Three Chinese Automakers May Build Joint Factory in U.S.

Khodrocar - A third-party company intends to bring together three Chinese auto producers to set up a U.S.-based factory and build cars primarily for the American market, according to the head of one of China’s leading automakers.

Wei Jianjun, chairman of Great Wall Motor Co. Ltd. — China’s largest SUV-maker — revealed the news to the media Tuesday in Frankfurt, Germany, ahead of the 67th International Motor Show (IAA), which kicks off Thursday.

Wei said the move was driven by a desire to reduce risk.

In March, Great Wall announced plans to build a factory in North America. "We have looked into many places, but we are still trying to work out how to best bring down the investment risks,” Wei said.

Great Wall brands Haval and Wey are slated to enter the North American market in 2020 and 2021 respectively.

Wei said Chinese car companies have had a penchant for building up their own overseas factories, and now an unnamed non-American third party intends to assist three such automakers in jointly building a U.S.-based facility.

Wei said that in the preliminary stage of the rollout, Great Wall might seek to produce its cars in another company’s factory and pay a service fee, which he said could reduce investment risks.

"The three Chinese auto companies may test the waters by building a factory together,” Wei said, without naming the two other firms.

Geely Automobile Holdings Ltd., Guangzhou Automobile Industry Group Co. Ltd. and Chery Automobile Co. Ltd. are the companies that had previously announced their respective plans to enter the U.S. market. But Geely and Guangzhou Automobile told Caixin that they haven’t heard of the plan announced by Wei. Chery did not respond to a request for comment.

The U.S. automobile market is the world’s second-largest after China, but American consumer purchasing power vastly exceeds that of its Chinese counterparts.

The American market is also known for its openness. Japan’s Toyota Motor Corp. and South Korean’s Hyundai Motor Co. gained fame as world-class automakers after finding success in the U.S. market.

IAA is one of the five biggest car expos in the world, and Wei said he brought the Wey there in order to "warm up” the brand before taking it global. He said the plan to enter the U.S. market also aims to lift the brand image.

"It’s brand-building to sell cars in the U.S.,” he said.

Chinese car companies have to meet U.S. regulatory requirements and standards before entering the American market — the biggest challenge for them to develop their business in the U.S. — and under the Trump administration, providing more jobs to locals may be another yardstick.

Regarding speculation over Great Wall’s interest in acquiring Jeep, Wei said that Jeep owner Fiat Chrysler Automobiles NV wants to sell and Great Wall wants to buy — but the two parties haven’t yet engaged in formal contact.

Source: caixinglobal.com