By on June 1, 2020

Over the past decade, regular reports that Chinese automakers were readying a major push into the North American market became commonplace. We started seeing them move out of trade show basements to take up some of the most desirable real estate on the main floor. While some of the product clearly wasn’t yet up to snuff, one could imagine budget-focused products flooding the U.S. and Canada after a few years of polish. However, the last time that seemed like a likely scenario was 2018.

Chinese brands are still trying to break into the untapped North American market; some even have physical office space set up within the United States. However, Sino-American relations have soured dramatically over the past few years, and new financial hurdles have made wrangling a new market extremely difficult. 

One could argue that Chinese automakers have already achieved their goal of breaking into the United States by nature of Zhejiang Geely Auto Group owning Volvo Cars since 2010. Of course, Volvo is a Swedish brand with a Chinese parent, and we’re talking about overtly Chinese brands starting from scratch — meaning we also can’t count General Motors’ Chinese-made products, either.

While we’ve seen a lot of big talk from China’s long list of electric vehicle startups, it’s been the large firms with the big bucks that seemed the most-likely candidates for landing upon our shores. The only EV companies that managed to even get close to building and selling an actual product were firms like Faraday Future — an “American” company baked by the same Chinese investor responsible for LeEco’s failed automotive push. FF’s history is quite bizarre and includes numerous missed payments, while false promises basically destroyed it. Its once-impressive prototype is quickly becoming noncompetitive, the founder declared bankruptcy in 2019, and it’s now part of a joint venture with Chinese online game purveyor The9.

That leaves the big boys as the most likely to come to the states. GAC said it wanted to, staging appearances at several U.S. trade shows before saying it needed to refocus on its home market. Geely has expressed an interest in bringing Lynk & Co to the U.S. too — specifically the connected, Volvo-esque EVs it already sells in Asia. Chery and Zotye are also interested in breaking into North America and are part of HAAH Automotive Holdings, an import firm hoping to sway U.S. dealers to sell their wares. But it’s no longer pushing Zotye as a brand.

According to the latest from Automotive News, HAAH will instead focus on Chery while Zotye contends with financial troubles and dwindling sales on the home front. The plan was to sell one or both brands under a single banner intended specifically for the American market, called Vantas. Troubles within China’s economy has forced HAAH to back the healthier-looking horse. “Zotye took an enormously big hit in China,” HAAH CEO Duke Hale explained. “They have to focus on home and get that turned around.”

“We still are good friends of Zotye,” he continued. “We’re still working with them. We’re going to work with them in Central America. And we have a long-term agreement with Zotye to bring their vehicles to the U.S. market — when it makes sense to do so.”

By Hale’s estimation, Zotye would need a minimum of two or three years of growth before it could be considered for exportation to America. Brand sales dipped over 25 percent in 2018 and fell by 50 percent (vs the previous year) in 2019, making the lofty financial commitment needed to enter the U.S. unrealistic.

Chery also faced hardships as China’s automotive landscape found itself confronting a brick wall. Growth stopped years before most thought that could even be a possibility. Still, it’s a huge company, starting out as state-owned and looking every bit like the most secure of the bunch. Chery likewise saw sizable sales declines in 2019, however, and had trouble maintaining export volumes even before the pandemic.

As big as the financial hurdles appear to be, we don’t believe it’ll be the thing that prohibits Chinese brands in North America — rather, it’s the social and political aspects of the situation that threaten the potential market entry

While Canada seems fairly friendly with China, at least according to its Prime Minister, its population has grown cautious. Meanwhile, the United States’ rhetoric has grown increasingly hash toward the Chinese Communist Party. Responding to criticisms of China’s borderline nonexistent intellectual property laws and unfair trade practices, the U.S. enacted aggressive tariffs that spilled over into a full-blown trade war. China’s handling of the coronavirus and its apparent influence over the World Health Organization worsened relations this year, only to be capped off by its passing of new security laws for Hong Kong that America says stripped the formerly democratic island of its autonomy.

The point is, tensions are rising, and it’s not just the United States that’s banning access to Chinese mega corporations — like telecom provider Huawei — on national security grounds (spying, basically), or growing increasingly critical of the way its businesses operate. Australia, which has strong economic ties to the region, has also begun to turn its back on China and appears to be entering into a trade war of its own. Canada also broadly backed the U.S. decision.

We’ve begun to get the feeling that no one in our geopolitical circle is super hot for China at the moment — especially compared to just a few years prior. And if the United States follows its current path, we doubt Chinese automakers will be allotted much space in North America anyway. President Donald Trump has been pretty keen on manufacturing being brought stateside, so any real hope of any overtly Chinese cars being sold here probably hinges on their also being built here (which takes much more cash up front). And if the U.S. puts the kibosh on Chinese autos, then there isn’t much point in trying to sell them to a smaller number of Canadians.

That’s assuming Trump wins the next election.

Then again, even with someone new in the White House, many issues involving China we were previously blind to will persist. Even if HAAH gets Vantas off the ground, customers may not respond. Political tensions could negatively impact sales as more Americans seek to buy products from friendlier-looking countries. But a good bargain can still turn heads and Chery’s low-cost options could be just the ticket; many may not even realize Vantas is technically a Chinese brand. Masking the point of origin is something China is exceptionally skilled at — be it a virus or the countless air conditioner units your author was browsing this past weekend.

Don’t discount Chinese brands just yet, but don’t assume they’ll be able to make it to North America anytime soon, either. While we may be able to revisit the idea next decade, anything within the next five years seems out of the question.

[Image: Destinyweddingstudio/Shutterstock]

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17 Comments on “Don’t Bet on Seeing Chinese Brands in the U.S. Anytime Soon...”

  • avatar
    SCE to AUX

    It doesn’t have to say “Made in China” to have difficulty.

    Look at Fiat/Alfa’s reentry to the US market. PSA would be crazy to try again, yet there’s always some commenter who say’s they’d be interested in that one niche vehicle nobody else offers.

    Heck, even Tesla has had an uphill battle since its 2003 inception, and it’s US-based. EV tech aside, they still have to build, sell, and service the product in a market saturated with incumbent mfrs and dealer networks.

    Establishing a toehold in the US car market is really, really hard, no matter who you are.

    • 0 avatar
      SCE to AUX

      Well, BYD is going to supply Ford with batteries, so that’s something:

      Why bother selling and servicing whole cars when you can simply sell the most expensive part into the same market?

      • 0 avatar
        Art Vandelay

        That’s not the same as selling a whole car and supplying parts to include major components is part of an established business model for Chinese companies.

        I predict that BYD wrapping that battery in their own body and selling it as a BYD would be way more difficult and honestly raises the question why bother?

        Cars that don’t have open beds are typically low margin. This case indicates why, especially now I’d let others assume that risk.

  • avatar

    As an owner of a Chinese vehicle, they will require a bit longer to achieve the quality levels expected of them. The best selling point is that they are significantly less expensive than their Japanese/Thailand built brethren.
    My vehicle, a HAVAL H9 is basically a Toyota Prado (Landcruiser 150?) and at $41,000 AUS fully loaded undercuts anything by at least $20,000. But, as I said, the quality is around what Kia was when they entered the market. Mind you after driving a Fiat Freemont nee Dodge Journey, sometimes the Chinese has nothing to worry about :).

    • 0 avatar

      Owning a Chinese assembled Buick Envision and a Cadillac CT6E makes me think a China assembly of a non-Chinese owned company would change your opinion. They are not economy cars and seemed to be put together well never having a problem or needing repair.

      Though many parts for an American car company are sourced elsewhere for China assembly the fit/finish and paint quality is what you’d expect in their respective segments.

  • avatar

    The Asian brand I would expect to see before the Chinese is Vietnams’s Vinfast. I think they’re actually planning on coming in 2021. The engines are BMW licensed. The interiors look fantastic, but I don’t know much about the cars other than that.

  • avatar

    Just do what Geely did with Polestar. Buy a European name (not even a car brand), and you can even sell a $150k made in China car in US.

  • avatar

    The Chinese aren’t looking to land cars on our shores. They’ll build in Mexico. EVs with batteries made in Mexico from lithium mined in Mexico.

    It’s the perfect storm for wildly undercutting all EVs possibly sold in North America.

    China is already bosom buddies with the Mexican drug cartel, supplying their fentanyl trade, and guess where in Mexico, one of the world’s largest lithium reserves was just found?

    Yep, the Sonoran desert, the heart and home of Mexican drug cartel, and just south of the US border.

    • 0 avatar

      The Chinese supply the methamphetamine trade as well, with all the ingredients exported to Mexico in massive quantities. They’re undercutting American society indirectly, and the social and medical cost to our country is massive.
      This is not a conspiracy theory – ask any drug enforcement team member.

      • 0 avatar

        China has stolen our meth industry now too??

        What’s left? Yeah I know it’s not legal, but it was a sizable part of the economy, now “outsourced”. It has a cascading effect, into the fully legal side.

  • avatar

    It’s going to be a huge, uphill battle for the Chinese brands to enter the US.

    A lot of people naturally compare the impending arrival of the Chinese to the Japanese in the 60’s and Koreans in the 80’s. Like those original imports, the quality may be off, the value proposition there, and the cars may be ill-suited to,American roads.

    But the biggest hurdle between them and the Chinese will be cultural. The Japanese and Koreans are innovators, and take pride in craftsmanship. The Chinese take the easiest, cheapest path and have no shame in mimicking. A few initial buyers will have quality woes, but I doubt the following products will improve much.

    In Australia, Great Wall was dinged for having asbestos in their modern cars and after sitting in some Geelys, they feel like a late 90’s Hyundai or Kia product. Mediocre twenty years ago……completely redundant today.

    Add in trade tariffs and an overall negative view of China, it won’t be an easy path

  • avatar

    It all may change if uncle Joe becomes a Tsar. He is a big proponent of free trade and he he was and probably still is on PRC payroll anyway.

  • avatar
    Jeff S

    I would have said 6 months ago the Chinese have a chance to get a toe hold in our car market but with the coronavirus exposing our dependence on Chinese parts and products, and China’s aggressive military actions in Asia many want us to be less dependent on China. For me I would rather pay a little extra for a product than to become more dependent on China. China is no friend of the USA.

  • avatar

    It makes me wonder why we even call car companies by their ‘country’. The Fiat 124 is an ‘Italian’ car, but the body is built by Mazda in Japan. The ‘Japanese’ Toyota Supra is actually BMW built in Germany. Some manufacturers are licensing out their engines, others are licensing out their chassis. This is how the Chinese are going to get into the market. They’ll be building cheap chassis and your favorite car maker will buy them and stick a motor from somewhere else in it and call it theirs.

  • avatar
    Jeff S

    Good point about Chinese not having to make the entire car. The Chinese have been making lawn equipment engines for MTD/Cub Cadet for years now and some of the lower priced 2 stoke lawn equipment and lithium battery powered equipment is made in China. China has been making automobile components for OEM for a number of years.

  • avatar
    schmitt trigger

    The only way I can see that Chinese-branded vehicles won’t make it to these shores sometime in the future, is if its Politburo decides to do something rash, like invading Taiwan.

    Maybe if they do it incrementally, like they have been doing with Hong Kong, they could get away with murder.

  • avatar

    My limited exposure is to Great Wall and Chery while visiting sunny islands…they get a lot of these cars second hand. I don’t think they’d sell in the US, it is between 70’s Fiat and 80’s 1st gen Hyundai with a dash of Volga. Like a Lada, probably a good fit for the market, but not a good fit for the expectation of North Americans.

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