From Orlando to Orient

Frank Rodriguez is a pioneer as an American new-car dealer who now owns a Ford dealership in China.

Although analysts predict the world's most populous country with 1.3 billion people is on the verge of becoming the largest automotive market, opening a dealership in a country where capitalism still is in its infancy is a gamble.

Rodriguez, president of Greenway Ford and Greenway Dodge Chrysler Jeep in Orlando, FL, celebrated the grand opening of Greenway Shanghai Motors with his partner, Carl Atkinson in late September.

The dealership, which began operation in January, is China's 27th Ford Motor Co. franchise to open. Nearly 100 have been assigned, although not all are operational yet, says Rodriguez.

It took 18 months for everything to come together, he says. The idea began with Chinese-American manager Yemao Huang, whom Rodriguez had placed in Ford's minority dealer-development program.

Huang, who will run the Chinese store, has a brother in China and thought the idea of opening a dealership there was attractive. After a couple of trips to China, Rodriguez and Atkinson decided to take the plunge and back Huang's idea.

Rodriguez, former chairman of the Ford National Dealer Council, admits the venture is a gamble, but he likes his chances.

“I don't know if we'll make a dime on it,” he says. “But if we can get the Huang family up and running, we just might start turning a profit.”

The group is planning to open more franchises in the future.

The dealership is 30 miles west of downtown Shanghai, in the growing suburb of Anting. China is developing certain metropolitan areas with commercial themes. Anting is designated as its “Motor City.” The area is an automotive-economic zone, which includes manufacturing and assembly plants, a technical research center and a Formula One racing complex.

The city also is building hundreds of single and multi-family homes and an automotive-theme park.

“Most people have no idea what China is like,” says Rodriguez. “Shanghai is as much a metropolitan city as you'll find anywhere.”

Some analysts estimate nearly 300 million people will migrate from China's rural areas to urban centers over the next four years. Shanghai already is seeing this shift with its population soaring to 20 million people in recent years.

Shanghai Greenway Motors is in an auto mall with three other dealerships — two Volkswagen brands and one Buick. Fifteen more dealerships are under construction. The mall will be an upscale promenade, in which customers can stroll as they shop for their vehicle.

Rodriguez says construction on the 38,000-sq.-ft facility with its 2-story parking garage, had not begun when he visited in March but was finished when he traveled there again in September.

“In China, they build things at a rate we have no concept of,” he says. “I was blown away with the amount of construction in the area that had occurred. It was all models when I was there in March.”

The construction company placed barracks on the property for workers to live in as they built the dealership.

Greenway has averaged 31 sales per month since January and doubled that in September, its first month in the new facility. Rodriguez says the Mondeo is outselling the Fiesta nearly two-to-one.

He admits there are tough obstacles to opening a dealership in China. “You don't realize all of the small things that we take for granted in the States,” he says.

The used-vehicle market, typically a cash cow for American dealers, almost is nonexistent in China because of stringent government regulations.

The dealership has yet to get the service department up and running because it still is working its way through licensing and red tape. However, the body shop is more than busy, Rodriguez says.

Financing is hard to obtain in China because of strict requirements recently implemented by the country's banks to keep the economy from outpacing itself. Currently, less than 20% of China's vehicle purchases include financing of some sort. Consumers often will use all of the family's savings to purchase a vehicle.

Because personal checking also is nonexistent in China, it is common to see someone enter the dealership carrying a sack of cash to pay for the vehicle, Rodriguez says.

Ford Motor Credit Co. obtained approval this fall from the China Banking Regulatory Commission to begin operations in China. A spokeswoman says the company should be offering wholesale and floor-plan financing to dealers sometime in mid-2005.

Financing for customers will follow soon after, albeit on a “prudent, thoughtful and limited basis,” according to the spokeswoman.

Ward's reported in August that Ford Credit expects loans over time will comprise 70%-80% of the vehicle purchases in China — approximately the same rate as in the U.S.

Despite the obstacles, Rodriguez is entering the Chinese market just as Ford begins to experience real growth there. Ford, with its partnership with the Changan Ford Automobile Corp. Ltd., had sold 38,000 vehicles in China as of July 28, more than double its sales for all of 2003 and was on target to reach its goal of 65,000 sales this year.

The Mondeo reached the 10,000-sale level just three months after starting production in the first quarter and was leading the 2.0L midsize-car segment ahead of the Buick Regal and Honda Accord through August, with 21,516 sales.