By on January 22, 2018

GAC GS8

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.

GAC GS8

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.

[Images: GAC]

Get the latest TTAC e-Newsletter!

Recommended

50 Comments on “Here’s What Chinese Brand GAC Still Needs to Do to Get Into America...”


  • avatar
    gomez

    “He also noted that Volvo and Buick have imported Chinese-built models to the U.S. without issue.” Yeah, but how many of those buyers KNOW that they purchased a Chinese-built vehicle? It’s not like Volvo and Buick are advertising that fact.

    • 0 avatar
      slavuta

      How many Buick buyers know that their car is Opel. Or, know anything about cars altogether?

    • 0 avatar
      Big Al from Oz

      gomez,
      There are people who don’t care.

      What I find here often is what I call “coffee syndrome”. These types of individuals think “because I like and want coffee in the morning everyone else does”. This goes for brand fans who idolise a lump of metal and plastic, the majority view the auto as an appliance, a liability you need to go shopping, to work and the in-laws.

      As I’ve pointed out the Chinese have the capacity to manufacture what others can. Some have an issue with this, “how can this be possible!” They exclaim.

      Remember the US started out in a similar way and the Europeans proudly exclaimed the superiority of their technology over the the production line stuff from the US.

      In the 19th Century the Europeans were the technology leaders. They just didn’t know how to innovate and adapt as well as the US. Now the Chinese are taking on the industrial revolution.

      We need to become more competitive by throwing ourselves at technology more and creating opportunities.

      It took a couple of World Wars for the Europeans to realise the World will not change to suit them.

      The US is now in a similar position Europe was 150 years ago.

      Blaming, whining and belittling your competition will get you nowhere other than projecting arrogance. They will continue on.

      • 0 avatar
        gomez

        Al, I think your’re preaching to the wrong person. I have often made that very same “people don’t care” argument on these forums. A lot of people don’t care and most people buy the “best” vehicle they can afford. But when it comes to China, there are a lot of Americans (especially in “flyover country”) that would care very much if they knew that the Buick they just bought was made in China. It may not be rational, but it is true.

  • avatar
    I_like_stuff

    They’ll do what they’ve done with steel, dump it to gain market share. Look for $0 down $199 leases for these “luxury” cars, coming soon to a dealership near you.

  • avatar
    geozinger

    “It took years for Americans to see that Japanese and Korean automobiles weren’t garbage and”

    more like: It took years for Japanese and Korean to ship automobiles that weren’t garbage and…

    It’s not like the initial efforts were ready for prime time here in the US. It took a while, but they’ve made the grade.

    • 0 avatar
      PrincipalDan

      Right and a lonnnnnnnnnggggggggggg warranty. Long enough that “American” brands have been too chicken$hit to match that warranty. I do like that Hyundai’s CEO told the workforce when the warranty was rolled out – either we can meet that quality level or we die trying.

      • 0 avatar
        danio3834

        The long warranties are pretty good gimmicks, but with fine print. Like they are only good for the first owner. If they get sold at the average 5-6 year mark, it reverts back to a more conventional warranty. So really, it costs Hyundai little more. If the Detroit 3 offered this kind of warranty, they would lose their a$$es on light and HD truck owners that keep longer, something that Hyundai and Mitsu don’t have to contend with.

        • 0 avatar
          ClutchCarGo

          But all that the potential GAC buyer will hear is “10 years/100K miles”, and if the GAC dealer service dept doesn’t screw it up, that would be sufficient to get a foot in the door. After that, the build quality will determine whether or not that foot gets chopped off.

          • 0 avatar
            danio3834

            Sure, it’s a smart move if they can get that far. Maybe not if their accrual data shows they still can’t afford it, though. Looking at Chinese J.D. Power numbers, the PPV for most of the Chinese brand stuff doesn’t look good.

  • avatar
    Rnaboz

    Perhaps they should only sell to rental fleets for the first 5 years, that should let GAC know how durable to really build them.

    • 0 avatar
      gomez

      I’m not sure a manufacturer would bother with the expense of federalization for vehicles that are only sold to rental fleets. Also, would a rental car company buy vehicles that they can’t eventually sell to the public?

      • 0 avatar
        JohnTaurus

        Why wouldn’t they be able to resell them? They would need a dealer network for servicing (which could be contracted to an existing dealer network), but other than that, I don’t see why not. They resold Captiva Sports and they were fleet-only.

        Unless you are saying that consumers will simply reject them and refuse to buy them, but I don’t think that’ll be the case.

        • 0 avatar
          gomez

          The Captiva Sport was also available from Chevy dealers as a special order vehicle. I saw plenty of them on dealer lots in MN. It was not exclusive to fleet sales. The Captiva Sport was also federalized as the Saturn Vue.

          The closest thing to a fleet-only vehicle today that is available to public sale after the fleet use is done would be the Caprice PPV. That model is treated like a long-wheelbase Chevy SS/Pontiac G8 and was federalized as such.

  • avatar
    Cactuar

    If they really want to show the US consumers that they’re on the same playing field as US companies, they should match their % of Chinese parts and advertise it. So if an Equinox is made of 45% Chinese parts, they should advertise that the GS8 (or whatever) is also made of 45% Chinese parts.

    • 0 avatar
      gomez

      It still won’t help. An Equinox that has 45% Chinese parts is still an American car in the minds of consumers because of that bowtie badge. The only way for a Chinese company to get around the perception that they only produce cheap crap is to sell the vehicles here and let the consumers find out for themselves. It is a very slow process (20+ years) but that’s the only way this will work.

      • 0 avatar
        burnbomber

        A Buick is still a Buick, sold in a GM dealership. Just that the window sticker says it’s “Design and Engineering Led By Buick in the United States of America…” but it is Assembled in Yantai, Shandong with 85% Chinese parts. A savvy buyer will easily see that, written plain as day on the MSRP sticker.

        It should drive and feel like any other GM product, but what drove me away was the fact that once it was equipped nicely (Premium trim level), it was at a crazy high price. Frankly, it made more sense to negotiate with the significantly cheaper (and easier, too) Koreans.

        • 0 avatar
          gomez

          Most people don’t look at the assembly location, even if it is “plain as day on the MSRP sticker”. They look first at the price, then at the features/options, and then maybe at the fuel economy. That’s it.

  • avatar
    JohnTaurus

    I was hoping the GS8 was a BOF-based SUV (it certainly looks butch enough), but it appears that its based on their large sedan. So, a Chineese Atlas/Traverse/etc, great. And so far, the only engine is a 2.0L turbo 4 which is overtaxed by the vehicle’s weight.

  • avatar
    slavuta

    First thing they need to do is come with original design instead of rip-off Landcruiser

  • avatar

    The first thing they have to do is change the company name, or at least the acronym GAC. Would you buy a PUK?

    http://clipground.com/images/bill-the-cat-clipart-10.jpg

    • 0 avatar
      Matt Posky

      Ha! They’ve already ditched the Trumpchi nameplate in the hope it would appease the American market. I’m not sure how much further they’re willing to go.

    • 0 avatar
      geozinger

      That’s not a bad idea.

      GAC (pronounced “gack”) sounds like an involuntary choking or vomiting sound. No way in hell anyone is going to pronounce Guangzhou correctly, either.

      If they do a deal with FCA (pronounced “ficka”) maybe they can reboot a “heritage” name, like DeSoto or Fargo.

      Seriously.

      • 0 avatar
        Steve Biro

        How about Plymouth – certainly not Dodge, Ram or Jeep – and sell them in Chrysler dealerships? That big SUV could be a Fury or Satellite. Or how about some of the old AMC model names: Hornet, Matador or Ambassador?

        • 0 avatar
          WildcatMatt

          For that matter, could GAC start by producing the midsizer that Sergio has talked about outsourcing?

          Badge it as a Plymouth and work out the teething troubles, then fill in other gaps in the FCA lineup that isn’t being handled by recycled Jeeps. If they built a minivan, this would be an opportunity to replace the Dodge Caravan with a new Plymouth Voyager in the entry-level segment without diluting the Chrysler Pacifica.

    • 0 avatar
      Guitar man

      They won’t be able to use their current badge, which is clearly “inspired” by GMC.

      Go away rotter, or, er, words to that effect…..

    • 0 avatar
      KitaIkki

      If “Killed-In-Action” could be made to work, why not GAC?

      There are also plenty of defunct American brands … From Pierce Arrow to Studebaker. Some may be available for purchase.

  • avatar
    gasser

    Cheap 3 year lease with a warranty. Low enough price will move any marginal POS.

  • avatar

    “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,”

    Well the automakers aren’t likely to say “Our Chinese-sourced product is sub-par really.”

  • avatar
    kcflyer

    It’s easy,

    Step 1. Pay large bribes to American lawmakers. It’s all perfectly legal, just hire a lobbing firm and they will funnel your bribes by the millions to PAC’s and directly to politicians in a variety of forms.

    Step 2. Have your Chinese government friends put some subtle pressure on the bureaucrats that handle bond issues. Something like “hey, we own 19% of all U.S. debt, if you don’t grease the skids for our automaker to sell in America we might lose interest in your next bond sale.”

  • avatar
    Fred

    Americans bought the truly awful 20 year old Fiat called the Yugo. So obviously price is king. I think their main concern is being harrassed for not being American and having no factory here.

  • avatar
    ajla

    Just buy FCA and sell under those brands.

  • avatar
    danio3834

    The major issue for Chinese brands selling in the US is that they don’t have a cost advantage, yet their wares are utter sh1t. They only way they could get a foothold is at dumping prices, which they can’t withstand. If NAFTA breaks down and vehicles/components assembled in Mexico get slapped with tariffs, that might open the door enough for the Chinese, though.

  • avatar
    Asdf

    American consumers will welcome GAC with open arms, convincing themselves by some contorted “logic” that since the iPhone and iPad are made in China, then these Chinese cars are not in fact the steaming piles of crap they actually are.

  • avatar
    ItsBob

    Back in about 2006 or 07 I was running the service department at a marine dealer handling Mercury Marine. They had just moved production of their midsize 40-50-60HP outboards from Fond Du Lac, WI to China.
    I recall asking the Mercury rep about replacement parts and such and he said what we had in stock would fit the still to arrive Chinese built ones and quality would not be an issue. I believe he said the machinery from Wisconsin had been shipped over to build them.
    So within a few months of the first Chinese ones hitting the water, we started having more leaky gasket problems and “much” higher failure rate on the various plastic pieces used in throttle and shift mechanisms. For anyone familiar with Mercury outboards from 6HP to these 60HP, you will know they had a lot of plastic pieces involved with the shift in throttle lever mechanism. On the USA built motors for over 20 years those plastic pieces stood up to years of abuse.
    The Chinese built were absolutely not the same quality as the US built ones even though supposedly identical. I left in 2008 so situation may be corrected but somehow I doubt it.
    It seems they “can” build quality if “every” production step and part used is speced and diligently quality controlled (like Apple does) but not likely that will happen with automotive for quite some time.

  • avatar
    KitaIkki

    If “Killed-In-Action” could be made to work, why not GAC?

    There are also plenty of defunct American brands … From Pierce Arrow to Studebaker. Some may be available for purchase.

  • avatar
    Sub-600

    The average Buick customer is busy trying to get reruns of “Murder, She Wrote” on their nav screens, they don’t care where the car was built. A Jeep, Corvette, or Harley customer is more likely to notice if their ride is Chinese.

  • avatar
    Big Al from Oz

    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.


Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • geozinger: Fnck. I’ve lost lots of cars to the tinworm. I had a 97 Cavalier that I ran up to 265000 miles. The...
  • jh26036: Who is paying $55k for a CTR? Plenty are going before the $35k sticker.
  • JimZ: Since that’s not going to happen, why should I waste any time on your nonsensical what-if?
  • JimZ: Funny, Jim Hackett said basically the same thing yesterday and people were flinging crap left and right.
  • JimZ: That and the fact that they could run on gasoline, which was considered a useless waste product back in the...

New Car Research

Get a Free Dealer Quote

Staff

  • Contributors

  • Timothy Cain, Canada
  • Matthew Guy, Canada
  • Ronnie Schreiber, United States
  • Bozi Tatarevic, United States
  • Chris Tonn, United States
  • Corey Lewis, United States
  • Mark Baruth, United States
  • Moderators

  • Adam Tonge, United States
  • Corey Lewis, United States