Greg Shafer ended a lifelong streak of buying U.S.-made cars
when in August the 53-year-old drove out of a Columbus, Ohio,
dealership behind the wheel of a Buick Envision.
His $40,000 sport-utility vehicle is one of the first cars to be
sold in America that was built in China. Mr. Shafer decided its
provenance wasn't an issue because "once you drive it and
experience all the features, it feels far from a made-in-China
car."
As the U.S. auto industry's rising reliance on Mexican car
factories becomes a hot topic in the 2016 presidential election,
customers like Mr. Shafer are delivering a boost to General Motors
Co.'s made-in-China strategy.
The No.1 U.S. auto maker in terms of sales started selling the
Chinese-built Buick Envision in North American dealerships in late
spring, importing relatively small numbers of the vehicles to give
a boost to the Buick brand. A few months into the experiment,
dealers are clamoring for more because they say most of their
customers don't care where the vehicle is made.
"There has been very little pushback," said Chris Haydocy,
co-owner of the Haydocy Buick GMC in Columbus, where Mr. Shafer
bought his SUV. "Most people realize the world is flat now."
U.S. auto buyers routinely purchase cars imported from Asia,
including South Korea and Japan, and much of the initial disdain
for those products has faded as imported nameplates become the
norm. Ford Motor Co.'s plans to invest $1.6 billion in a new
small-car plant in Mexico has become a symbol of U.S. production
jobs being exported in election debates. Mexico's share of North
American production has doubled to 20% in the past decade, with
most of the output slated for the U.S.
The made-in-China label is a new one for the U.S. auto industry
and represents a hurdle due to quality concerns. Cars with bad
fit-and-finish and outdated components have been displayed by
indigenous Chinese auto makers at U.S. auto shows for years, but
have never been made available for sale here.
China's growing reputation for making higher-end consumer goods
such as Apple Inc.'s iPhone has made the idea of Chinese-made cars
more acceptable for U.S. buyers, said Michael Dunne, a strategy and
investment adviser at Dunne Automotive Ltd.
GM's decision to import the Envision, disclosed late last year,
riled factory workers at home. The United Auto Workers called it a
"slap in the face to U.S. taxpayers" that had financially supported
GM in the 2009 bailout of the auto industry.
GM said the strategy made sense because Buick, which is one of
the largest-selling brands in China, had holes in its U.S. product
lineup at a time when low gasoline prices had buyers clamoring for
more SUVs. With ample Envision capacity at a Shandong province
factory, executives decided to carve out tens of thousands of units
and send them to the U.S.
"This is the advantage of having such a strong presence in the
two biggest markets in the world," GM North America President Alan
Batey said in an interview. "We couldn't have done it [in the U.S.]
if China hadn't done that vehicle."
Volvo Car Corp., owned by China's Zhejiang Geely Holding Group,
last year began shipping small numbers of a version of its S60
sedan to the U.S. from a plant in Chengdu province.
In the U.S., Buick barely ranks among the top 20 auto brands by
sales volume. The brand is a stalwart in China, however, where
sales are quadruple Buick's annual U.S. volume and more than double
what Chevrolet sells in China.
The Envision is built by Shanghai GM, the auto maker's joint
venture with SAIC Motor Corp., but was designed and engineered by
GM at a facility just outside Detroit. Last week, the Envision
earned the top safety rating from the Insurance Institute for
Highway Safety.
The Envision quickly became one of Buick's top sellers in China
as buyers moved to SUVs from sedans and vans. GM sold about 150,000
Envisions last year—its first full year on the market—and is on
pace to top 200,000 this year, on par with Jeep Cherokee sales in
the U.S. The brand is selling more than 1,500 Envisions a month in
the U.S. as GM ramps up imports.
Greg Heath, managing partner at Mark Christopher Auto Center in
Ontario, Calif., said he is less worried about his customers'
perception of the Envision's Chinese origins than he is about
getting more of the SUVs. His dealership sells GM vehicles,
including Buick.
"We'll get them in droves from a big shipment," he said. "Then
it'll be months before we get any more."
Made-in-China cars aren't expected to become a big part of
overall U.S. car sales. Mr. Dunne said other auto makers may ship
cars from China to the U.S. as production capacity there surges
ahead of demand. China's car factories will have the capacity to
make about 40 million light vehicles this year, while sales are
forecast to hit around 25 million, according to researcher IHS
Automotive.
Western auto makers are likely to limit any exports from China
because it is usually more profitable to build cars where they're
sold, Mr. Dunne said. There are timing issues, too. U.S. Buick
dealers said it can take as long as six months to receive a
custom-made Envision, more than double the normal wait time for a
vehicle assembled in North America.
Write to Mike Colias at mike.colias@wsj.com
(END) Dow Jones Newswires
October 06, 2016 12:55 ET (16:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.