LOS ANGELES – Guangzhou Automobile Group (GAC) is already laying the groundwork for its entry into the U.S. market. It has reserved a booth at the 2018 National Automobile Dealers Association (NADA) show in Las Vegas. GAC has said it plans to bring an SUV to sell here in 2019. Great Wall Motor Co. says it will build a plant in Mexico or the U.S. to sell vehicles here by 2021.

There used to be doubts among U.S. dealers as to the quality of Chinese vehicles. Those doubts are dissipating. Now, Chinese automakers must address questions relating to their distribution plans. If they successfully do so, the first Chinese brand to enter the U.S. market is likely to find dealers eager to take them on.

“You always take a look at new things that are coming down the road and find a few dealers that say, ‘Sounds good to me, I’m in,’” says Mark Schienberg, president of the Greater New York Automobile Dealers Association.

When he went to China some 15 years ago, says Schienberg, the quality of the vehicles was not up to U.S. standards. That has changed.

“I think they can stand up to American standards now,” he says.

The acquisition of global brands, such as Geely’s purchase of Volvo, has helped legitimize Chinese automakers in the eyes of U.S. dealers, says Mark Scarpelli, chairman of NADA and president of the Raymond Chevrolet and Raymond Kia dealerships.

Dealers’ main concern now will be the amount of investment required to take on a Chinese brand, says Schienberg. A big investment in a dealership would not be welcome.

“If one of the Chinese manufacturers says it wants a stand-alone facility, it will be a lot more difficult for dealers to consider,” says Schienberg.

If a Chinese manufacturer allows a dealer to pair its vehicles with another line, that could make carrying a Chinese brand more acceptable, says Bob Smith, executive director of the Greater Los Angeles New Car Dealers Association.

That would help cushion the lack of revenue from service work that any new dealership faces, says Smith.

“If it was stand-alone, there would be no revenue from service work for some time,” he says.

One problem with partnering with another brand, however, is that it would violate dealership franchise laws in some states, says Ken Elias, a partner with consultancy Mary Ann Keller and Associates.

He suggests that Chinese automakers study the market entry of Japanese and Korean brands.

When Toyota entered the U.S. market in the late 50’s, the Japanese automaker initially focused on California. Chinese brands could choose to start small that way, says Elias.

To get more information, please click “read more 阅读原文” to subscribe.

The above article appeared in the December 2017 (Vol. 12, No. 12) issue of China Automotive Review (CAR), our monthly tabloid magazine in English exclusively focused on the Chinese auto industry.

GS7 SUV to make global debut in Detroit 现场 | 广汽底特律全球首发GS7 SUV

©本刊所有图片、文字及版式版权均为【中国汽车要闻】（China Business Update）所有，未经授权许可，不得复制或用作其它商业用途，其他网站及平面媒体如需转载，须注明作者及出处。