WINDSOR, Ont. -- Ontario and California are the most likely jurisdictions to host a Chinese automotive assembly plant in North America, an industry expert says.
Joe McCabe, CEO of U.S.-based AutoForecast Solutions, told an audience at the Automotive Parts Manufacturers’ Association’s annual conference here Wednesday that a Chinese automaker would spend two or three years to setup a sales and marketing network before any vehicles would be built on this continent.
“You would have to reach sales of 50,000 vehicles annually for it to make any sense,” said McCabe. “And they would have to be incentivized sufficiently to draw in those customers.”
McCabe said that Ontario’s already-established cluster of assembly plants and parts suppliers, along with an experience workforce, would make it the most attractive Canadian province for Chinese automaker investments.
California, meanwhile, is the most logical U.S. state because it has already shown itself to be a major customer base for imported vehicles, particularly those from Japan and Korea.
Earlier this year, China's GAC said it would put its North American headquarters in California.
Chinese vehicles first started appearing at the North American International Auto Show in Detroit almost 10 years ago and the greatest impediment to large-scale acceptance on this continent remains quality, he said.
But much of the same criticism was leveled at Japanese and Korean products when they made their first appearance in North America decades ago and their quality is no longer an issue, said McCabe.
“In the past year, quality has substantially improved and the successful Chinese automaker may be the one which is best able to leverage its partnership with either North American or European automakers,” said McCabe.”
“If they can reach a certain level of quality, current and new consumers may be willing to take a look at a Chinese vehicle and not be as tied to brand loyalty as much as an earlier generation of consumers,” added McCabe.
It appears as if attracting a Chinese automaker to build a plant here or convincing a European vehicle manufacturer to move a product here would be Canada’s best and only chances of new assembly line production.
“To be blunt, I don’t see any production moving north unless it’s an offset,” said McCabe. “If, for instance FCA Canada shifted its muscle car production from Brampton, you might be able to backfill production with another product but it would be a zero-sum game,” he said.
Even when FCA Canada launches an entry-level minivan at its Windsor, Ont. assembly plant later this year to replace the outgoing Dodge Caravan, it will only fill excess capacity because of flagging minivan sales, said McCabe.