Chery Planning Auto Exports to US Market
Chery, one of the leading second-tier auto makers in
China, is planning to export Chinese-built cars to the
US market beginning in 2007. The distributor for the
cars will be Visionary Vehicles LLC, which is owned by
Malcolm Bricklin, who brought Yugos and Subarus into
the US market.
Chery, based in Anhui province, has substantial backing
from the Anhui provincial government, and has acquired
a reputation as a fast-mover in the auto business. Unfortunately,
it has been criticized as a fast mover of the wrong kind,
having become best known for its QQ
model, which is based on a GM design. Currently,
GM is taking Chery to court for intellectual property
violations in Chinese courts.
While some Chery models have been selling well in China
and other developing countries, the company does not
have the makings of a long-time survivor in the increasingly
competitive auto business. There is a excess capacity
in auto manufacture, and Chery does not have the stature
of SAIC,
Volkswagen's and GM's Shanghai-based first-tier Chinese
manufacturing partner.
The fact that Chery's distribution partner in the US
is the same man who brought Yugos into the US market
in the 80s is far from reassuring. When was the last
time your car was passed by a Yugo? Come to think of
it, when did you see one? By the way, what happened to
the country?
The fact is that there will be other Chinese-made cars
entering the US market before the first Chery makes it
in. Toyota is building a plant to make the highly popular Toyota
Prius in Changchun, taking advantage of the country's
excellent workforce and low production costs, as well
as modern new manufacturing facilities.
Subaru, which is a successful niche player in the US
market, now handles its own distribution
The fact is that name-brand models will be imported
into the US market before Chery enters the US market;
US buyers just won't know that they were made in China
unless they go out of their way to find out.
Visionary Vehicles claims that it will be able to import
Chery cars at prices significantly lower than other competing
vehicles in the same comparable category. That's exactly
how Yugos were positioned.
It didn't work then, and it's hard to understand how
it will work now.
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