Will China's BYD Bring the F3DM to the U.S. or will this be Just Another Broken Promise?

When it comes to making cars,China is king. We’re talking the world’s largest car market, with over a hundred individual marques. So why is it that there are virtually zero Chinese car manufactures selling cars in the U.S. aka the world’s other largest car market?

So far, China’s “Big Four” (well, the four most visible to those outside of China) have made and broken promises of bringing their vehicles to the North American market. Brilliance, Chery, Nanjing and Geely have all backed down from their plans to open dealerships and factories stateside. So far, not a single car from China's major automakers has touched down on U.S. soil outside a motor show.

Senior analyst Bill Visnic of Edmunds.com explains why: “This isn’t computers or cellphones, where you just get into a big-box store. You need some dealerships, and those things are tremendous investments of time and resources. [The Chinese] thought it was going to be a lot easier than it was.”

BYD hopes to change all that. China’s sixth largest automaker provided plug-in hybrid cars to the 2008 Beijing Olympics and now plans on bringing that hybrid, the awkwardly , named F3DM to the U.S.A. for Spring 2012. It still could be an uphill challenge, though.

The fallout from the slump in auto sales after the Global Financial Crisis, the government’s bailouts of two of the Big Three, the liquidation of numerous dealerships and the reduction in hybrid sales that came with the sudden drop in fuel prices is still being felt in much of America’s automotive heartland. Add to that the small market share commanded by hybrid and electric vehicles – just 2.2% worldwide according to JD Power – and BYD may be in over their heads already.

AS Mike Omotoso from JD Power explains:

“Because consumers are wary about electric vehicles and their driving range and batteries, they are even more likely to go with more established companies like G.M. and Nissan. The problem with the Chinese car companies is they are trying to run before they walk.”

Volvo to Cut Down its U.S. Lineup, V50 Among the First to go

With its U.S. sales steadily declining for 7 years now, Volvo has no choice but to radically rethink its strategy. The Swedish automaker is currently offering nine models in the States or about as many as Volkswagen does, but it sold almost five times fewer cars than the Germans in 2010.

Consequently, the Swedish brand, which is now owned by China's Geely, has decided to significantly reduce the number of models in its North American lineup and concentrate on best-selling vehicles in an effort to increase sales.

“Five or six is probably a good number”, said Doug Speck, head of Volvo’s operations in the U.S., in a telephone interview for Bloomberg. “We have to focus on the key segments with significant volume potential”.

Mr. Speck confirmed that the V50 estate is sure to go, although didn’t specify exactly when, saying that dealers will be notified first. The manufacturer hasn’t decided yet which other models will be phased out, but it will definitely keep the S60 sedan and the XC60 and XC90 crossovers, he added.

Volvo will also try to boost sales with more advertising and expects “double-digit” percentage growth in the U.S in 2011.

As for the near future, Mr. Speck said that Volvo will introduce hybrids and all-electric cars, but declined to say if it will bring diesels to America.

Source: Bloomberg

Volvo to Cut Down its U.S. Lineup, V50 Among the First to go

With its U.S. sales steadily declining for 7 years now, Volvo has no choice but to radically rethink its strategy. The Swedish automaker is currently offering nine models in the States or about as many as Volkswagen does, but it sold almost five times fewer cars than the Germans in 2010.

Consequently, the Swedish brand, which is now owned by China's Geely, has decided to significantly reduce the number of models in its North American lineup and concentrate on best-selling vehicles in an effort to increase sales.

“Five or six is probably a good number”, said Doug Speck, head of Volvo’s operations in the U.S., in a telephone interview for Bloomberg. “We have to focus on the key segments with significant volume potential”.

Mr. Speck confirmed that the V50 estate is sure to go, although didn’t specify exactly when, saying that dealers will be notified first. The manufacturer hasn’t decided yet which other models will be phased out, but it will definitely keep the S60 sedan and the XC60 and XC90 crossovers, he added.

Volvo will also try to boost sales with more advertising and expects “double-digit” percentage growth in the U.S in 2011.

As for the near future, Mr. Speck said that Volvo will introduce hybrids and all-electric cars, but declined to say if it will bring diesels to America.

By Csaba Daradics

Source: Bloomberg

_______________________________GALLERY_______________________________

Volvo ownership moves from Ford to ... China

The Volvo Car Corporation is one of the car industry’s strongest brands, with a long and proud history of world-leading innovations. Founded in Gothenburg, Sweden, by Gustaf Larson and Assar Gabrielsson, the first car left the factory on 14 April, 1927. It was called ÖV4 (Jakob). Image Credit: egmCarTech

Volvo ownership moves from Ford to ... China

In the annals of automobile culture, nothing expresses the challenge of change more than a change in the culture of ownership of a manufacturing operation.

So when Chinese low-end mass production automobile brand, Geely purchased the Swedish premium brand Vlovo from Ford for $1.8 billion, many thought this made sense. Geely could get help migrating up the quality and auto size chain from small and cheap, to mid-sized with a premium brand added on to coordinate.

Ford sold Volvo at a time when their domestic stable brands are benefitting from American free-market loyalty ever since the Obama Administrationtook over and restructured the other two domestic brands ... retaining control over General Motors and selling off Chrysler to Italian automaker Fiat while hurting investors through a devaluation of position along the way.

The culture difference between Volvo and Ford was never able to turn a profit so one has to question if the culture divide between China and Sweeden might be a bit more tough to cross even though China can boast the largest potential market on Earth. Chinese Government support and the desire for Geely management to win where others may fail could be the key.

Understand now that when one purchases a Volvo ... they will be supporting a subset of the Chinese government as they seek to become the most powerful nation on the planet.

Has Geely and China over-reached in this cross-borders international expansion with the purchase of an internationally recognized European luxury car operation (the first of its kind by a large Chinese equipment manufacturer)?

This excerpted and edited from Financial Times -

Premium car deal fills a hole at Geely
By Patti Waldmeir, Financial Times - Published: March 29 2010 03:00 | Last updated: March 29 2010 03:00

Arthur D Little, the consultancy, has predicted that Geely would be one of only five Chinese automakers - out of more than 100 - likely to make it into the "exclusive club of global OEM champions" by 2020.
Reference Here>>

Culture integration may be the first order of business to success or failure.

... notes from The EDJE

Chinese automakers claim stake in new technology as light car demand drops

In July of 2009, Caijing Magazine quotes unidentified sources as saying Chinese automaker Chery is looking for bank and equity investor help for a possible bid for Volvo, Ford’s Swedish nameplate. Chery looses out to Geely. Image Credit: The Auto Beat

Chinese automakers claim stake in new technology as light car demand drops

China's automakers Geely and BAIC pushed ahead with plans to harness the technology of Ford's and General Motors' ailing Swedish brands Volvo and Saab in a bid to be global industry players. A significant technology gap between domestic Chinese automakers and their global rivals, has left the Chinese looking for acquisitions of overseas technology and designs as the global auto industry restructures.

Ford Motor Co. released a statement today, Wednesday December 23, 2009, that it aims to complete the sale of its profit loosing Volvo Cars unit to a privately-held Chinese auto maker, China's Zhejiang Geely Holding Group, parent of Geely Auto, in the second quarter of 2010.

Beijing Automotive Industry Holding Corp (BAIC), China's fifth-largest automaker, said separately it would launch an aggressive campaign to develop its brand both at home and overseas, after buying the rights to three old Saab models from GM. BAIC is expected to invest 33 billion yuan ($4.8 billion) in vehicle R&D over the next three years, after paying $200 million for the Saab technology, including the rights to three overall vehicle platforms and two engine technologies.

Reported that the new car Geely SL-1 is based on the Geely Vision, possibly named “Sea Wave“, inherited Huapu’s “Sea Series” name.

It should be said that from Geely Pride, we could see so much shadows of Mercedes-Benz in Geely, especially the front grille. Huapu could never get rid of such problems, this time, the Geely SL-1 looks very very like the Mercedes-Benz C class version, the front-end shapes, insurance skirts…

Front-end gives a same feeling to us

Similiar headlights? Caption & Image Credit: chinacarfans.com

All of this activity is happening at a time where the market for light car platforms in the United States has been tanking and only slow growth gains are expected over the next five years, according to a study just released by AutoPacific, a future-oriented automotive marketing research and product-consulting firm.

In a study released earlier this week, AutoPacific states that "2009 will be a memorable year for the automotive industry – unfortunately for all the wrong reasons. The U.S. light vehicle market is expected to close out 2009 at a disastrous 10.3 million sales, down from 16.1 million sales just two years prior and the lowest industry volume since AutoPacific began forecasting automotive sales in 1988. Naturally, the national economic collapse had a profound impact on retail sales of light vehicles."

The industry can look forward to year-on-year recovery over AutoPacific’s five year forecast period, but at a relatively gradual pace. In the near term, AutoPacific forecasts industry volume of 11.4 million units in 2010 as the economy slowly heals but also as unemployment hampers faster industry sales recovery. 2015 will see industry sales of 15.4 million, a significant improvement from 2009 volumes but still a far cry from the near-17 million unit years seen through much of the past decade.

“Even with the gradual recovery of the economy, many Americans will need to address serious near-term issues such as loss of personal savings and wealth as well as focusing resources on projects, such as home repairs, that had to be deferred due to the recession,” said Ed Kim, Director of Industry Analysis at AutoPacific. “Because today’s vehicles are more durable and long lasting than ever, consumers are able to put off new vehicle purchase for much longer than they have been able to in the past. This dynamic will hamper industry recovery in the near term.”

2009 Pontiac G8 GT - With its aggressive styling, sport suspension and available V8 power, the full-size rear-wheel drive G8 sports sedan is proof that Pontiac is serious about performance cars. Image Credit: Pontiac/General Motors

To further complicate the issue for Chinese automakers, that even though the industry has seen the loss of several autobrands and nameplates (Saturn, Pontiac, PT Cruiser, the Chrysler Aspen and the Dodge Durango are a few examples that come to mind) the industry still expects nearly 300 individual vehicle nameplates in the marketplace by 2015. By comparison, there were only 198 nameplates back in 1998, which was the last time industry volumes were at around 2015’s expected level (15.4 million units). Thus, automakers will be fighting for a piece of a much smaller pie. Profitability at these lower volumes will represent a challenge, especially when the drive towards greater fuel efficiency will add significant cost to upcoming new vehicle offerings.

These are not heady times to be an auto-manufacturer in this world.
(ht: WSJ, Reuters, Forbes, and AutoPacific)

... notes from The EDJE