China Sets Sights On U.S. Car Market

China's Geely Automobile Co. said Tuesday that the biggest challenge to its plan to sell a low-priced family sedan in the United States by 2008 will be overcoming the negative image of Chinese manufacturing.

The company also acknowledged that the 7151 CK sedan it is displaying this week at the North American International Auto Show in Detroit does not meet U.S. safety and emissions standards. But Geely (JEE'-lee) said it was confident it could meet those standards.

Li Shufu, chairman and founder of privately-held Geely, on Tuesday announced plans to sell a future version of the 7151 CK, a small sedan, for less than $10,000 in the United States by 2008. CBS News correspondent Anthony Mason reports the model destined for the United States is spartan, with a bare bones interior, no sun roof or heated seats.

At a news conference at the auto show, John Harmer, vice president of Geely-USA Inc., said the company aimed to sell 25,000 vehicles in its first full year on the U.S. market and to reach 100,000 vehicles by its fifth full year. Harmer said the sedan will first be sold only in Puerto Rico before it is brought to the states.

Harmer said company engineers have determined what they need to do to bring the vehicle in compliance with U.S. standards and will be able to make the necessary changes within 18 months.

A more difficult problem may be convincing U.S. consumers to buy a Chinese car.

"The question I get asked most frequently is, `John, do you think the Chinese can really produce a quality automobile?"' Harmer said. "This automobile, or rather its grandson, which will be the car that will come into the U.S. market, will not be put out to consumers until we are absolutely certain that it is not just of adequate quality, but superior quality."

General Motors Corp.'s Rick Wagoner said Tuesday that Geely's sedan is not an immediate concern for U.S. automakers.

"Long term you'd be crazy not to be looking at what could China do given what others have done," he said. "Short-term it's not an issue. The product won't be competitive."

Li said the car was in its third generation and that the vehicle will be in its fifth generation when it is sold on the U.S. market. The name also is likely to change, he said.

Geely's presence at the Detroit auto show — the first time a Chinese automaker has displayed here — is part of an effort to boost its image. However, Geely is displaying only for the media and will not be here when the show opens to the public, Saturday through Jan. 23.

The debut in Detroit of the 7151 CK followed its appearance at other international industry shows, part of an effort to raise the company's profile as it pushes overseas.

"We know what it will take to succeed with this dream and we are prepared to pay that price," Li said.

"Our goal is to present to the American people another choice for the family sedan, a vehicle that possesses the highest quality but is available at the lowest price," Li said in a statement.

Chinese rival Chery Automotive also plans to begin exports to the U.S., as early as 2007, in association with American entrepreneur Malcolm Bricklin's Visionary Vehicles. It hopes eventually to sell 2 million vehicles a year.

Until recently, most Chinese vehicle exports have gone to the Middle East and other parts of the developing world. Last year China reported it had become a net exporter of cars and trucks for the first time, recording an export surplus of 7,000 vehicles in the first 10 months of 2005.

Harmer predicted Geely, which sells vehicles in Ukraine, Yugoslavia and the Middle East, would enter the European market before the U.S.

Geely, whose name denotes good luck in Chinese, was founded in 1986 in Zhejiang province, south of Shanghai.

Li led the company's transformation from a refrigerator and bicycle maker into a major automaker with a dozen factories able to turn out 200,000 vehicles and 200,000 engines a year. Workers are paid just $3.50 an hour, Mason reports.