Here's What Chinese Brand GAC Still Needs to Do to Get Into America
Chinese car brand Guangzhou Automobile Group’s showing at the North American International Auto Show made it pretty clear that the manufacturer wants to get into the U.S. market. But, with its earlier deadlines to do so having gone unmet, there is skepticism that it won’t happen by 2019. Is it really possible?
Well, sure, anything is possible. But GAC has a laundry list of obstacles to overcome if it wants to sell cars to Americans in earnest and the clock is ticking. For starters, politicians are starting to get a little testy when it comes to Chinese trade policies, and GAC now finds itself as a focal point on the issue. More importantly, the brand needs a clear-cut path to victory — and we’ve yet to hear one.
That’s not to suggest it hasn’t taken meaningful steps to plant its flag on U.S. soil. GAC already has a technical center in Silicon Valley and intends to establish an R&D hub in Detroit. But showing up isn’t the same as winning.
The company’s next big step is to attend the National Automobile Dealers Association meeting in Las Vegas this March. Figuring out how to establish a dealer network is essential to making things work in North America and, without help from NADA, GAC could be launching itself up the creek with its paddle still on the shore.
NADA chairman Mark Scarpelli told Automotive News he’s already spoken with the automaker at the Shanghai auto show and then again in June during a more private stateside meeting. “They were quite eager to talk to NADA and myself about the U.S. market,” Scarpelli said. “Since June, we have had numerous exchanges. We have offered our help to facilitate meet-and-greets with potential dealers.”
However NADA says it can’t outright endorse the brand until it outlines a clear plan for its dealerships. “Every dealer should make their independent decision,” explained Albert Gallegos, NADA’s director of international affairs. “They’ll have to do their own due diligence.”
GAC’s partnership with Fiat Chrysler could come into play here. While the Italian-American company hasn’t stated that it would sell Chinese cars at its own dealerships, it is a potential ally for Guangzhou. The two already work together in China to sell Jeep-branded vehicles. But the United States is a different beast. There are no governmental requirements saying foreign brands have to work with a domestic partner and FCA would need to be convinced that helping GAC on its home turf is a lucrative move.
There’s also the matter of convincing consumers that GAC isn’t a junk nameplate. Historically, emerging brands often enter into a market with a bad reputation. It took years for Americans to see that Japanese and Korean automobiles weren’t garbage and, in Japan, our imports still hold a special stigma. As China has been exporting cheap goods to North America for decades, GAC faces an uphill battle. But are its products just as good as what’s coming from other manufacturers?
J.D. Power’s Initial Quality Study places GAC’s Chinese vehicles alongside Volkswagen, Toyota, Nissan and Honda — most of which don’t cut corners on product, regardless of where it’s manufactured. However, Guangzhou will also need to prove its models can hold up on a longer timeline, and that cannot be done until Americans have lived with problem-free vehicles for a number of years.
One of the first models buyers will have to test is the GS8 — a model the company claims “redefines Chinese high-end SUV market.” Although Michael Dunne, president of consulting firm Dunne Automotive Group, advisor to GAC, said the company will likely enter North America as a value brand. The GS8 is the most-expensive vehicle GAC has produced within its home country, but it starts around $25,000. Not bad for something that’s roughly the same size as a Ford Edge.
“Their quality is solid, they’ve adopted Japanese manufacturing systems, and they are profitable,” said Dunne. “It’s only a question of time.”
Sargent feels the same and thinks, if GAC can reassure U.S. consumers about the quality of its vehicles and deliver a clear plan to NADA in March, the company can be successful. He also noted that Volvo and Buick have imported Chinese-built models to the U.S. without issue. “If you talk to the automakers, they’ll say the quality they are getting in China is as good as anywhere else — and sometimes better,” Sargent said.
Big Al from Oz on Jan 23, 2018
As reasonable as some of the Chinese vehicles are they are having problems gaining a foothold in the mature vehicle markets. LDV have a very similar size SUV on sale in Australia, it seems nice and it even has a 5 Star ANCAP rating. A good engine is lacking from what I've read, the 2 litre turbo gas engine just doesn't have the oomph. The LDV will struggle as this GAC will. The Chines EVs in the future will be the biggest competitors, not gas or diesel vehicles. Chinese vehicles, even though cheaper are not cheap enough for people to want to invest in one. China is becoming more expensive everyday as a manufacturer.
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