LOS ANGELES — Just as the coronavirus pandemic was plunging the U.S. auto industry into crisis and stripping millions of car sales from stunned retailers, Duke Hale was searching for American factory space to assemble Chinese crossovers for his Southern California startup.
Hale, CEO of HAAH Automotive Holdings, partnered with China’s Chery Automobile Co. this year to bring a new U.S. brand — called Vantas — to life, even as pandemic uncertainties swept across the industry. But just as remarkable, HAAH and Chery are aiming to succeed at something that half a dozen Chinese brands have failed at since about 2005: entering the U.S. market.
The arrival of Chinese brands in America — following in the footsteps of German, Japanese and Korean automakers — has been imminent for nearly two decades. That includes a failed attempt by Chery in 2005 to bring cars to the U.S. with the help of auto entrepreneur Malcolm Bricklin, who helped establish Subaru of America in the 1960s and Yugo in the 1980s.
The Yugo improbably made it to American shores from an obscure factory in Yugoslavia. Vehicles from China — now the world’s largest auto market — have not.
Among the Chinese brands that have announced a U.S. launch before pulling back: Chinese automakers Zotye, GAC, Great Wall, Chery and Geely. A separate Geely brand, Lynk & CO, has said it would launch in the U.S. in 2021 but has not announced steps toward doing so. Additionally, several Chinese and Chinese- funded electric vehicle brands have expressed interest.
“I don’t know of any other business expansion effort that has been in the works for as long as bringing Chinese automobiles to the U.S.,” said Karl Brauer, executive publisher of Autotrader. “It doesn’t mean it’s never going to happen. But if people in the industry seem skeptical, they have very good reasons.”
Why is this effort so elusive?
Michael Dunne, CEO of ZoZo Go consultancy and a leading industry voice on U.S.-China auto dealings, believes it has less to do with the Chinese and more to do with the challenge of getting through the great wall of America.
“When they cast their eyes on the U.S. market, it’s so big and so profitable that it has an irresistible attraction for Chinese automakers,” Dunne told Automotive News. “When they arrive on the California coast and set up their office, they find that it’s impenetrable. And that’s when they often make a U-turn and have to rethink it.” Home was fine
Chinese automakers have stalled in the U.S. for a variety of reasons. One has been that an easier and more attractive growth opportunity was beckoning in the home market of China, where vehicle sales ballooned to 28.9 million in 2017. Chinese producers often weren’t motivated to do the heavy lifting needed to break into U.S. retailing, where success might take decades, when there were easier pickings at home.