China Aims to Rein in Auto Exports

Following a flurry of export announcements by Chinese auto makers over the last two years, China in 2006 takes steps to stem the number of vehicles leaving the country.

The move no doubt was helped along by the European debut of the Landwind SUV from Jiangling Motors Co. Ltd., which was widely criticized by the European media for its lack of safety features and poor handling. German automobile club ADAC insisted it be banned from European roads.

The first Acura TL performance luxury sedans arrive in port of Shanghai for sale in China.

Earlier this year, Geely Automobile Co. Chairman Shufu Li said he was well aware consumers have reservations about buying cars made in China.

“We still have a lot of work to do to improve our technology and quality, and that’s what we’re doing,” Li told Ward’s in an interview at January’s 2006 North American International Auto Show in Detroit. “We believe one day American consumers will accept us.”

The auto maker commissioned a study following its appearance at the show to gauge public reaction to media coverage of Geely. Results showed 25% of those surveyed were highly skeptical of the quality of Chinese products.

“It’s probably a realization by the government, and the companies, that penetrating the (major) export markets in a meaningful way would require a lot more groundwork and would take a lot longer than they originally planned,” Global Insight Asian analyst Ashvin Chotai says of the Chinese government’s reasoning for wanting to limit auto exports.

Geely, for example, failed to meet U.S. emissions and safety standards, delaying its entry until 2009, giving it time to develop a more sophisticated vehicle for the West than its current small, no-frills CK sedan.

The first Chinese auto maker to announce U.S. export plans, Chery Automobile Co. Ltd., also will not see its models on U.S. roads as early as first thought.

The government says it will limit the number of export licenses available to domestic auto makers starting early next year. The goal is to prevent assemblers from shipping poorly made vehicles, thus sparing China embarrassment and harming chances of future auto exports.

After pushing back the start of sales several times, U.S. entrepreneur Malcolm Bricklin, who formed Visionary Vehicles LLC to import Chery models, now is postponing the company’s launch until late 2008 in order to meet top safety requirements in U.S. government crash tests.

Meanwhile, a Chinese truck maker may set up a plant in Brazil by 2010 if sales justify the move, says Mario Santos, technical director of the Tricos group of Portugal, which represents the Chana group of China.

The first lot of 300 imported units arrived in Brazil late this year, including five models: a minivan, van, pickup, small cargo truck, double cabin cargo truck and 5-seat pickup. Prices range from $13,000 to $15,900.

Chana plans to invest $5 million to set up the dealership network and create a car-part storage system and other technical structures. Officials say they want to win the confidence of consumers with quality services and products.

The Chinese government in August designated eight cities as regional auto-export zones, giving them undetermined assistance. These include Shanghai; Tianjin; Xiamen; Taizhou; Wuhan; Chongqing; Changchun; and Wuhu, where Chery is headquartered.

"Expanding the export of vehicles and spare parts, especially our own brands and those with our own intellectual property rights, is the only way to enhance our auto industry's international competitiveness," Commerce Minister Bo Xilai tells the China Daily.

About 160 vehicle and spare parts manufacturers are listed as part of the first group of government-approved exporters.

China’s auto makers and suppliers need not be in a hurry to rush into new markets, with the country’s national vehicle association reporting car sales surged 40% in the first nine months through September.

General Motors Corp.’s joint-venture sales, led by GM Shanghai Automotive Co. Ltd., rose 36.7%, to 645,680 units in the first three quarters, helped by strong demand for newly introduced models such as the Buick LaCrosse and Chevrolet Lova and securing the auto maker’s No.1 sales spot for the ninth straight month.

Ford Motor Co., relatively new to the hotly contested market, saw sales jump 105% in the period to 114,685, while Volkswagen AG sales rose 28.7% to 534,558. Newcomer Toyota Motor Corp. sold 203,000 vehicles through September, marking 164% growth over year-ago.

– with Sol Biderman in Brazil

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