SHANGHAI -- How much will a Chinese brand need to discount its cars to succeed in America?
Wu Song, general manager of aspiring U.S. entrant Guangzhou Automobile Group Motor Co., says he has that magic number: His cars will have to be priced 30 percent cheaper than rivals in the same segment.
If everything goes his way, Wu will be testing his bargain-basement pricing strategy with the U.S. launch of his company's GS4 crossover sometime in 2017.
"We are confident. It could be popular in the market," Wu told Automotive News at the Shanghai auto show. "Considering the low price, it should be competitive."
The company's top executive already is seeking U.S. dealers, importers and distributors.
Guangzhou Automobile, which goes by the abbreviation GAC, is the latest Chinese automaker floating plans to sell made-in-China cars in the U.S., following similar pronouncements by Great Wall Motor Co. and BYD Auto Co.
Skeptics often pooh-pooh such goals, noting the many Chinese brands that have pledged to be on sale in the U.S. in two or three years but still aren't. But Wu's comments shine a light on the pricing calculus they are working with.
With no true bargain brands left in the U.S. market, Chinese brands see room to make a pure price play.
The GS4 represents the latest GAC has to offer. It was launched in China on April 18, priced between 99,000 and 146,800 yuan ($16,245 and $24,088). GAC aims to sell 120,000 a year there.
In the U.S., it would go up against such entries as the Toyota RAV4, which starts at $24,565, including shipping, just above the GS4's price range.
Wu says his offering boasts better fuel efficiency, more power and a roomier interior than the RAV4. The GS4 consumes 6.3 liters per 100 kilometers under China's testing cycle, Wu said. While that can't be directly converted to an EPA rating, it equates to about 37 mpg. The RAV4 gets a city-highway combined 26 mpg.