A study by California-based consultancy AutoPacific says 15% of U.S. new-car buyers would consider vehicles produced by China-based brands, while 11% would contemplate Indian marques.
The first offerings from either country are at least seven months away from arriving in U.S. showrooms.
Against this backdrop, consideration rates are 16% for South Korean auto makers such as Hyundai Motor Co. Ltd. and Kia Motors Corp. — and their vehicles have been on the U.S. market for more than two decades.
AutoPacific was “a little surprised” by the findings, says Stephanie Brinley, senior manager-product analysis, adding expectations of lower prices took a back seat to greater marketplace openness.
“More has to do with the fact that people understand we are in a global economy and are more willing to buy products that aren't built in the States,” Brinley tells Ward's.
While acceptance levels revealed in the study represent a “huge opportunity,” she warns American consumers can be unforgiving. So sales success is not a “slam-dunk” for new players from China and India.
“If the product doesn't meet what (consumers) expect, they won't consider it again,” Brinley says.
India's Mahindra & Mahindra Ltd. will be first to test the waters as China-based OEMs are beset by a string of broken promises. Mahindra is scheduled import a line of small, diesel-powered pickup trucks in time for a February 2010 showroom debut.
“The interior refinement is there; obviously, the safety features are there,” says Max Butler, Global's vice president-marketing.
Butler tells Ward's he is not surprised by the AutoPacific study because Global's own research suggests vehicle origin has little influence on buyer perception
The study indicates those who would consider a car from China and India rate reliability and durability high. They are less interested in vehicle dynamics, such as handling, braking and acceleration.
AutoPacific President George Peterson says U.S. consumers already are accustomed to buying high-tech products from China. “Why not automobiles, too?”
He adds: “It appears that buyers in America are willing to give Chinese and Indian vehicles a chance right out of the box. Understanding these consumers will be critically important to the success of any newcomer.”
Americans most likely to consider vehicles from China and India “tend to be young, well-educated and affluent, for their age, and have good jobs in administrative, health care and middle-management,” Peterson adds.
Chinese and Indian product “considerers” are more likely to currently own Japanese and Korean autos, indicating that these Asian brands, rather than domestic brands, may face stiffer competition from impending new entries to the U.S. market
But Steve Taylor, who owns Kia and Hyundai franchises and plans Mahindra distribution from his Taylor Automotive Family enterprise in Toledo, OH, introduces a more ominous motivation: consumer backlash. “We're seeing more and more people that are discouraged by the government bailout of GM and Chrysler,” he says.
Meanwhile, U.S. launch timing for China-built vehicles is fuzzy. Chery Automobile Co. Ltd., which reneged on a planned 2007 U.S. product introduction and later, under a cloud of suspicion about its engineering competence, dissolved its partnership with the former Chrysler Group, recently launched a campaign to combat the resulting poor publicity.
Chery's website describes a plant tour it hosted for journalists from countries such as Russia, Turkey, Venezuela and Brazil. Of one journalist, Chery claims, the tour “completely changed his opinion (of) ‘made in China.’”
Chinese America Cooperative Automotive Inc. (Chamco) had plans that rivaled Chery's, but unraveled in an internal management dispute.
Taylor expects to be selling cars from Brilliance Auto Group in 2011, the same year BYD Auto Co. Ltd. has promised the U.S. launch of an electric car.
New research indicates 15% of new-car buyers in the U.S. say they would consider purchasing their next vehicle from China, and 11% would consider buying a car from India, without knowing specific brands or vehicles.
This compares with 16% who said they would consider a vehicle from Korea, which has been marketing vehicles in the U. S. since the 1980s.
“As Hyundai and Kia have been on the American scene for decades now, it's surprising that consideration for Chinese and Indian brands, sight unseen, would be about as strong as it is for the Korean brands,” says the study's author, George Peterson, president of automotive research firm AutoPacific.
He notes Americans currently buy many premium and high-tech non-automotive products made in China. That fact has potentially warmed them up to the idea of buying a Chinese-made vehicle.
Based on a national survey of more than 30,000 new car and truck buyers, the AutoPacific study looks at who these consumers are and what they want in a vehicle.
“Not only are a significant number of people willing to consider Chinese and Indian brands, this group consists of highly desirable buyers who would be coveted by any manufacturer,” Peterson says.
Many are young, well-educated and affluent for their age, and hold administrative, health care and middle management jobs.