Ford's China partner planning to sell in U.S. in 2020
Ford Motor Co.'s newest Chinese partner, Zotye Automobile, is preparing to launch at least two SUVs in the Blue Oval's backyard.
The relatively small Chinese automaker Zotye Automobile International Co. is partnering with California-based HAAH Automotive Holdings to look beyond its home market and form a new sales distribution company in the United States known as Zotye USA (pronounced ZOH-tay) — a tie-up that would sell direct competitors to some of Ford's most lucrative SUVs.
"We're facing a new reality where the Chinese domestic market is slowing for the first time in recent memory," said Michael Dunne, CEO of Hong Kong-based ZoZo Go, a firm that advises automakers on the Chinese market. "Now that things have gone soft, automakers are finding themselves in a situation where they have to export and find new markets. Zotye is possibly the first, but they won't be the last."
Also at MarketWatch and CNET.
(Score: 1, Disagree) by Anonymous Coward on Thursday November 15 2018, @02:36PM (7 children)
There is a large gap between US and Chinese regulations for crash, emissions and probably many other details. They might send some SUVs here, but my guess is the first few batches will be sent back for non-compliance. It will take more than a couple of years to satisfy the USA rules.
There will also be aggressive USA car dealers that want to get in on the next big round of lower-priced vehicles from low wage countries, but the Feds will hold fast to the regulations.
The Chinese might do better trying to peddle their vehicles in S. America or Africa where rules are easier?
It would be nice to revisit this news item in a couple of years, to see if my prediction is correct.
(Score: 3, Insightful) by khallow on Thursday November 15 2018, @03:20PM (4 children)
Believe it or not, US regulations aren't secret knowledge. This business will be quite aware that it can't just drop a bunch of vehicles off a ship and expect them to be street legal.
(Score: 0) by Anonymous Coward on Thursday November 15 2018, @04:22PM (1 child)
> This business will be quite aware that it can't just drop a bunch of vehicles off a ship and expect them to be street legal.
Agreed. But being aware of the regs and actually meeting them are two different things. This article has some history of recent attempts by Chinese car companies to sell in USA, so far all have failed, with some retreating and pledging to return at a later date.
http://www.latimes.com/business/autos/la-fi-hy-china-auto-export-20180205-story.html [latimes.com]
Matches my memory of the last 10+ years of Chinese attempts in the USA car market. It ends with a funny coincidence,
(Score: 1) by khallow on Friday November 16 2018, @05:35AM
Sure, but it's foolish to hype the supposed ability of US regulations to block Chinese car makers. Especially, when they're starting to work with US automakers who already have the regulations figured out.
(Score: 2) by Blymie on Thursday November 15 2018, @08:25PM (1 child)
A company you might have heard of -- called Hyundai, wanted to enter the North American market years ago. Mid-80s, and I recall my friend's Dad pondering it.
The 2-for-1 sale caught his eye. Literally, they advertised "2-for-1", and sold two Hyundai Ponies for $6k+. Crazy.
The cars weren't bad, in that you could easily fix them. But the first car rusted to uselessness in a few, yes 3+ years. Completely unready for the Canadian market, the snow, and all the salt spread on the roads for the ice.
My friend's Dad wasn't too upset, he had a brand new one in the garage. But you can bet Chinese imports will not fit without changes.
And on top of all of this, Chinese stuff? It *is* crap. It is. And quality control is NOT easy, Hyundai only managed to get their act into gear by stealing Toyota's staff + quality control processes + documents (trade secrets + copyrighted material).
But Hyundai got it right. So potentially whatever company this Chinese company is, could too...
(Score: 0) by Anonymous Coward on Friday November 16 2018, @03:08AM
Chinese build to a price point. You want super cheap, you get crap (Walmart, Harbor Freight, etc. want super cheap). Remember that all Apple, Dell, HP, Lenovo, etc. are made in China / Taiwan too.
Datsun (Nissan) broke out into the international market licensing their engine designs from Mercedes. Hyundai originally came with engine designs licensed from Mazda. If this company is a Ford partner, these cars might just be re-badged Ford designs (so no worse than any other Ford).
(Score: 3, Touché) by suburbanitemediocrity on Thursday November 15 2018, @05:16PM (1 child)
Remember when the same was true with Japanese automakers?
(Score: 0) by Anonymous Coward on Thursday November 15 2018, @06:55PM
Why, yes, I do. Per Wiki https://en.wikipedia.org/wiki/Nissan [wikipedia.org] Nissan/Datsun produced it's first car(s) in 1914. Started export to USA in the late 1950s and were not recognized as making reasonable quality cars (subjectively) until about 1970 with the 510 sedan (we had one in the family) and the 240Z sports car.
With few US regulations in the 1960s, the Japanese could "learn on the job".
China didn't start until ~20 years later https://en.wikipedia.org/wiki/Automotive_industry_in_China [wikipedia.org] and made mostly trucks, "As late as 1985, the country produced a total of only 5,200 cars." No question the Chinese are coming on like gangbusters in terms of production quantity, but quality and an understanding of the requirements of the USA market takes a little longer. If you want to buy a high quality car in China these days, I hear that you buy an import, or foreign brand made in China (like Buick).
Are you ready to buy a battery electric car from China? Will you worry about a battery fire burning down your garage/house?? The smart importer/dealer will either carry insurance for this unfortunate situation or self-insure and quietly pay off this kind of disaster.
(Score: 3, Insightful) by The Shire on Thursday November 15 2018, @03:54PM (12 children)
The Chinese are good at making cheap products in large quantities, they aren't however known for producing high end high quality products. They can't compete with the used car market if they go ultra cheap, and they can't compete on a quality basis with existing auto makers at the higher end. Add the current political environment where such imports will face stiff tarrifs and I don't see how the US market is going to be a good route for them. As others have said, the European market might be a better option, or other countries which might be more inclined to favor cheap low cost crap.
(Score: 2) by suburbanitemediocrity on Thursday November 15 2018, @05:20PM (1 child)
Chinese companies are perfectly able to produce to any price/quality point that any other country in the world can. What most people have experience with is cheap crap from walmazbay designed to be built for pennies.
(Score: 2) by The Shire on Thursday November 15 2018, @06:40PM
This is actually not the case because the basic mass produced materials like steel and plastics are sub quality, and that's driven entirely by price. And even if they found a way to build at a high quality they would be unable to make it attractive to US buyers due to both reputation and the expense of export and tarrifs.
The auto industry has a lot of competition and I just can't see anyone buying a car in the US from China. My guess is Ford will start putting chinese engines and other components into their own cars instead. This will be as big a hit as when they put Fiat engines into Jeeps.
(Score: 3, Insightful) by bob_super on Thursday November 15 2018, @05:20PM (8 children)
Remember when the same was true with Japanese/Korean automakers?
(this is gonna be a fun thread. You guys seem to ignore that Chinese manufacturers were selling in Europe over 10 years ago, and you're talking as if they were just born, not some of the biggest companies on the planet)
(Score: 2) by The Shire on Thursday November 15 2018, @06:34PM (7 children)
Actually, I do remember that, and it was just as true at the time as it is for the Chinese now. I fully expect that to eventually turn around, but that may take a decade or more. Right now there are no ethics involved in most manufacturing over there - the money makers are all about manufacturing things fast and cheap and no one cares about the quality.
(Score: 1) by khallow on Friday November 16 2018, @05:40AM (6 children)
They do care about profit. That means some level, perhaps even a very good level of quality, just like with a number of other auto manufacturers. And there's no way that their ethics will ever be more impaired than General Motors has been for longer than you've been alive.
(Score: 2) by The Shire on Friday November 16 2018, @03:36PM (5 children)
Profit and Quality are like Security vs Ease of Use, they are opposing elements. Right now the Chinese are all about profit and not so much about quality. They will provide the bare minimum of quality in order for their marketing to succeed and not one iota more. Face it, this is a nation who, if you hit someone in an accident with your car, they will go back and make sure you're dead because it's cheaper. Ethics are an afterthought in most production environments over there.
And if you don't believe me, here's some backup:
https://www.news.com.au/travel/travel-updates/incidents/disturbing-stories-from-chinas-roads/news-story/9cdb5a1db6620d454a0ca96128f8cd6e [news.com.au]
There are a lot more documented incidents if you care to look.
(Score: 1) by khallow on Saturday November 17 2018, @05:41AM (4 children)
Going back to my earlier example, why would GM behave any different from a Chinese firm, given the same incentives? Don't confuse what is incentivized with what is moral. When bad behavior costs one or two orders of magnitude less than good behavior, you're going to get a lot of bad behavior. Laws and regulations aren't the only way to incentivize good behavior. Customer behavior can as well.
Here, putting out cars which have a high total cost of ownership means few customers will buy them.
(Score: 2) by The Shire on Saturday November 17 2018, @04:11PM (3 children)
It's a cultural difference. Western workers will report unsafe practices to their unions or the government. In China, unsafe practices in the name of profitability are considered the norm, no one bats an eye. So ultimately you end up with a seriously inferior product from China when compared to something manufactured in the west.
Generally you wont even know it until a year later, or when the warranty expires that the thing was built with substandard materials. Your engine block will crack because they used cheap alloys, your trim will dry rot from being made from the same plastic as the crap toys. A thousand things that can result from unethical chinese build practices. It may look great the day you buy it but you'll pay dearly in the long run.
(Score: 1) by khallow on Saturday November 17 2018, @08:01PM (2 children)
And your point is? Cultural differences can be changed. My point is that too much is made of the "cultural difference" and not enough of the incentives for producing goods of better quality.
(Score: 2) by The Shire on Sunday November 18 2018, @08:06PM (1 child)
My point is, cultural differences are slow to change. If everyone around you takes the cheap and easy path then you are not likely to be rewarded for standing up and saying "Hey, we should stop making crap".
The initial entry into the auto industry will be a very painful one for the chinese as they try to shake the justifiable image of being makers of cheap broken crap. They will have to learn the hard way to boost their quality levels and earn the trust of consumers the same way the Japanese did. It can happen, over time, but for the foreseeable future the market will be very hard on them.
I'm sure the Chinese government will do everything in their power to make sure Trump isn't re-elected, because if he is then the market will remain tough on them through 2024. The more the Chinese government subsidizes their cars to try to undercut US auto makers, the more tariffs they're likely to see.
(Score: 1) by khallow on Monday November 19 2018, @03:09PM
(Score: 2) by Arik on Thursday November 15 2018, @11:15PM
I'm afraid you're wrong about that. Chinese manufacturers are making a ton of high end products. They just don't put their own names on them. But they're still making it.
It's actually kind of funny how it works. A Chinese company makes products for a big foreign brand, and they have quality checks and demands written into the contracts, with hefty penalties for failing to meet them - so they put out a good product. Then they will also clone that product (or come as close to that as they can get away with) for their own brand *but* they don't clone all the QC stuff. They sell them for much less, but they still have a hard time selling them *in China* where all the cards are in their favor. Chinese people avoid Chinese brands! They will pay more for a foreign brand, even though it's the same design produced from the same factory, because they know that all the junk components that were rejected by the foreign brand just get used for the Chinese brand, and QC is essentially nonexistent.
This isn't just electronics, it's virtually everything. It's baby formula, in spades, and it's very definitely true in cars too. In China, driving a Chinese brand of car is a way of screaming to the world 'look at me, I'm poor, I'm a failure.'
So at first glance this doesn't look likely to gain any steam at all. Of course it's possible they'll find an angle, but if they follow the typical pattern for Chinese brands so far, this is no threat to Ford's ability to buy cars from China, slap their brand on them, and sell them here for a profit.
If laughter is the best medicine, who are the best doctors?
(Score: -1, Troll) by Anonymous Coward on Thursday November 15 2018, @05:34PM (2 children)
Chinese automaker Zotye plans 2020 Entrance into the U.S. market WHEN TRUMP LEAVES OFFICE
(Score: 0) by Anonymous Coward on Thursday November 15 2018, @06:36PM (1 child)
But the cynic in me says he'll be re-elected ...
(Score: 0) by Anonymous Coward on Thursday November 15 2018, @06:58PM
If he's re-elected the tariffs will stay and Chinese cars will be at 25% - not so attractive anymore...