Geely Announces North American Sales Plans

DETROIT – Attracting a crowd that spilled over the balconies here at Cobo Center, Geely Automobile Co. becomes the first Chinese auto maker to hold a press conference at the North American International Auto Show.

Geely says it plans to begin selling cars in North America “at the end of 2008.”

Geely executives told Ward's earlier at the show the auto maker planned to sell cars in the U.S. territory Puerto Rico in 2008 and likely would enter the North American mainland in 2009. (See related story: Geely Chief Confident of Eventual Acceptance in American Market)

When asked by a Chinese journalist why Geely, one of many domestic car manufacturers in China, wants to sell cars in the U.S., Shufu Li, founder and chairman of Geely, says “every forest has small and large trees, some healthy, others not.

“Geely wants to be a tall and healthy tree on the same piece of land,” Li says through an interpreter.

Geely press conference at NAIAS.

John Harmer, vice president-Geely U.S.A. Inc., says Geely's plans are rather modest for its first full sales year in the U.S. at 25,000 units.

After five full sales years, Harmer pegs Geely's U.S. sales at 100,000 units.

He says it will be about 18 months before Geely's vehicles, some of which have been delivered to the U.S. Environmental Protection Agency last July, will be compliant with U.S. regulations.

Harmer confirms Geely first will sell vehicles for six months in Puerto Rico, where it will gauge consumer response. It then will enter the U.S. market, with Canada to follow shortly thereafter.

The car Geely is displaying here, the 7151 CK, is the predecessor to the model it plans to sell in the U.S., the executives say.

Asked why the initial vehicle, which Geely will price below $10,000, is a better choice than some of the other low-priced subcompacts seen this past week in Detroit, Harmer says it will be simple, basic transportation, free of frills.

“We believe this automobile will be the prize for a family who does not want to go into debt for five or six years,” he says.

As for competition between Geely and Chery Automobile Co. Ltd., which plans to begin selling cars in the U.S. in late-2007 via Malcolm Bricklin's Visionary Vehicles LLC, Harmer says Bricklin's vehicles will be priced some $15,000 more than Geely's.

“We don't regard Chery as competition in the U.S. market,” Harmer says.

Harmer acknowledges the possibility of a backlash to a Chinese car in the U.S. market, as many Americans losing manufacturing jobs currently place the blame on outsourcing of high-wage jobs to low-cost countries such as China.

While he acknowleges Chinese auto workers are underpaid compared with American standards, he says the majority of the 6,000 Geely employees in China are former peasants that earned just $0.11 a day. Geely's pay rate is $3 per day.

“We don't have any apology to make about the way our employees are treated,” Harmer says, adding he personally has visited all four of Geely's Chinese vehicle assembly plants.

Many of the parts used to build the 7151 CK, he says, are supplied by U.S. companies, including the vehicle's windshield.

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