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Allen
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« Reply #103 on: January 14, 2008, 08:03:39 am » |
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Chinese cars headed for Canada at cut-rate prices
GREG KEENAN
From Monday's Globe and Mail
January 14, 2008 at 2:23 AM EST
DETROIT — Two Chinese companies are planning to sell cars and trucks in Canada next year and promising rock-bottom prices in a move that will ratchet up the already fierce competition in the Canadian market.
Representatives of China America Cooperative Automotive Inc. (Chamco) and Geely Holdings Group said Sunday at the Detroit auto show that they plan to sell vehicles in Canada in 2009, with Chamco claiming an ambitious sales target of 15,000 vehicles.
A pickup truck and a sport-utility vehicle will be sold by Chamco at prices 20-per-cent lower than similar models now on the market, chief executive officer William Pollack said Sunday. Prices will start at the equivalent of about $13,500 (U.S.).
"Quality, style and price," will enable the auto maker to meet those goals, Mr. Pollack said.
Chamco will sell vehicles manufactured by Hebei Zhongxing Automobile Co. Ltd., starting with operations in the United States, where tests to meet safety and other regulatory standards are under way.
Sales will begin in the United States this year and in Canada early next year, he said, disputing the notion that the cars might have trouble meeting rigid North American safety standards.
"They're in 52 different countries," Mr. Pollack said in an interview at the North American International Auto Show in Detroit where he was flanked by the pickup truck and sport-utility vehicle that he said will go on sale in Canada in early 2009.
"They've been road-tested in some of the most brutal climates on the planet."
The company has already begun showing the vehicles to Canadian dealers but the cars can't be brought into Canada until they meet Canadian standards.
Geely, meanwhile, is showing off its FC compact car and the TX4 model, which looks like a London taxi.
Chinese auto makers have their biggest presence yet at the North American International Auto Show in Detroit. There are five Chinese companies showing vehicles here.
But other auto makers are also turning to China to supply North America.
Chrysler has signed a deal with Chery Motors to make a subcompact that also is expected to go on sale in Canada and the United States next year.
"Chery's going to be a big play for us," Chrysler president Tom LaSorda told reporters. The auto maker does not offer a subcompact now in Canada and the United States, which has hurt its sales in both countries because higher gas prices have sent Canadians and Americans scrambling to buy smaller cars.
Canadians are much more likely to see a Chinese-built car from Chrysler than they are to see Chinese companies selling their own vehicles in Canada, said industry analyst Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc. of Richmond Hill, Ont.
A more realistic assessment of the Chinese companies' prospects is that they are five years away from North American sales, Mr. DesRosiers said.
"They don't have the fit, finish and quality that would pass muster for North America," he said.
Canadians have reacted cautiously in recent years to new entries in the vehicle market. Japanese auto maker Mitsubishi is the most recent entrant and it has had trouble gaining more than 1 per cent of the Canadian market of about 1.6 million vehicles annually.
South Korea-based Kia Motors has had similar difficulties, although it outsells Mitsubishi.
Both companies have been hampered in part by the experience of Hyundai in Canada in the 1980s, which enjoyed a raging success in its first years here with the cheap Pony.
But the quality of the vehicles was spotty and Hyundai still struggles to some degree to overcome the perception that its cars aren't as reliable as other long-established names in the market.
But Richard Cooper, executive director of the Canadian operations of consulting firm J.D. Power and Associates, said the Chinese auto makers should be taken seriously.
"There'll be a healthy skepticism on the part of consumers at first, but I think [the companies] will work hard to change those perceptions," Mr. Cooper said.
Cheap and unattractive
Like a nation of high school head bangers, Canada appears to have an affinity for cheap cars with questionable looks. Over the years, some affordable compact cars have been bestsellers, as drivers went crazy for boxy, two-door, wood-panelled rides, while others models are perhaps best forgotten.
Yugo
The Yugoslavian brand was sold in the U.S. from 1985 to 1991, with a price tag beginning at $3,990. But, like other things that come cheap, the Yugo had something of a reputation problem. In the late 1980s, a Yugo driven by a young woman was blown off a Michigan bridge. In 2007, it was declared the second-ugliest car of all time, behind the Pacer, in a survey of car collectors. One collector described it as "a car that fell apart while you drove."
Hyundai
A whole company built on the idea of affordable cars, Hyundai has created a surprise empire on the low-budget end of the automobile industry, along with its sister brand, Kia.
Skoda
Was it really a good idea to buy a car from a company that started off making bicycles? With models known as the "poor man's Porsche," this Czech brand was bought by Volkswagen in 1991 and underwent something of a transformation. But this ugly duckling of the automobile industry had a hard time shaking its past: One marketing campaign featured the tag line, "It is a Skoda, honest."
Chevette
The best-selling small car in the U.S. in 1979 and 1980 is perhaps known for its Woody model, which featured simulated wood panelling. In 1986, GM announced it was dropping the price of the Chevette to $4,995 (U.S.), but soon ceased production. The car is now relegated to the wistful fantasies of aging band geeks.
Yaris
A Toyota brand launched in 1999 and known as Vitz in Japan, the Yaris built its popularity in Canada through a kitschy marketing campaign likening the car to a bizarre Eastern European man. The automotive equivalent of Borat is a popular choice with young car buyers.
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