Chinese Automaker GAC Wants Fiat’s Help in Entering U.S. Market

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A new report from Automotive News says that China’s Guangzhou Automobile Group wants help from its global partner Fiat Chrysler Automobiles as it tries to enter the U.S. market. Chinese automakers have yet to find much success outside of China and are selling vehicles in small volumes in developing markets where it’s highly price competitive.

Last year, China exported 728,200 vehicles, a decline of 20 percent. The drop came amid struggles with instability in markets such as Russia and the Middle East, as well as currency fluctuations. Guangzhou Automobile’s subsidiary, GAC Motor, has announced its intention to enter the U.S. market by 2017, and if that happens, it would be the first Chinese automaker to sell passenger cars to buyers stateside.

Chrysler’s development in China required our support. Now for GAC Motor’s development in the U.S. we also hope for Chrysler’s support and help,” said Wu Song, GAC Motor’s general manager at the 2016 Beijing auto show.  However, Wu and his representatives didn’t hint at what type of support FCA might offer, and the Italian-American automaker is keeping quiet on the matter.

In order for foreign automakers to build cars in China, they need to form joint ventures with domestic brands to avoid massive import taxes. Guangzhou Auto was the sixth-largest automaker in China in terms of sales volume for 2015, and it has produced vehicles through other joint ventures with Toyota, Honda, FCA, and Mitsubishi. Extending the cooperation outside of China has yet to be done by these joint ventures, but General Motors and SAIC Motor Corp. plan to start joint production of vehicles in Indonesia in 2017.

Currently, GAC Motor is in discussion with potential dealership partners in the U.S., but it has yet to start road tests.  Wu stated that the automaker is already testing two models to meet U.S. standards. Despite the slowing down of China’s auto market, Wu said GAC Motor will keep its primary focus on the mainland instead of expanding globally.

“Sudden price cuts have messed up the whole (Chinese) market, so at this time we have to invest a lot of energy determining the brand’s next strategic steps to protect our position,” said Wu. “We must not be distracted.”

Source: Automotive News (Subscription Required)