Ralph Kisiel
Automotive News
January 26th, 2009, Detroit.-.Chinese-designed cars assembled in Mexico will be sold in the United States within five years — maybe through big-box retailers such as Wal-Mart — industry veteran Kathleen Ligocki said.
In August, Ligocki, 52, was named CEO of GS Motors, the automotive arm of Grupo Salinas, a conglomerate in Mexico City.
GS Motors plans to produce Chinese-designed cars at a plant being built in Michoacan, Mexico, with China's First Auto Works. The plant will assemble cars starting in 2010 with an ultimate annual capacity of 100,000 units.
"I think the product will be ready for the U.S. market within five years," Ligocki said last week at the Automotive News World Congress.
GS Motors offered three imported Chinese subcompact models in Mexico last year. Sales totaled 4,000 units.
Sales will expand in Latin America, then to Canada and ultimately to the United States, Ligocki said. GS Motors is the first volume producer of Chinese vehicles in North America.
Big-box retailers
The company is using a hub-and-spokes retail strategy in Mexico. Its network includes 20 "agencies" — company-owned dealerships — and mini agencies in Grupo Salinas Elektra retail stores. The Elektra stores are big-box retailers similar to Wal-Mart stores in the United States. There are about 300 Elektra retail sites, she said.
GS Motors' surveys indicate that women like the idea of buying a car in an Elektra store, a retail environment with which they are familiar, she said.
Ligocki said this experimental hub-and-spokes retail sales strategy will work in emerging markets and Europe — and ultimately in the United States.
She conceded that U.S. franchise laws will restrict some of the retail experimentation that she foresees. "But I think ultimately some of these big-box retailers will figure it out," Ligocki said.
"Think of any of the big-box retailers that all of you go to all the time, the consumer flow into those stores and their merchandise lineup. It's going to finally encompass cars as well.
"In particular, if the big-box retailers are successful in making women very comfortable, then I think that it will be a successful additional channel," she said.
"There's certainly a lot of risk trying to start a business like this," Ligocki said. But putting together two unconventional partners leads to creative ideas. "Two strong market partners married together with a very innovative approach — these are the next changes that will rock the automotive world."
GS Motors and its Chinese partner need time to learn more about the U.S. market, she said.
"It gives them a couple of years" to meet U.S. vehicle regulations, and customer demands regarding "fit and finish on the product," Ligocki said. "It's the right strategy for them for the Americas, to start in a place like Mexico."
Under $5,500
GS Motors will launch the FAW brand in Mexico formally this year, she said. The F1 hatchback, the entry-level car, is sold for under $5,500. Its most expensive car, the F5 sedan, is sold for less than $9,000, she said.
Before moving to GS Motors, Ligocki was CEO of Tower Automotive Inc. She led the supplier through a Chapter 11 restructuring that culminated in a reorganization plan and the sale of the company to Cerberus Capital Management LP.
Ligocki previously held a variety of senior positions at Ford Motor Co., including CEO of Ford of Mexico in 2000-01. AN