China's latest cheap export: a loaded SUV - for $14,000

DETROIT — Amid all the futuristic vehicles, "green cars" and crossovers this week at the Detroit auto show, one of the biggest game-changers coming to the American market can be summed up by its price sticker.

How's this for innovation: $14,000 for a fully loaded, midsize sport utility vehicle with a leather interior.

The catch: It's made in China.

Four Chinese automakers and an American importer of Chinese cars showed off their wares here this week, with one promising to bring vehicles — including the SUV — to the U.S. as soon as year's end. It was a torrent of activity from an industry that made its debut at the Michigan big-boys' party only two years ago.

Their plans to sell cars in the world's largest auto market are ambitious, considering the mountain of regulatory and marketing challenges, not to mention a history of postponed and canceled attempts to come stateside.

And then there's the skepticism of U.S. consumers, who have endured a wave of recalls of Chinese-made pet-food ingredients, hazardous toys and other tainted products.

Still, it's hard to ignore the ability of these manufacturers to supply an exploding Chinese market. (Nearly 8.8 million vehicles were sold in China last year, a 22 percent rise that put its market at more than half the size of the U.S. market). And thanks to joint-operating agreements required of U.S. and European companies selling cars in China, Chinese manufacturers have gained exposure to some of the latest Western technology.

"There are a number of very aggressive car companies in China," said John Parker, a Ford vice president who works closely with a Chinese carmaker through a joint-operating agreement. "Their cars are progressively getting better. I think it will be a very significant industry in terms of size and scale."

Probably coming to U.S. roads soonest are cars from China America Cooperative Automotive, a U.S. company with an exclusive contract to sell 600,000 pickups and SUVs, including the $14,000 model, over five years. Chamco Chairman William Pollack says the cars will go on sale at the end of this year or early 2009 in nine states, including California.

The vehicles are made by Heibei Zhang Xing, or ZX Auto, and Chamco says they are going through engineering changes required to meet U.S. safety and emissions standards.

"We know this car will pass the most rigorous testing," Pollack said.

Several other Chinese companies say they aren't far behind. Hunan Changfeng Motor Co. says it will sell SUVs in the U.S. next year. Chrysler signed a deal with Chinese company Chery last month to make economy cars it would badge as Dodges and sell in the U.S. starting in 2009.

BYD, a Shenzhen company, says it could market sedans, including a plug-in hybrid, in the U.S. in three to five years.

Meanwhile, China's largest automaker, Geely Group, said this week it will build a plant in Mexico.

Like most products from China, the central marketing approach will be affordability. It's the same road taken by Korean carmakers Hyundai and Kia in the past two decades, and, further back, Japan's Toyota and Honda. Yet with models that have retracting hardtops, anti-lock brakes and heated seats, the Chinese say they're not hawking econo-boxes, despite prices that almost never break $20,000.

For companies established in the U.S., the threat of price competition is worrisome. Industry analysts point to Hyundai's impending launch of a luxury sedan as a response to the Chinese threat. The Korean carmaker, they say, is essentially trying to move up a category to get out of the bargain realm.

"Automakers are very much worried about Chinese automakers," said Aaron Bragman, an industry analyst at Global Insight. He contends that the immediate threat is not in the U.S. but in China itself. GM, for example, sells more Buicks in China than in the U.S. "How long can U.S. automakers keep a position of prominence there?" Bragman asked.

Moreover, Chinese cars are already being sold in Africa and Latin America.

Despite their ambitions, the Chinese are clearly auto-show rookies. Their presentations are scatter-shot and translations odd.

Geely said drives of its MK "feel like kicking lighthearted dance in the streets."

And Changfeng said its CS6 "make you reluctant to move your eyeballs off the car."

Material from the Detroit News

was used in this report.