AVAG clears way for Chinese imports

Juergen Voss of Augsburg-based AVAG Holding wants to import vehicles from China to Europe

Last week, Juergen Voss was sitting in an airplane on his third trip to China.

For good reason: On behalf of the AVAG Group, the auto executive is coordinating the creation of an import company for Chinese cars.

"We have signed a letter of intent with both candidates, Geely and Chery," Voss said.

By year-end, an import contract with one of the two brands should be signed and sealed. The dealer group plans to launch sales at the 2006 auto show in Leipzig.

Voss is experienced at importing Asian vehicles. As early as the mid-1990s, he brought Hyundai to the German market.

Chery and Geely each produce 100,000 cars a year, he said. By contrast, a competitor, Shenyang Brilliance, makes just 12,000.

"We find Geely interesting because it builds products on its own and isn't doing knock-offs," he said. In addition, as a well-capitalized private company, it can react "quickly to changes."

Chery is known for its array of products.

"We want to offer a minicar for 6,000 euros (about $7,200 at current exchange rates) as the first step to an addiction" to the Chinese brand, he said. Families would later be drawn with a van and "an all-grown-up small car" in the Polo segment.

But the cars "will have to be optimized for the NCAP crash test" before they start heading for Europe, said Voss, the former managing director MG Rover Germany. The same applies to pedestrian protection, he said.

"Our goal is a general European operating license for Chinese vehicles," he said.

In all, he plans to amass 80 to 120 dealers by the time the vehicles debut in the German market. Voss will expect the dealers to sell between 8,000 and 14,000 vehicles in the first full business year. That could be 2007.

In total, Voss is figuring on a German market share of "2 percent or 70,000 cars" for Chinese manufacturers in 2007.

He sees countries where AVAG "is already well-positioned" as potential markets.

Besides Germany and Austria, they include Hungary, Croatia, the Czech Republic, Slovakia and Slovenia, plus just the major cities in Poland.

AVAG was already the general importer for Opel in Croatia during the 1990s.

In all, these markets have about 4.4 million new registrations. So far, AVAG has invested 800,000 euros in staff, systems and processes for its new business unit.

Voss was also able to add his former MG Rover colleague Jochen Schultze as product manager. He plans to name an after-sales manager by the end of the year.

AVAG does not see the Chinese models as an accessory to existing sales operations, but as an independent dealer network.

"We want our own value chain," Voss said.

He is already talking to 60 business people. A dealer group in Hesse has been part of these discussions.

"Right from the start, they can sell Chinese vehicles in five of their 25 operations, without hurting their main brands," he said.

The dealer contracts aren't expected to amount to more than six to eight pages. Voss is promising dealers "a tidy margin," expected to be between 18 and 20 percent. "That's what it has to be, or no one will be interested," he said.

Tags: China

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