Chinese car company to sell cars in US soon

[bigpoppanils]

08:30 June 21, 2004)

Chinese car company says it will sell cheap sedan in U.S.

By ALYSHA WEBB | Automotive News

SHANGHAI -- It was inevitable.

One of the "young tigers," the controversial new breed of companies building cheap cars in China, says it's ready for prime time in the United States.

Geely Group, which only started producing autos six years ago, says it plans to export its small Uliou sedan to the United States.

The Kia Rio-sized Uliou sells in China for 58,000 yuan, or about $7,000 at current exchange rates.

Caught in the updraft

Like such Chinese companies as Chery, Great Wall and Hebei Zhongxing, Geely has been caught in the updraft of the country's auto market. Now it wants to become the first Chinese automaker to sell in America.

But it first has to establish a distribution network and get approval from U.S. regulators. And those things seem a long way off.

Indeed, Geely joins a long line of carmakers from low-cost emerging markets that have tried to make a killing by selling on price in America. Most never got off the ground.

A senior Geely executive says that exports to the United States will start this year after the company receives certification from the EPA.

The company, which began building cars in 1998, will begin producing cars that comply with federal emissions standards, says the executive, who asked not to be named. The source says a U.S. distributor has an Uliou sedan that will be tested by U.S. officials.

An EPA spokesman would not say if the agency has been contacted. "The status and details of the certification process are confidential until completed," said spokesman John Millett.

But an agency source says that the EPA is not testing a Geely car and that he was not aware that the carmaker has approached the agency.

"It would take a lot of development work for this Geely to pass" U.S. requirements, he said.

The National Highway Traffic Safety Administration also would have to certify that the car meets U.S. safety standards.

Autokam is distributor

The Geely executive said Autokam Ltd. of Scottsdale, Ariz., would import the Uliou.

In 1997, Autokam owner Dave Shelburg attempted to import vehicles made in China under the name China Motor.

He failed when the vehicles could not meet U.S. emissions standards.

The attempt resulted in several lawsuits from dealers who never got the cars they were promised.

Shelburg was traveling in China last week and could not be reached for comment.

Tim Southwick, owner of Toyota of Berkeley (Calif.), was one of Autokam's distributors until he was terminated this month. Southwick says he was cut loose by Autokam because he tried to warn dealers that their money was at high risk.

"David is a nice man, but he is putting cart before the horse," Southwick says. "Car dealers need to be on their guard. I hope he makes out well with this thing, but for a dealer to invest money before emissions are passed is risky."

Geely President Xu Gang has said he wants exports to account for 25 percent of the company's total output within five years. The company plans to export 5,000 units worldwide in 2004. So far this year, 1,000 units have been shipped to Mexico and the Middle East. Geely exported 400 cars last year, mainly to the Middle East and Mexico.

The 162.4-inch Uliou is a four-door notchback that closely resembles an old version of the Daihatsu Charade. In China, the car competes with the Volkswagen Gol, General Motors' Opel Corsa-based Buick Sail and the Ford Fiesta. Those cars are priced from $10,300 to $12,700.

The Uliou uses a 1.3-liter engine similar in design to an engine that Geely bought from Toyota until three years ago. It continues to advertise that its cars use Toyota technology - a source of irritation for Toyota.

The Japanese carmaker sued Geely last year for copying Toyota's logo. A Beijing court ruled in Geely's favor in November, allowing Geely to continue to use the logo.

80,000 cars last year

Geely's headquarters is in east China's Zhejiang province and the company is privately held. It makes sedans and hatchbacks priced from $3,860 to $10,260 at current exchange rates. It sold 80,000 cars in 2003 and expects to double sales this year.

Geely aims to sell 1 million units by 2010. That's a bold goal, since Geely has had trouble finding enough cash to boost capacity and upgrade technology.

Geely has been seeking a foreign partner for years.