Future models from China

The closer China becomes, this progress — specifically its advances in manufacturing — comes sharply into focus. Maliciously still ridiculed as the global origin of sub-standard goods, China is showing that it has been grossly misunderstood. And to their peril, its detractors may continue to ignore the alarming ability for China to achieve rapid financial and manufacturing strength.

Ric Hull, the managing director of Australian car distributor, Ateco Automotive, is on his 25th business visit to China. This time he is cementing relationships with two Chinese car makers following the introduction of one brand, Great Wall Motors, onto the Australian market last month. Even after nearly 20 years of visits, he admits to being constantly staggered by the nation's progress. "Money appears to be unlimited," he says. "This is not a third-world country.

"Fifteen years ago private car ownership was unheard of. There are now 176 million private vehicles on Chinese roads and to meet demand, there are about 60 domestic carmakers building and selling one-million units a month — bigger than any country." Ateco now distributes Great Wall Motors' (GWM) two dual-cab ute models through 46 Australian dealers. It's a modest start but sales expansion and new models — deliberately priced 10-15 per cent below comparative Korean-made vehicles are coming. And coming fast.

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Hull says GWM's two commercial utes will be joined by the Hover H3 4WD and a single-cab ute variant before the end of this year. The Florid (a five-door hatch not unlike a Suzuki Swift) follows in early 2010, then a smaller hatch (the Phenom) and a sub-$25,000 seven-seat people mover are planned for release through that year. (If the names are frightening, Hull assures they'll be replaced for the Australian market).

There's even a startlingly well-equipped and finished camper van based on the dual-cab ute that is being eyed by Ateco as suitable for Australia's camper rental industry.

The Chinese assault being prepared by Ateco next year will also include products from China's fifth-biggest vehicle maker, Chery. Already confirmed for next year is the Chery A1 — a 1.3-litre hatchback but Hull says that single model could not sustain the brand in Australia. So the A1 will be quickly followed with bigger passenger car derivatives, including the pretty Mazda3-sized A3. "They also have a diesel van — similar to the now defunct Kia Pregio that we're almost salivating over," he says, "because it will be a very, very popular seller in Australia."

Ateco's plans for Chery and GWM are parallel though they'll be offered to different dealers and occupy different showrooms. "There'll be some dealers selling both but they'll have to be stand-alone operations," he says. Ateco is yet to sign Chery. Hull is awaiting final specifications before completing a business case and selecting dealers.

He indicates that the much smaller GWM company — which only started mainstream carmaking in 1990 and is one-fifth the size of Chery is faster at making business decisions and more open to tailoring vehicles for specific Australian needs.

Comparisons with China's progress in automotive manufacture are made with that of Japan and Korea. Everyone, including GWM CEO, Madam Wang, agree that there are similarities. But there is a difference. Time. Hull expects companies such as GWM to take half the time of Korea to reach global market and product maturity.

Madam Wang, China's only woman car boss, is aware of criticism about the quality of earlier, domestic-only vehicles. She believes GWM's smaller 1.3 to 1.5-litre cars are almost equal to the Japanese in terms of quality but believes the mid-size 2-litre models have about four years to go to be on par with the Japanese rivals. "We can match the quality of Lexus in seven to eight years," she says. "But in terms of (engine) performance, there is still a big gap."

"We forecast we will have five-star Euro NCAP (safety standard) car ratings by 2011." GWM has a seemingly minor 7-8 per cent of the enormous Chinese domestic market though is regarded as being one of the better quality manufacturers. "In our smaller cities, buyers have price as the most important issue," Madam Wang says. "In the bigger cities, like Beijing and Shanghai, buyers want quality and brand image. We sell better in the bigger cities."

That quality image will be further tested when GWM in 2011 takes on the locally-made BMW models. "The luxury BMW sells for one-million RMB (about $200,000) but we believe we can get a similar car in style and luxury on the market for RMB400,000 (about $80,000)," she says. "The difference between pricing is a branding issue and some technical issues."

That car is believed to be based on GWM's recently shown CHC011 four-door coupe concept, a 5m-long limousine now with a 3.5-litre V6 petrol engine and five-speed automatic transmission. A relatively unknown Chinese car company with aspirations of taking on BMW would, in normal circumstances, be laughable. But to Madam Wang and her company of 200,000 employees, taking on BMW is entirely possible.