GM may export China-made Buick to US – USA TODAY
General Motors is close to becoming the first major automaker to sell a China-made vehicle in the U.S. in a move that could fuel political consternation over the decline of the American manufacturing sector.
Industry analysts expect that the automaker will import the compact crossover Buick Envision from a plant in China to U.S. dealerships by the end of 2016. In fact, IHS Automotive analysts are so sure it will happen, they’ve already integrated it into their official U.S. sales forecasts.
“That’s what we expect,” IHS analyst Stephanie Brinley said. “It will be interesting to see, if GM follows through on this plan, how consumers will react.”
The move could come in the heat of the U.S. presidential campaign, which has already focused intensely on barriers throttling the U.S. economy amid stiff foreign competition with manufacturers in China, Mexico and elsewhere.
Republican candidate Donald Trump and Democratic candidate Bernie Sanders have assailed U.S. political leaders for giving China the upper hand on trade.
Buick spokesman Nick Richards said talk of the Envision coming from China to the U.S. is speculation. But he acknowledged that GM is “looking at all the opportunities” for the vehicle.
“It’s our practice to build where we sell. In every business aspect it makes the most sense,” Richards said. “That’s what we strive to do in every vehicle and every case. Nothing’s changed in that regard.”
GM makes the Envision in China because that’s the biggest market for the Buick brand. (Chinese consumers appreciate Buick a lot more than American consumers do.) If GM decides to sell the vehicle in the U.S., where it would fill a crucial hole in Buick’s lineup, the quickest and most cost-effective route would be to export it.
“Definitely the U.S. market is the secondary market for the Buick brand,” AutoPacific analyst Dave Sullivan said.
Regardless, the decline of American manufacturing and corresponding rise in Chinese manufacturing is fodder for political consternation, with the auto industry positioned squarely in the bull’s-eye during campaign season.
During the 2012 presidential race, Trump — then just a real estate baron with a penchant for politically charged rants on Twitter — caused a stir when he joined Republican candidate Mitt Romney in erroneously accusing Chrysler Group’s Jeep brand of moving U.S. production to China.
In reality, Jeep was expanding its manufacturing presence in China at the time, not moving any U.S. jobs. It’s customary for manufacturers to assemble vehicles where they sell them, which mitigates the impact of currency fluctuation and reduces transportation costs.
GM has generally adhered to that strategy, which is expected to help the automaker navigate China’s decision last week to devalue the yuan.
But the Buick Envision, which is similar in size to GM’s Chevrolet Equinox crossover, is an outlier because U.S. sales volume is likely to be too low to justify building the vehicle in two different plants. The trade journal Automotive News first reported on Monday that GM is weighing the move.
GM is expected to sell about 129,000 units of the Envision in China in 2017, according to IHS Automotive forecasts. In the U.S., where the vehicle is currently not available for sale, the company is expected to sell about 35,000 units in 2017, IHS projects.
At that small volume, it may not make economic sense to build the car in China and in the U.S., analysts said.
An additional complicating factor for GM is the onset of contract negotiations in the U.S. with the United Auto Workers union. The UAW, which has threatened to authorize a strike at GM, Ford or Fiat Chrysler if it doesn’t reach deals by mid-September, is consistently critical of manufacturers for locating production in other countries.
GM began producing the Envision about a year ago at a new plant in the Shandong province city of Yantai, southeast of Beijing. In the first seven months of this year, the company sold 57,413 of them.
GM has already said it will launch an as-yet unnamed vehicle at its Orion Township assembly plant in Michigan. Analysts and product planning specialists have speculated that most likely that vehicle will be a crossover to be sold as a Cadillac.
GM announced plans last month to spend $5 billion to expand its partnership with Shanghai Automobile Industry Corp. (SAIC) to develop a new family of Chevrolet models for China, India, Brazil and Mexico. President Dan Ammann said at the time there were no plans to export those vehicles to mature markets such as the U.S.
BUICK IN CHINA
China is the primary market for GM’s Buick brand. The automaker sold about four times as many Buicks in China as it did in the U.S. in 2014: 918,559 to 228,963.
But with the Chinese economy sputtering, auto sales have stagnated in the world’s largest market for new vehicles. Sales fell 7% in July, according to Citi analysts.
That will exacerbate production overcapacity, giving manufacturers more incentive to seek foreign markets for China-made cars.
Many automakers are already exporting vehicles from other Asian markets to the U.S., such as the Buick Encore subcompact crossover made in South Korea.
“As the Chinese market continues to slow down, they’re going to be looking for ways to keep the capacity going in China by exporting,” AutoPacific’s Sullivan said. “If there was any blowback, I would imagine it to be very short-lived.”
U.S. consumers are already accustomed to products made in China, such as Apple products and TV sets. The quality of those products has given consumers confidence in the quality of products made in that country. That may not even matter much for the auto industry.
“American consumers aren’t always entirely aware where their vehicles are made,” Brinley said.
Even so, analysts don’t expect GM to make it obvious the Buick Envision comes from China, if it decides to make the move.
“It’s not necessarily going to be visible to consumers until they read the window sticker,” IHS’ Brinley said.
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.
Contributing: Greg Gardner, Detroit Free Press