UPDATE 2-Chery Auto says has no immediate plans to enter US
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BIRMINGHAM, Mich., Nov 15 (Reuters) - Chinese auto maker Chery Automobile has no immediate plans to enter the U.S. market but is working on meeting safety and quality standards, the company's general manager said on Thursday.
Speaking to reporters at an industry seminar in Birmingham, Michigan, Dr. Lin Zhang also said Chery's partnership with Chrysler LLC to bring a small car to the U.S. market is in the "conceptual stage" of product development.
Zhang declined to comment on a timeline for launch in the U.S. market, but said the process typically takes three to four years to get a product from that stage to production.
"We don't have a definite timetable yet," Zhang said at the seminar on the Chinese automotive industry, hosted by industry research firm JD Power.
"The key is to continually assess our products and capabilities. Until we are ready, we won't come to the U.S. market."
Chery, the largest independent automaker in China by market share, signed an agreement with Cerberus Capital Management [CBS.UL] affiliate Chrysler in July to develop, manufacture and distribute Chery-made small cars in North America, but industry experts have remained unclear on a timeline.
"There is no question the U.S. is the most competitive and most demanding market in the world," Zhang said. He said the company must meet several challenges to enter the U.S. market, such as safety and emissions requirements and "a very high expectation of quality."
Zhang also said a Chrysler-Chery car could "conceivably" be priced at $10,000 in the U.S. market, given the current value of the U.S. dollar. That price would make the car, which analysts expect will be branded a Dodge, the cheapest small car in the United States.
He said Chery plans to bring its own car to the U.S. market independently after it launches the Chrysler car.
Many Chinese automakers want to bring their vehicles to the United States, but analysts and industry experts have said they fall severely short of quality and safety requirements.
Jeff Schuster, executive director of global forecasting at JD Power, said he expects Chery to bring a Chrysler car to the U.S. market around 2010, but that timeline could be delayed if Cerberus reviewed the plans.
Cerberus bought a roughly 80-percent stake in Chrysler earlier this year from Daimler AG (DAIGn.DE).
Schuster also said an independent Chinese car would likely not be seen in the United States until closer to 2015.
"It's been a moving target, and I think rightfully so," Schuster said, referring to a launch timeline for the U.S. market.
"They want to make sure that when they do come, they do it the right way, have the right product and the right infrastructure set up to support a successful launch."
Zhang said the recent series of recalls and warnings over faulty Chinese goods ranging from toys to tires should not affect demand for Chery cars.
"It is not a concern for Chery, but a negative image has a negative impact," Zhang said. "To some level, this issue was exaggerated but there are problems and Chinese manufacturers have to be careful."
Zhang said he expects Chery's total sales to exceed 400,000 units in 2007, while the company expects to export 110,000 vehicles in the same year.
Zhang also said he would now focus on expanding in "high-growth countries" in the Middle East and Eastern Europe.
"We want to continue to build a network of products in countries we have already entered," he said. "The EU and the U.S. are still an objective for us, but they are in the long-term planning."
Zhang said the Chinese passenger car market is expected to grow to 6 million units in 2008, up from an estimated 5.2 million units in 2007.
Chery currently has a 7.7 percent share of the Chinese market. (Editing by Carol Bishopric)
