China’s Cheap Car Strategy for US

china flagHans Greimel writes an interesting perspective published by AutoNews on China’s Cheap Car Strategy for the United States.  Check it out:

SHANGHAI — How much will a Chinese brand need to discount its cars to succeed in America?

Wu Song, general manager of aspiring U.S. entrant Guangzhou Automobile Group Motor Co., says he has that magic number: His cars will have to be priced 30 percent cheaper than rivals in the same segment.

If everything goes his way, Wu will be testing his bargain-basement pricing strategy with the U.S. launch of his company’s GS4 crossover sometime in 2017.

“We are confident. It could be popular in the market,” Wu told Automotive News at the Shanghai auto show. “Considering the low price, it should be competitive.”

The company’s top executive already is seeking U.S. dealers, importers and distributors.

Guangzhou Automobile, which goes by the abbreviation GAC, is the latest Chinese automaker floating plans to sell made-in-China cars in the U.S., following similar pronouncements by Great Wall Motor Co. and BYD Auto Co.

Skeptics often pooh-pooh such goals, noting the many Chinese brands that have pledged to be on sale in the U.S. in two or three years but still aren’t. But Wu’s comments shine a light on the pricing calculus they are working with.

With no true bargain brands left in the U.S. market, Chinese brands see room to make a pure price play.  Read More.

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