GAC Motor plans to sell the first Chinese-branded vehicles in the U.S. as it is targeting the fourth quarter of 2019 to begin selling a small sport-utility in the U.S. market.
Company officials told attendees at its press conference attendees at the North American International Auto Show today that it has been preparing to enter the U.S. market for two years. It established an R&D Center last April in Silicon Valley to develop intelligent vehicle systems, driverless cars and other new energy vehicle technologies.
Additionally, the company plans to open a second center in Detroit or the surrounding suburbs in the first half of this year to concentrate on more conventional development activities as well as a design studio that will be based in Los Angeles.
“The Detroit center will help us to make the adjustments to the first (vehicle),” said Yu Jin, president of GAC Motor. “Based on that it will help in the design and engineering of the second and third vehicles.” Jin did not identify what kind of the vehicles would follow the SUV.
(China’s BYD outlines plans to sell vehicles in the U.S. in two or three years. Click Here for the story.)
Perhaps just as important as having a development team in place, the company, which just celebrated its 10th anniversary in China, has no sales network in place. Later this year, the company will set up a sales company and will attend the National Auto Dealers Association’s annual show in March to see if it can recruit some potential dealers.
Additionally, the company has a very powerful ally in China: Fiat Chrysler. GAC is FCA’s mandatory partner in its sport-utility business in China. Officials said they have built up a lot of trust with FCA and believe the automaker will act as a “mentor” during the growth process.
FCA Chief Sergio Marchionne, speaking at separate event at the show, supported the assertion that they have a strong partnership. “They are already … a very good partner” in China, he continued, “Without them, we could not have gone as far as we have in China.”
(GAC plans to open R&D facility in U.S. by end of 2017. For more, Click Here.)
In addition to China, GAC sells vehicles in 14 other countries and that experience led executives to believe they are ready to make the move to the U.S. market. Aside from the cultural acceptance of a vehicle produced and exported from China to the U.S., which has been mitigated to some extent by the sale of the Buick Envision and Volvo’s entire line-up, there are other hurdles to surmount.
“The U.S. has a mature legal system,” said Feng Xingya, president of GAC Group and chairman of GAC Motor. “It is the most challenging (legal system) in the world.”
Xingya and other executives repeatedly said the company has been studying and preparing for the legal hurdles it will face not just in meeting the country’s stringent safety standards, but also making sure it conforms to the franchise sale structure, which has laws that vary from state to state.
(To see more about other makers in China looking to sell in the U.S., Click Here.)
He also noted the company has studied the lessons learned by Honda, Toyota, Mitsubishi and others as they attempted to sell vehicles in the U.S. and failed initially.