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The GS5 SUV will be on sale in China at the end of the month.
 
GAC may delay U.S. plans in wake of trade spat
Dave Versical | 2018/10/5

PARIS -- Chinese automaker Guangzhou Automobile Group may delay plans to sell vehicles in the United States because of the escalating trade spat between the world's two biggest automaking nations.

The company in January said it would introduce a seven-seat utility, called the GS8, in the U.S. next year, and it solicited dealers in March at the annual National Automobile Dealers Association convention.

But the new 25 percent tariff imposed on Chinese imports by President Donald Trump has forced GAC to change its outlook.

"There may be a delay," said President Yu Jun in a meeting with reporters after the company introduced the second generation of its GS5 crossover at the Paris auto show.

"Maybe in the first half of 2020 we will go to the U.S. market."

The shift serves as the latest example of how automakers are being blown off course by the tariffs, which had been 2.5 percent on cars and utility vehicles.

In August, Ford cited the tariffs in canceling plans to import the Focus Active to the United States from China.

General Motors has warned that it may drop the China-made Buick Envision from its lineup if it fails win a tariff exception from the U.S. government. Earlier, Volvo said it had begun shifting XC60 crossover production for the U.S. to Europe from China to avoid the levies.

GAC's Yu noted that the company operates a design studio in Los Angeles and r&d operations in Silicon Valley and Detroit. Though the distribution strategy hasn't been decided, "we are considering having a network of dealers," he said.

"Because of the tariffs between the U.S. and China, we will consider how to make a good decision."

European plans
The debut of the GS5 in Paris signaled the company's desire to enter Europe in "the near future," said Yu.

He said overseas sales account for about 10 percent of the company's sales volume. The goal is for that figure eventually to reach 50 to 60 percent.

GAC Motor now operates in 16 countries.

In Europe, GAC probably will enter the market with an electric vehicle, but the timing is still uncertain, Yu said.

¡°We are studying how to enter the European market, and most likely it will be with an electric vehicle first,¡± Yu told journalists in Paris.

GAC so far has expanded in selected emerging markets within the ¡°one belt, one road¡± initiative, which focuses on improving connectivity and cooperation among countries spread across Asia, Africa and Europe. 

Alongside the new GS5, in Paris GAC is showing most of its product range, comprising crossovers, sedans and EVs. The most recent version of the electric GE3 crossover has a 410-km (255-mile) range, GAC¡¯s vice president for design and r&d, Zhang Fan, said. Another variant will enter production next year with a 500-km range, he said.

The GE3 ¡°has the potential for the European market, but it must be improved in certain areas, especially regarding the very strict safety regulations,¡± Zhang told   Automotive News Europe. ¡°We don¡¯t want to come here with any product and maybe incur problems and suffer a bad reputation.¡±

Another hurdle, Zhang said, would be the recharging system, which is different.

How many EVs has GAC sold in China this year? ¡°I can¡¯t give you overall figures,¡± Zhang said, ¡°but for this most recent version of the GE3, we received 5,000 orders so far. But we can deliver just 1,500 per month due to insufficient supply of batteries.¡±

Andrea Malan contributed to this report.

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