Chinese automaker's US debut shows promise, limits

By Tony Czuczka Jan 9, 2007, 9:42 GMT

Detroit - China's ambition to crack the US auto market was on display this week in the American car industry's home town, but the Chinese are not coming to US dealerships just yet.

Changfeng Group's debut Monday at the Detroit auto show, which included a sport-utility vehicle, a compact and two pickup trucks, highlighted advances in quality and manufacturing technology. It also suggested that the Chinese need to work on styling, marketing and technical issues to move out of the curiosity category internationally.

Experts believe it will take a few more years for Chinese automakers to turn their sights to the biggest auto market, starting out with low-cost models. The big boys with their glitzy displays at Detroit's Cobo Centre have fair warning.

'They are certainly testing the water. Without question, we will have Chinese vehicles in the US,' said Jeffery Schuster, an auto analyst at JD Power and Associates.

For now, China's car industry is building up sales experience in other markets before any major moves into Europe and North America. China says its auto exports doubled in 2006 from the year before, to a record 340,000 vehicles.

Changfeng, even less known abroad than automakers such as Chery and Brilliance China Automotive, is only the second Chinese company to display at Detroit following Geely Automobile Co last year.

True to style, its presentation to a crowd of journalists kicked off with a formal greeting ceremony at which company executives exchanged gifts with local officials.

A fast-paced promotional video featured a reference to the late communist leader Mao Zedong's hometown and the slogan, 'The cheetahs are leaping forward into the new century.'

Changfeng's main models are called Liebao - Chinese for cheetah - and include the CS7, dubbed a sport-utility vehicle by the company, but closer in size and style to a compact. Also featured was the CS6, an SUV with a 2.5-litre diesel engine and four-wheel drive, and a smallish pickup truck.

Some of the dozens of journalists and industry insiders crowding the event snickered at the cars' styling. But Bob Thibodeau, a senior executive of the Detroit show, said Changfeng's presence means the company is serious.

'It establishes that they are legitimate manufacturers,' he said.

For US autoworkers, the prospect of cheap, small Chinese cars coming into the country is a new menace after the Japanese and South Koreans showed how to beat Detroit's Big Three in their home market.

But the US needs to face up to the reality of a globalised auto industry, not give in to fear, Thibodeau said. Most experts believe Chinese automakers are five to seven years away from seriously entering the US market, he said.

Changfeng, based in Changsha, Hunan Province, has a decade-long partnership with Mitsubishi, producing Pajero sport-utility vehicles for the Chinese market based on the Japanese company's technology. It plans to nearly triple its total yearly production to 288,000 units by 2010.

'Changfeng's participation in this auto show symbolizes the starting of our internationalisation strategy campaign,' company chairman Li Jianxin said in Detroit.

Meeting Western car safety and emissions rules as well as improvements in styling and marketing will be major challenges for the Chinese manufacturers in the years ahead.

'You need vehicles that meet world class quality, and at this point in time Chinese manufacturers generally are not there yet,' Schuster said in an interview.