Tuesday, September 13, 2005

Chinese, Korean and Japanese automakers unveil their new models


MATT MOORE

Associated Press


FRANKFURT, Germany - China's burgeoning auto industry roared into the Frankfurt auto show, eager to create a splash with its new models and make inroads into competitive European and North American markets.

Geely Automobile Co. Ltd., part of the Geely Holding Group, had the biggest presence, bringing five models, including a sports car called the CD, or "China Dragon."

Landwind Motor Corp., part of Nanchang-based Jiangling Landwind Motors Co. Ltd., unveiled a four-wheel drive sport utility vehicle built in a joint venture with Ford Motor Co.

And Brilliance, a Chinese company that has a joint venture with BMW AG, showed off its Zhonghua sedan, slated to go on sale in Germany this year at a price of 18,000 euros ($22,096).

Geely Automotive Chief Executive Li Shufu said he was pleasantly surprised by the reaction the Chinese presence has caused.

"The European and U.S. markets are two of our dream markets, so we will strive to reach them," he said Tuesday. "But we are currently still planning and we are not sure when we will get there."

While some other Chinese automakers assemble foreign-branded cars, Geely manufactures its own cars from the ground up. Li said the company expects to sell more than 140,000 cars this year, with 10,000 of them exported abroad, primarily to the Middle East, Africa and South America. Last year, Geely sold 100,000 cars, with 5,000 exported.

Peter Morici, a University of Maryland business professor who follows the automotive industry, said Chinese manufacturers stand to benefit from the issues European and American companies have with powerful unions over wages, benefits and working hours.

"U.S. and German automakers seem wholly unable to address their domestic labor problems, or lethargy in their own management," he said. "Importing cars from China may prove a survival tactic."

The Frankfurt show has strict requirements about its exhibitors, including that they have no ongoing intellectual property rights disputes and have a certain volume of market share.

"Many Chinese automobile manufacturers have not been allowed to participate because they could not meet these rigorous standards," said Geely spokesman Zhang Xiaodong.

Compared to European and U.S. automakers, whose brands are ubiquitous worldwide, Chinese market share numbers pale. Chinese manufacturers have some distribution in the Middle East, Africa and South America, but aren't well known outside of Asia - especially in a region rife with automotive history including Mercedes-Benz, Jaguar, Renault and Volkswagen.

Even in Asia, they face competition from titans such as Japanese automakers Toyota Motor Corp. and Mitsubishi Corp. and South Korea's Hyundai Motor Co. and Daihatsu Motor Co. Ltd.

The titans aren't worried yet.

"I think it's going to be silly not to take the competitive threat seriously. If we haven't learned any lessons from Japan and Korea, we deserve the things that befall us," General Motors Corp. Chairman and CEO Rick Wagoner said. "On the flip side, the growth in China continues to be so strong that our guess is that most of the capacity in China will be used to meet Chinese needs."

China has built 3.7 million cars this year, an 8.2 percent gain from last year.

The China Automotive Industry Association said sales of domestic cars rose 15 percent to 2.4 million last year. That compares to sales of 17 million vehicles in the United States last year and 16.8 million in Europe.

Morici said Chinese manufacturers can follow a trail to European consumers already blazed by Japanese and Korean companies.

"Europe has proven receptive to Japanese cars, and I think it will prove receptive to many Chinese cars," he said.

Wagoner said most Chinese vehicles aren't in line with U.S. or European tastes, and he doubts Chinese automaker Chery Automotive Co. can meet its goal of selling 250,000 vehicles in the United States by 2007.

"You've got to have a consistent, gradual growth strategy, and I think some basics are going to be required," Wagoner said.

Chery, based in east China's Anhui province, wasn't at the show but has announced plans with auto importer Visionary Vehicles - run by Malcolm Bricklin, the man who brought the Yugo to the U.S. - to eventually sell 2 million Chery cars in the United States. It plans to offer five models in the U.S., ranging from a compact sedan to an SUV, starting in 2007.

Lewis Booth, group vice president and chairman and CEO for Ford of Europe, said Chinese automakers will be a growing presence in the market and that Ford can meet the challenge with good designs and strong brands that hold their value.

"At the end of the day, the business is going to be on the strength of the product," he said.

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AP Auto Writer Dee-Ann Durbin contributed to this report.

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