According to Reuters report on June 25th, after China and Canada reached an economic and trade consensus in January, Chinese automakers began preparations to enter the Canadian market.
Just two weeks after Canadian Prime Minister Mark Carney's visit to China in January, Chery held its first meeting with car dealers in Canada.
According to regulatory records and sources, BYD plans to open six dealerships in Canada, and has already initiated the compliance procedures for exporting two passenger cars to Canada.
Geely's luxury sports car brand Lotus also plans to open six dealerships in Canada this year.
Changan Automobile's design director, Klaus Zichola, revealed that Changan Automobile has formed a team to prepare for entry into the Canadian market.
The report indicates that the sales and profit prospects in the Canadian market are not optimistic in the short term. Only 49,000 vehicles are allowed to be imported with a low tariff of 6.1% per year, and the cap for five years is only increased to 70,000 vehicles. Chinese automakers have still adopted aggressive expansion strategies.
This “cake” is not only small, but also needs to be divided among many parties, with meager profits.
However, several industry experts claim that Canada provides Chinese enterprises with a more valuable “strategic stepping stone”. They point out that although the United States actually prohibits Chinese cars from entering its market, it is inevitable for Chinese cars to eventually enter the US market.
Chinese-made luxury car brands are transported onto transport ships and headed to Canada. Video screenshot
According to Reuters, Canada is not only geographically close to the United States, but its automotive market also has consumer preferences and industry regulations that are almost identical to those of the United States.
In addition, large Canadian dealership groups also have stores in the United States, and the American group has business operations in Canada as well. Therefore, establishing relationships with dealers now will play an important role once the US market becomes open to Chinese automakers in the future. This process may take several years, but Chinese companies are known for their long-term vision when it comes to business opportunities.
Last month, Chery International President Zhang Guibing told reporters that Chery hopes to enter the US market at an "appropriate time". He said, "We definitely have the idea of selling cars in the US. Everyone definitely has this idea."
BYD Executive Vice President Li Ke said the company is still deciding which models will be launched in Canada and it's very likely they will start selling in next year. At the same time, she refuted the BYD view of Canada as a "stepping stone to entering the US" saying the company has made sufficient preparations for entering the US market.
Consulting firm AlixPartners’ global co-head of automotive business, Dan Hersh, said that once the conditions are ripe, transferring the business from Canada to the United States would be as simple as “turning a switch”.
Hersh predicted that as Chinese cars flood into Canada, Americans who desire to purchase Chinese cars will likely find ways to bring them across the border into the United States.
U.S. new car prices continue to rise. Chart by Reuters
Chinese cars are beginning to enter the Canadian market, causing anxiety among the American automotive industry and politicians. In March, several automotive organizations wrote to the Trump administration, highlighting the risks. Subsequently, American politicians quickly took action, and bipartisan bills were even introduced in both the House and Senate, aiming to legislate against the sale of Chinese cars.
But for American drivers, they seem to be willing to buy Chinese cars.
As smaller and more economical cars become increasingly scarce, American consumers are witnessing the continuous rise in car prices. Last month, American journalists and social media influencers appeared at the Beijing Auto Show, catering to the growing interest of their audience. According to a survey by Cox Automotive, nearly 40% of American consumers said they "very likely" or "definitely" consider purchasing cars from Chinese brands.
In January this year, U.S. President Trump publicly stated in Detroit, “We welcome Chinese automakers to invest and build factories in the United States.”
Reuters reported last month that the United States is removing barriers to Chinese cars entering its market, it's just a matter of time and method.
According to Katrina Hamlin, a columnist for this publication, Chinese cars are cheaper. Many brands of Chinese cars are also more stylish compared to models from Western automakers like Ford and General Motors. Due to protectionism and so-called ‘technical security’ concerns, the U.S. government has imposed high tariffs on Chinese cars. However, there seems to be a rift in the U.S.’s decision to ban the sale of Chinese cars.
