Wal-Mart is making this possible through its contract with a Mexican holding company, GS Motors, which imports three models from China's First Auto Works (FAW). FAW is one of the largest Chinese automakers, a statistic it has achieved partly though joint ventures with heavyweights like Toyota, Mazda and Volkswagen. GS sold 4,000 FAW vehicles in Mexico last year, with ambitious plans to keep ramping up sales.
Despite the bad economy, GS is expanding its operations through a partnership with – you guessed it – FAW, and together they are building an assembly plant in Michoacán, Mexico. They plan to roll an entry-level F-1 Hatchback off the line in 2010, selling it for less than $5,500.
As an industry, we need to pay attention to this phenomenon for several reasons. Rumors of an import invasion of Chinese cars into the United States via manufacturing footholds in neighboring countries like Mexico have run rampant for years. This approach is in contrast to other Chinese automakers. Chery Motor Co., for example, sought partnerships with established U.S. car companies with an existing dealership network. GS/FAW strategy is further differentiated by the opportunity it has to use the cash from robust sales to fund design and safety improvements preventing other Chinese manufacturers from entering the U.S. marketplace.
Chinese car manufacturers are determined to sell cars in the United States. Last summer I spoke with a major frame machine manufacturer who said that the Chinese companies are buying up his machines, along with cars from Japanese manufacturers, and dissecting them to reveal crash safety intelligence.There's more to it than safety and design engineering. The role of a parts distribution network is key – failing to meet demand has doomed many a new entrant into the United States, as Daihatsu learned when its dealers proved unable to promptly service cars. The mighty Wal-Mart distribution network could cure this ill easily.
If GS/FAW can engineer a vehicle able to pass U.S. safety standards and can build these vehicles in a neighboring country, importing these cars into the United States and putting them on our roads will become a reality before we know it. GS/FAW will likely start importing vehicles on the West Coast and southern U.S., similar to the game plan Kia Motors used to break ground and make its initial entry into the U.S. market. Kia also put cars in rental fleets, watched how customers used and abused their cars, and made design and hardware changes based on those findings.
So what does this mean to the collision repairer? First, these cars will likely total out in moderate accidents, leading us to believe that their total loss rates will likely be high. But the good news is that the manufacturer will be looking for both mechanical and collision repair solutions.
While Wal-Mart can perform light mechanical repairs, delving into highly skilled, in-depth repairs without a conventional dealership infrastructure in place could prove challenging. If GS/FAW can develop a hybrid approach that includes a network of "certified collision and mechanical repairers," it may be able to bolster credibility and overcome potential buyers' uncertainty about where to have their cars serviced and repaired.
When opportunity knocks – enter your shop. Marketing your collision center to companies like GS/FAW and delivering top-notch repairs and customer service is a great way to grow your business and take advantage of new car company growth.
