Associated Press, 7-31-05
NINGBO, China - It may be close to its humble beginnings, but
Geely Group, a privately owned car manufacturer, has global ambitions.
Geely and fellow Chinese upstart Chery Automotive are gearing up for expansion overseas, having seen sales of their compact cars soar in China at a slow time for bigger automakers like Toyota.
Geely's Merrie, Maple and Haoqing economy models are sold in 30 countries in Asia, Eastern Europe and the Middle East. The company, based in Ningbo, a port city south of Shanghai, is looking West.
Geely and fellow Chinese upstart Chery Automotive are gearing up for expansion overseas, having seen sales of their compact cars soar in China at a slow time for bigger automakers like Toyota.
Geely's Merrie, Maple and Haoqing economy models are sold in 30 countries in Asia, Eastern Europe and the Middle East. The company, based in Ningbo, a port city south of Shanghai, is looking West.
"We're planning to explore other markets in Europe. We're
planning to export our cars to America," said An Conghui, general manager of
Zhejiang Geely Automobile Co. "Of course there are difficulties, but . . .
our goal is to meet the requirements of every market."
The company signed a memorandum of understanding this month with the Hong Kong Productivity Council, a government-run business promotion body, to begin research on development of a new car model in Hong Kong.
Geely's two mainland Chinese auto companies, Zhejiang Geely Automobile Co. and Shanghai Maple Guorun Automobile, sold 96,683 sedans in 2004, up 27 percent.
It claims a bit more than a 4 percent share of China's market for passenger cars. Geely models retail for $3,600 to $9,600. Its top model, the Beauty Leopard sports car, sells for $17,000.
Until recently, China's vehicle exports were limited mainly to buses, trucks and farm vehicles sold to developing countries. That is fast changing as automakers upgrade technology and expand production in hopes of competing internationally.
Geely exported 5,200 cars in 2004 and plans to increase its exports more than double this year, to 12,000 units, An said. The company aims eventually to have two-thirds of its sales outside China.
Chery Automotive, whose base is farther north in east China's Anhui province, has announced plans with auto importer Visionary Vehicles to sell 2 million Chery model cars in the United States. Visionary is run by entrepreneur Malcolm Bricklin, best known as the man who brought Yugo to America.
The company plans to offer five models in the United States, from a compact sedan to an SUV, starting in 2007.
Analysts have expressed doubts, given that Chery made only 80,000 cars and exported 10,000 last year.
Masaki Taketani, an analyst who studies Asian markets for Detroit-based CSM Worldwide, said that Chinese automakers aren't expected to make a big dent in the U.S. market until the next decade. For now, he said, China lags others in design, engineering and advanced technology.
Taketani said China likely will follow the model set by Japanese and South Korean automakers, who slowly have gained U.S. market share over the past two decades.
"They'll increase sales little by little, but right now we're not optimistic," Taketani said.
Chery is pushing ahead with plans to export up to 50,000 cars this year and to begin production at factories in Iran and Malaysia with components shipped from China.
Apart from its QQ minicar, which sells for as little as $3,600, Chery also makes larger sedans like Fengyun, Qiyun and Oriental Son, most of which retail for less than $12,000.
Geely signed an agreement in May with IGC Group of Malaysia, Southeast Asia's biggest auto market, to export 10,000 complete cars this year and 30,000 complete knockdown kits of parts and components that will be assembled into cars at a new plant there next year.
"Malaysia will be our production base for Southeast Asia," An said. "Six or seven factories were vying to cooperate with us but we chose Malaysia."
Those deals are just the beginning, says Yale Zhang, an auto market specialist for consulting firm CSM Asia Corp. in Shanghai.
"Will they become major exporters? It won't happen within three to five years, but it might be on a large scale in five to 10 years' time," Zhang said. "The local ones are starting and the foreign (joint venture) ones will start to export when they find the quality is good enough."
The company signed a memorandum of understanding this month with the Hong Kong Productivity Council, a government-run business promotion body, to begin research on development of a new car model in Hong Kong.
Geely's two mainland Chinese auto companies, Zhejiang Geely Automobile Co. and Shanghai Maple Guorun Automobile, sold 96,683 sedans in 2004, up 27 percent.
It claims a bit more than a 4 percent share of China's market for passenger cars. Geely models retail for $3,600 to $9,600. Its top model, the Beauty Leopard sports car, sells for $17,000.
Until recently, China's vehicle exports were limited mainly to buses, trucks and farm vehicles sold to developing countries. That is fast changing as automakers upgrade technology and expand production in hopes of competing internationally.
Geely exported 5,200 cars in 2004 and plans to increase its exports more than double this year, to 12,000 units, An said. The company aims eventually to have two-thirds of its sales outside China.
Chery Automotive, whose base is farther north in east China's Anhui province, has announced plans with auto importer Visionary Vehicles to sell 2 million Chery model cars in the United States. Visionary is run by entrepreneur Malcolm Bricklin, best known as the man who brought Yugo to America.
The company plans to offer five models in the United States, from a compact sedan to an SUV, starting in 2007.
Analysts have expressed doubts, given that Chery made only 80,000 cars and exported 10,000 last year.
Masaki Taketani, an analyst who studies Asian markets for Detroit-based CSM Worldwide, said that Chinese automakers aren't expected to make a big dent in the U.S. market until the next decade. For now, he said, China lags others in design, engineering and advanced technology.
Taketani said China likely will follow the model set by Japanese and South Korean automakers, who slowly have gained U.S. market share over the past two decades.
"They'll increase sales little by little, but right now we're not optimistic," Taketani said.
Chery is pushing ahead with plans to export up to 50,000 cars this year and to begin production at factories in Iran and Malaysia with components shipped from China.
Apart from its QQ minicar, which sells for as little as $3,600, Chery also makes larger sedans like Fengyun, Qiyun and Oriental Son, most of which retail for less than $12,000.
Geely signed an agreement in May with IGC Group of Malaysia, Southeast Asia's biggest auto market, to export 10,000 complete cars this year and 30,000 complete knockdown kits of parts and components that will be assembled into cars at a new plant there next year.
"Malaysia will be our production base for Southeast Asia," An said. "Six or seven factories were vying to cooperate with us but we chose Malaysia."
Those deals are just the beginning, says Yale Zhang, an auto market specialist for consulting firm CSM Asia Corp. in Shanghai.
"Will they become major exporters? It won't happen within three to five years, but it might be on a large scale in five to 10 years' time," Zhang said. "The local ones are starting and the foreign (joint venture) ones will start to export when they find the quality is good enough."
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