21
Nov
17

Chinese cars coming to America in 2019

GUANGZHOU, China — The cars are called Trumpchi (though their Chinese maker insists the name is just a coincidence).

Various models of Trumpchi cars have been motoring down Chinese roads for the past seven years. But even after the United States elected a real estate tycoon with a similar name as president, the world ignored them.

Now the company that makes Trumpchis hopes that will change — and China appears to believe the rest of its auto industry is ready to go global, too.

GAC Motor said on Friday that it would begin selling Trumpchis in the United States by the end of 2019. The company hopes it will be the first Chinese car brand to take off in a market that has eluded the country’s manufacturers.

Trumpchis have gained a devoted following in China. The brand’s burly GS8 midsize sport utility vehicle, the first model that the company plans to sell in the United States, and its spacious new GM8 minivan have sleek lines and levels of fit and finish close to those of Japanese automakers.

Top executives and their advisers are agonizing, however, over whether, and how, to change the name for the American market.

“There’s no Obama-mobile, that’s a cultural thing, there’s no Clinton car,” said Robert C. Maling Jr., a retired Lexus executive who is now an adviser to GAC. “It would be confusing to the American public to have the Trumpchi name.”

The Chinese government broadly appears to be gearing up for large-scale exports.

China’s auto industry has grown into the world’s largest, producing more cars each year than the United States and Japan combined, while shielded from imports by the highest trade barriers by far of any major car market. Those policies forced multinationals to move factories and their latest technology to China.

But Beijing is now discussing slight reductions in those restrictions. It is largely to prevent foreign governments from citing them as a reason to apply their own limits on Chinese automotive exports.

Unlike any other carmaking power, China requires multinationals to produce cars in 50-50 joint ventures with local companies, to help its domestic businesses learn the latest manufacturing techniques. But in statements over the past two weeks, the government has said that it may relax that rule somewhat for electric cars made in foreign trade zones.

China also said right after President Trump left Beijing a week ago that it would consider a gradual cut in its import tariffs. China charges a 25 percent tax on imported cars, compared with 2.5 percent in the United States.

Cars made in free trade zones must still pay the 25 percent tariff if they are shipped to Chinese dealers instead of being exported. But those rules also appear to be softening. In recent discussions with Tesla, the American electric car company that wants to build a wholly owned factory in a Shanghai free trade zone, Chinese officials have been looking into possibly reducing the tariff as well, two people familiar with the discussions said.

A formula being considered would apply the 25 percent tariff only to imported components in each Tesla car, said one of these people, who insisted on anonymity because the discussions were continuing. That would cut Tesla’s financial burden, while also putting heavy pressure on it to shift as much production as possible to Chinese suppliers.

Tesla declined to comment, except to repeat that it is in talks to set up a factory to supply the Chinese market.

Starting in 2013, Commerce Ministry officials have suggested they might lower China’s own automotive trade barriers once Chinese manufacturers were ready to sell abroad, to prevent them from being used as justification by other countries for reciprocal trade barriers. Indeed, carmakers from China that export electric vehicles to the United States could even find advantages.

Yu Jun, the president of GAC Motor, said in an interview on Friday that the company planned to export electric cars to the United States and Europe as well as gasoline-powered vehicles. If it does so, it could benefit from the United States’ $7,500 tax credit for electric car buyers.

Only the first 200,000 electric cars from each manufacturer qualify for the credit. Tesla and other American companies, like General Motors, are close to exhausting the credits for their customers. But GAC and other Chinese companies would each have the full 200,000 credits available.

The tax credit’s future, though, is uncertain. As Congress considers a tax overhaul, some lawmakers are considering eliminating it.

Here in China, the government has barred people who buy Teslas from collecting subsidies of $10,000 or more per electric car because such benefits are available only to buyers of Chinese-built cars. The American tax credits, by contrast, can be used for imports.

Despite the changing environment, GAC Group, GAC Motor’s parent company, has a lot of marketing work to do before it enters the American market.

At the Guangzhou auto show on Friday, Feng Xingya, the group’s president, emphasized that GAC is a state-owned enterprise seeking to faithfully carry out the goals of the Chinese government. That message might not go over as well next year at the Detroit and Chicago auto shows, where the company plans to announce more details of its American sales offensive.

And then there’s the name. GAC officials, for their part, say Trumpchi sounds in Chinese a little like “passing on happiness.” Any decision on whether to change the brand’s name would be announced at the Detroit auto show in January, Mr. Yu said.

Whatever it is called on arrival at American docks, Trumpchi may have the best shot of any Chinese competitor at international acceptance.

The Chinese government has long been leery of letting its automakers start exporting, for fear that they might embarrass the country and damage their brands by having shoddy quality. But Trumpchi has done much better than most Chinese brands, and better than some multinational brands’ China subsidiaries, in surveys of initial quality by J. D. Power and Associates, the global quality consulting company.

China is already ramping up trans-Pacific exports of multinational-brand cars. Volvo, now owned by a Chinese company, and G.M. have already started shipping cars from China to the United States. Ford announced in June that it would move production of its popular Focus compact car from Michigan to China.

China would be following the example of Japan and South Korea by jumping into the American market, but might face geopolitical obstacles. Beijing has been viewed warily in the United States for, among other things, building an archipelago of artificial islands with military-grade runways in the South China Sea.

Car dealers, however, may not be as concerned. “I’m not into the geopolitical nature of it,” said Bob Shuman, a Detroit-area Chrysler dealer who attended Trumpchi’s introduction of a new minivan in Guangzhou. “I’m just interested in selling cars.”

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2 Responses to “Chinese cars coming to America in 2019”


  1. November 24, 2017 at 2:45 pm

    China is way past being a developing economy. So is South Korea and probably several other countries are ready to grow up and play by big boy rules.
    I do not agree with 99% of what trump says, but we need to address these tariffs and quotas. If China has a 25% tariff on US cars, than we should have a 25% tariff on their cars. Their auto industry is larger than ours, so why do they need protection?
    Americans don’t just need cheap shit, cheap. They also need jobs and the revenue generated by tariffs on foreign products. At times, it does seem like we have been played for fools.

    • November 25, 2017 at 1:48 am

      I agree that we definitely need trade reform. Trump is not a true believer, he only said it in the first place, because people would vote for it. He only started Made in America in January, 2016. At that time, he did not know what the World Trade Organization and he still off-shores his manufacturing to China. His trade reform efforts have been half-assed at most, but it is something. Jack A.


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