Chinese cars finally making inroads in Western markets?

After a decade of development, often through buying or benchmarking foreign technology and know-how, Chinese automakers are looking with greater ambition at selling their cars in major Western markets.

Improvements in car design, technology and marketing at firms including Geely, GAC Motor and Great Wall Motor have brought them a bigger share in their home market, the world’s largest, and give them a better chance of survival in competitive markets in Europe and the United States.

Once distant dreams of staking a claim in Western strongholds may now be edging nearer.

“We have in the Western world an outrageous arrogance. We think we’re ahead. It’s going to change,” says Alain Visser, Senior Vice President of Lynk & Co, a new brand set up by Geely.

“China is passing you at a speed that in our arrogance we don’t even see,” Visser told Reuters earlier this month.

Hangzhou-based Geely, which owns Volvo Cars and Lotus and makes London black cabs, has its sights set on selling cars in Europe in 2019 and the United States a year later. The Lynk & Co brand, set up in Sweden with Volvo, will spearhead its attack.

Geely plans only to sell ‘green’ cars – conventional hybrid, plug-in hybrid and all-electric models – in those markets, and would primarily sell through directly-owned stores and online rather than through traditional dealer franchises. It could also offer cars for rent via a subscription model similar to Netflix and Spotify.

GAC Motor, whose parent Guangzhou Automobile Group partners Honda Motor, Toyota Motor and Fiat Chrysler  in China, may beat Geely to the US. market, eyeing entry by end-2019. But unlike Lynk & Co, GAC is more likely to sell through a traditional distribution network of franchised retail stores there.

It’s taken Chinese automakers years to get this far, and, to be sure, there will be significant road bumps.
“A key obstacle in markets like the United States is a consumer bias against Chinese-made goods,” said Jeff Cai, a Beijing-based senior director at JD Power & Associates. “Our research found most U.S. consumers think China is a third-world country that builds low-quality products.”
There’s also the thorny issue of China’s trade surplus with the United States – an imbalance high on U.S. President Donald Trump’s radar. Cars shipped in from China would likely increase that surplus.