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Chinese Automaker GAC Returning to Detroit Auto Show

Move could signal brand is finally ready to enter the U.S. market.

by on May.18, 2016

GAC Group announced it is returning to the Detroit Auto Show next year after a two-year absence.

Guanghzhou, the economic engine as well as the largest city in Southern China, is hoping its state-owned automotive company, the GAC Group, can use its clout in the Chinese market to move on to a larger stage.

That “larger stage” being the U.S. Many are looking at the return to Detroit as a precursor to selling vehicles here. If that happens, GAC will be the first company to do so.

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“As we look to establish ourselves as a global brand we are optimistic we can gain more momentum following the announcements we will make this coming January in Detroit,” hinted Zeng Qinghong, vice chairman and president of GAC Group.

GAC Group returns to Detroit after skipping the 2016 NAIAS. However, GAC had participated in the 2015 show revealed the company’s GS4 sport utility vehicle, which has become popular in China where SUV sales have boomed over the past two years

“GAC Group’s return to NAIAS is very exciting for our show as it underscores the significant coverage and impact automakers receive in markets across the globe when unveiling products at our show,” said Sam Slaughter, 2017 NAIAS chairman.

The GAC Group's SUV the GA4 has been a big seller in China. Could there be a U.S. market for it?

Among other things, Geely and Chinese carmakers, such as Geeley, Chery and BYD, have had to focus their attention on the fast-growing home market. For much of the past 15 years, Chinese car sales have grown at a solid, double-digit pace with most makers struggling to keep up with demand. But with sales dipping into the low single-digit range in recent months, carmakers are beginning to think about exports as a way to keep their factories busy.

(Volvo looks to secure $575 million in new financing. For more, Click Here.)

Foreign-owned brands like GM dominate the Chinese car market, but domestic makers like GAC, which builds products for Toyota, Honda and Fiat Chrysler NV, as well under its own brand names, are becoming more serious contenders.

Chinese-made products displayed in Detroit in recent years have received generally poor reviews because of obvious quality and design issues. One small maker’s sedan even had its name badge mounted at an awkwardly crooked angle. But the “fit and finish” of Chinese-brands is steadily improving.

Moreover, the rising prices of American, Japanese, Korean and European cars is creating a potential opening for Chinese manufacturers, who have succeeded in selling everything from furniture to motorcycles in the U.S. and GAC is reportedly interested in seeing is own vehicles sold in the United States.

Geely is one of China’s homegrown automotive success stories, and its Volvo subsidiary was, the first automaker to ship vehicles from China to the U.S., last year launching American sales of a stretched version of the Volvo S60.

A second Chinese-made model will arrive in the U.S., and General Motors has much higher volume aspirations for the compact Buick Envision SUV. As the second-largest automotive manufacturer in China, GM could readily export other models but will use Envision to see if American buyers are open to the idea.

While Chinese manufacturers could slip into the entry-level niche largely vacated by both Japanese and South Korean brands, they may opt to target more mainstream segments – especially at a time when demand for small sedans and coupes has largely dried up.

(Click Here for more about GAC at the Beijing Auto Show.)

The GAC announcement comes on the heels of a visit by a delegation of company executives to Fiat Chrysler Automobiles NV’s offices in Auburn Hills outside of Detroit. GAC is Fiat’s principal partner and FCA chief executive officer Sergio Marchionne hosted the delegation, which came to Detroit from Guangzhou.

Marchionne has said China is strategically important to Jeep’s development as a global brand. Jeep is now one of the fastest growing brands in China, which has become the number one market for Jeep outside of the U.S. Jeep has set global sales records four years in a row, and China will play an important part in the brand’s continued growth.

In a statement released after the meeting, Marchionne also said that, in addition to Jeep, there are two other brands that have great potential in China and globally: Maserati and Alfa Romeo. “Maserati captivated the Beijing International Automotive Exhibition last month with the unveiling of the Levante, the first SUV in Maserati’s hundred-year history,” said Marchionne.

(For more on Jeep’s China plans, Click Here.)

“Alfa Romeo has not yet arrived in China, but we are counting on it being an increasingly important market as the brand develops a full line of premium sports cars. Our plans for these brands,” he added, “demonstrate both our confidence in and commitment to being a major player in the development of the Chinese auto market.”

Joseph Szczesny contributed to this report.

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