GAC Plans 2019 Launch for U.S., But Roadblocks Are Appearing

We have heard countless promises and teases from various Chinese automakers about entering the U.S. market. But one automaker appears to be making a serious effort to make it a reality.

Last week at the Detroit Auto Show, Guangzhou Automotive Group (GAC) announced that it plans on launching the GS8 SUV in later 2019, and will attend this year's National Automobile Dealers Association convention in March. 

"We will attend the NADA convention in preparation for entering the North American market in the fourth quarter of 2019," said GAC President Yu Jun.

“We will explore all sorts of channels, including partnering” with other dealership groups, he said. “We will also try to build our own dealership network in the future. All of these options are on the table.”

GAC has been doing a lot of work behind the scenes preparing to launch in the U.S. They have already opened a technical center in Silicon Valley and is planning on opening a second one in Detroit. The company has also been studying the marketplace and conducting research to measure demand.

"They've been doing preparation on the ground, talking to consumers. They've been running clinics to find out what consumers care about. This is the real deal," said Michael Dunne, president of Dunne Automotive Ltd. and an adviser to GAC.

But there a number of issues that GAC needs to address. For one, GAC was planning to introduce the Trumpchi brand for the U.S. But given current affairs, the name could be problematic and executives have hinted that a name change could happen. There is also the impression that Chinese-built product doesn't have the same quality as others. GAC could use J.D. Power’s Initial Quality study where it has been the top-scoring Chinese automaker for the past five years.

"It looks like they have a good quality product. There is still a stigma of 'made-in-China,' but it's largely a perception issue," said David Sargent, vice president of J.D. Power's global automotive unit.

"If you talk to the automakers, they'll say the quality they are getting in China is as good as anywhere else — and sometimes better."

But the biggest roadblock that GAC could face is the U.S. Government. Both President Donald Trump and the top U.S. Senate Democrat, Chuck Schumer of New York cited GAC's plans and used this as a launching pad to criticize China's automotive trade rules. China levies a 25 percent tariff on U.S.-built vehicles. The U.S. only slaps a 2.5-percent on Chinese-built vehicles.

Source: Automotive News (Subscription Required), 2, Reuters