
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Chinese cars have been displayed at the Detroit Auto Show for the past several years. Many industry critics ridiculed them for design or quality flaws. But others see these first Chinese vehicles and remember how Japanese and Korean cars were once laughed off—only to become mainstream products in America.
Kathleen Ligocki, CEO of GS Motors and formerly president of Ford of Mexico, expects Chinese-designed cars to begin production in Mexico in 2010—and make their way to the US about five years after first testing the waters in Latin America and Canada. GS Motors, a Mexican company, already imports three models from China’s First Auto Works (FAW) and sold 4,000 of them in Mexico last year.
Here’s the zinger: Ligocki believes Chinese cars will be sold in the US through big-box stores like Costco or Wal-Mart, which is how GS Motors is retailing them in Mexico.
GS is building an assembly plant in Michoacan, Mexico with FAW. The plan is for vehicles to roll off the line beginning in 2010. GS Motors will launch the FAW brand in Mexico this year with the F1 Hatchback, an entry-level car sold for under $5,500. FAW, one of the largest Chinese automakers, is allied in China with Volkswagen. FAW also produces the Miles ZX40, a small van-style neighborhood electric vehicle, developed by Miles Electric Vehicles, based on Santa Monica, Calif.
GS Motors is racing to bring the first Chinese cars to America via Mexico—but they are not alone. BYD (Build Your Dreams) showed plug-in hybrid and electric model in Detroit last month and promised to bring them to the US as early as next year. In fact, many of China’s 80 or so auto companies have made similar gestures, with varying degrees of seriousness.
While Ligocki and other industry executives believe Chinese cars will inevitably enter the US market, these plans have been slowed down by the global economic crisis. The Chinese domestic car market is already experiencing lower demand. And many analysts—including the Chinese central government—forecast that a number of Chinese automakers will not survive the coming year as cash and enthusiasm for importing Chinese cars is diminished.