In a major milestone, GM mulls selling Chinese-made cars in U.S.

2015-11-17 09:30China Daily Editor: Wang Fan
A production line of GM's Buick brand in Wuhan, capital of Hubei province. (Photo/China Daily)

A production line of GM's Buick brand in Wuhan, capital of Hubei province. (Photo/China Daily)

General Motors is reported to be planning to import its midsize sport-utility vehicle, the Buick Envision, from China-becoming the first United States automaker to sell Chinese-made cars in the country.

The Wall Street Journal and the Detroit Free Press both reported GM is to bring the Envision to the U.S., with the Journal expecting imports of between 30,000 and 40,000 of the vehicles.

GM declined to comment on the reports.

Speculation had been building that GM's Buick brand was planning to sell the Envision-now produced at a plant in Shandong province-in the U.S..

The Envision is considered a midsize crossover sport utility vehicle that is bigger than Buick's Encore subcompact, but smaller than its large Enclave SUV.

David Whiston, an automotive analyst at Morningstar Inc, said the Envision could fill an important gap in Buick's U.S. lineup.

"They don't have a vehicle in that (midsize crossover) category. The Encore is too small and the Enclave is too big or too expensive for many families," he told China Daily.

Sean McAlinden vice-president for strategic studies and chief economist at the Center for Automotive Research in Michigan, thought the model "will probably sell very well" in the U.S..

"This segment is now over 30 percent of the market."

Volvo-part of privately owned Chinese automaker Geely Holding Group-began exporting the Chinese-made S60 Inscription sedan to the U.S. earlier this year.

Analysts suggested that could well have prompted the GM move, as well as inspire Ford Motor Co and Fiat Chrysler Automobiles to import their Chinese-made models to the U.S. too.

"Fiat Chrysler does not have much capacity in China," said McAlinden.

"It plans to build the Jeep Renegade in China. Ford might consider it as the Chinese market has slowed down.

Whitson said that whether those companies do choose to sell Chinese-make cars in China might "depend on the political fallout" and also on what happens to Chinese demand.

"If China's economy picks up and demand there recovers, GM may have to build the vehicle here in the U.S.," he said, adding the Envision may even end up becoming a part of the U.S. presidential campaign.

"There will be rhetoric on this in the campaign, particularly from Donald Trump."

McAlinden went further, suggesting Trump has "already bashed Ford for building plants in Mexico".

"That will probably be the extent of the political fallout. No one else in any party has taken such an interest in the issue."

Stephanie Brinley, a senior analyst with IHS, said: "Building close to where you sell is sound strategy and expected to remain the first choice-but in some cases, the volume justification means importing is the better solution. This appears to be true in the case of Buick."

She said that it was certainly conceivable another manufacturer may make a similar decision in the future, but that GM's move is not "necessarily indicative of an overall shift" of auto manufacturing from North America to China.

"Buick already imports some of its products, and reports are saying that Buick expects to sell about 30,000 to 40,000 units per year-while that volume will be notable for Buick's U.S. sales, it is a fraction of GM's sales and manufacturing," said Brinley.

"GM will continue to source the majority of its North American products from plants in North America; if the car is imported, it is not expected to portend a large shift of U.S. auto manufacturing to China. GM's overall import volume to the U.S., from any country outside NAFTA, was only about 92,000 vehicles in 2014."


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