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Automotive

Chinese cars are coming to the U.S., but when?

Toyota North America CEO Jim Lentz thinks it's a question of when, not if, Chinese automakers venture into the U.S. market.

In an industry where failures tend to be uncommon but high-profile – anyone remember the launch of the Tata Nano? – risks can be hard to take. That’s part of the reason why Chinese automakers haven’t ventured into the United States market.

But on that topic, Jim Lentz, CEO of Toyota Motor North America, was unequivocal about one thing.

“It’s not a question of if Chinese manufacturers will come to the U.S., it’s when,” he said.

Lentz made his remark during the March 29 Reuters Newsmaker, in which he and Reuters Corporate Regulation Reporter David Shepardson discussed the Japanese automaker’s plans for the future and the state of the global automotive market.

Chinese automakers have several hurdles to overcome if they’re going to avail themselves to American consumers.

“This is a tough industry in which to start fresh,” Lentz said.

First, there’s the deeply ingrained sense of certain brands and types of car as either “American” and therefore patriotic or “exotic” and therefore refined and desirable. At present, Chinese auto brands don’t fall into either category.

Along those same lines, Chinese automakers have no reputational cache with U.S. consumers. That will make it for their selling points to not fall on deaf ears.

“It will be interested to see, even in the case of GAC, what’s their brand promise? “ Lentz said. “What are they going to show customers who don’t know anything about their brand? They’re going to have to come in and, likely, undercut the market.”

(Toyota and GAC have an agreement under which GAC produces Toyota vehicles for the Chinese market.)

In addition to those brand and image challenges, if Chinese automakers want to enter the U.S. market, they will have to lay some serious groundwork in terms of infrastructure. Lentz mentioned dealership channels and finance connections specifically.

The challenges facing Chinese automakers who want to enter the U.S. market are significant, but Lentz didn’t see them as insurmountable

“There’s no question they’re coming,” he said.


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