Who's gonna be the first person to get a Geely ? Will they be for sale at Wal-Mart ?
Geely Debuts China-Made Car in Detroit for U.S. Sales (Update2)
Jan. 10 -- Geely Automobile Holdings Ltd., China's first carmaker to display at the Detroit motor show, said its Free Cruiser compact car is undergoing U.S. road and emission tests and should go on sale for less than $10,000 by 2008.
``This is like a first step in a long march,'' Li Shufu, Geely's chairman, said in an interview at the North American International Auto Show in Detroit. ``This is one step for us to bring our car to the world.''
Geely has set a goal of selling 25,000 to 50,000 cars a year in the U.S. starting in 2008, said John Harmer, 71, vice president and chief operating officer of its U.S. unit. The Free Cruiser compact car, called 7151CK outside China, seats five passengers and is about the size of Honda Motor Co.'s Civic.
A front-window display at the biggest industry show of the world's largest vehicle market raises the brand's profile among customers and dealers. Geely, based in eastern China's Zhejiang province, follows Chery Automobile Co. and Changan Automobile Co. in trying to sell cars overseas, repeating the export strategy that helped Toyota Motor Corp. and Hyundai Motor Co. grow into two of the world's largest assemblers.
``They are saying: ``Well, if we stay at home, margins will decline and we have to know what it takes to compete globally, so let's get out there,'' said Mike Dunne, president of Automotive Resources Asia Ltd., in Shanghai. ``Geely and Chery are out there way ahead of everybody else'' in pushing for exports, he said.
China's Global Push
Geely shares rose for a fifth day today, advancing 3.7 percent to 42 Hong Kong cents at 10:05 a.m. in Hong Kong. The stock surged 29 percent in five days.
Chery Automobile Co., working with New York-based importer Visionary Vehicles LLC, said it will sell cars in the U.S. by next year. The two automakers were China's sixth and seventh largest by sales volume in 2004.
``Chinese carmakers are going on the same path as Japanese and South Korean assemblers by using their cheap costs and low prices to attract customers,'' said Yale Zhang, a CSM Asia Corp. analyst in Shanghai. ``They will gradually enhance their quality, build their brand image and introduce high-end products.''
Geely, profitable even when it sells vehicles at less than 70,000 yuan ($8,600) each, is taking advantage of wages that are 5 percent of Detroit's average pay to sell low-priced models. The company pays workers $3.50 an hour for wages and benefits, Geely's Harmer said. By contrast, members of the United Auto Workers union at General Motors Corp. earn $64 an hour.
``The UAW and GM may not like it, but we're in a global economy,'' Harmer said. ``The American consumer needs a high quality product that won't put them in debt for seven years, and that's what we're going to give them.''
Geely switched to assembling cars in 2000 after more than a decade of making refrigerator compressors, selling 5,000 cars overseas in 2004 out of a capacity of 200,000 units.
It's the largest Chinese automaker that isn't affiliated with the government. Geely specializes in low-price models, such as the 1.3-liter-engine Merrie with a base price of 33,000 yuan ($4,087).
Geely is aiming to export 1.3 million cars by 2015 out of 2 million it's aiming to produce, or about 2 percent of the estimated global market share. Li said. Total sales may rise to 200,000 units this year from 140,000 last year, he said.
On Every Road
``My dream is to see Geely cars on every road in the world, instead of letting cars from every other country clog Chinese roads,'' Li said on the carmaker's Web site.
Geely will have 25 to 50 dealers located along the east and west coasts of the U.S., said Harmer, a Salt Lake City lawyer who said he has done work for Chinese companies. The company will redesign the car to meet quality expectations of U.S. consumers, he said.
``I don't know if that's enough dealers,'' said auto analyst Rebecca Lindland at Global Insight Inc. in Lexington, Massachusetts. ``If you break down 200 miles from your home, nobody's going to know how you fix it.''
China will produce an automaker that can compete with Toyota all over the world within 10 years, Harmer said.
``That sounds too quick to me,'' said Lindland, who predicted Geely could experience similar growing pains as South Korea's Hyundai Motor.
Hyundai Motor opened a factory in Bromont, Quebec, in 1989 and shut it down five years later because of poor quality. The company opened its first U.S. plant in Montgomery, Alabama, last year.
Geely may already have won recognition from China's car buyers. The company in 2003 prevailed over Toyota in China's first legal dispute over the copying of vehicle designs and logos.
Toyota sued Geely in December 2002 for 14 million yuan, charging the Chinese company with using a logo on the hood, hub cabs, steering column and boot of its Merrie cars that resembled Toyota's stylized ``T'' marque. The Beijing Intermediate Court ruled in favor of Geely and ordered Toyota to pay court costs.
Toyota's spokeswoman Yang Hongjian said the company ``regretted the ruling'' while Geely's lawyer Wang Zhong described the verdict as ``fair'' and ``objective.''
Geely last week said sales through November rose 30 percent from a year earlier to 115,153 units.
The company is prospering without the support of a Chinese city or provincial government by building cars that customers want, Li said.
``Geely people have a spirit of fighting. That's what we rely on,'' he said.