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Chinese-made cars debut in US market
(Agencies)
Updated: 2004-06-29 10:22
An Arizona car dealer is gearing up to become the first to sell a full line
of Chinese-made vehicles in the United States at Wal-Mart-style prices he hopes
will lure tens of thousands of buyers.
David Shelburg and his privately held company, China Motor Corp., want to
cash in on China's fast-growing auto industry and cheap labor costs by
establishing a network of 100 dealers to sell vehicles from a trio of Chinese
manufacturers across the United States by the fall.
The plan is to have the dealers sell as many as 60,000 Chinese-built cars and
trucks at prices starting below US$10,000, by the end of the year, Shelburg's
business associates told Reuters.
Shelburg, one of the first dealers to sell Subarus in the United States in
the 1960s, hopes to establish himself as a discount king with business from
California to Canton.
"It is going to happen," Shelburg's wife, Paula Shelburg, a corporate officer
and board member China Motor, said in a telephone interview.
Analysts, however, are skeptical. They point out that most China-built cars
have inferior quality, that U.S. standards for pollution and safety are
rigorous, and that even established automakers have trouble in the U.S. market.
Analysts said the 60,000 sales target for the last four months of the year,
roughly equivalent to the pace of U.S. sales for household brands such as Subaru
and Mercedes, is far too optimistic. Other global automakers, such as Italy's
Fiat SpA, France's Renault SA and Korea's Daewoo Motor, have pulled out of the
United States in recent years when sales plunged due to poor quality.
Shelburg's company plans to import cars, SUVs and trucks made by Geely
Automobile Holdings Ltd., Great Wall Automobile Holdings Co. Ltd. and Gonow, a
manufacturer of motor-scooters that is entering the truck market.
According to a J.D. Power & Associates survey, a Westlake Village,
California-based research firm that specializes in the Asian market, the quality
of compact cars built in China was four times worse than those built in the
United States, Dance said.
Furthermore, David Shelburg has been barred from selling vehicles in Texas
after a plan to sell Chinese cars there in the 1990s fell through, leaving some
dealers empty-handed, a Texas official said.
"He sold franchises to 15 dealers here and was never able to produce cars,"
said Carol Kent, director of enforcement for the motor vehicle division of the
Texas Department of Transportation. "He's permanently barred in Texas."
Paula Shelburg said her husband, who was in China on business last week and
not available for interview, would clear his name in Texas.
Shelburg's business is attractive to dealers because he charges a franchise
fee of only around US$20,000, much lower than the US$100,000 or more charged by
major automakers, said one Texas dealer who asked not to be named.
Meeting
U.S. safety standards will be a big hurdle, said Al Warner, director of the
Office of Automotive Affairs for the U.S. Department of Commerce.
"Safety technology is expensive. It's quite a trick (to meet the standards),"
Warner said following a speech in Michigan on Wednesday.
But China Motor officials said they were confident the Chinese cars would
meet all U.S. standards and be ready for sale this fall.
Regardless of China Motors' success, Warner said it was only a matter of time
until the quality of Chinese vehicles improves and makes them marketable to U.S.
car buyers.
"There is a good chance that we will see good-quality vehicles from China in
the U.S. -- and maybe sooner, rather than later," he said.
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