Cablegate: China's Brilliance Automotive to Enter U.S. Market In

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PP RUEHCN RUEHGH RUEHVC
DE RUEHSH #0155 2190839
ZNR UUUUU ZZH
P 070839Z AUG 07
FM AMCONSUL SHENYANG
TO RUEHC/SECSTATE WASHDC PRIORITY 8155
RUEHOO/CHINA POSTS COLLECTIVE

UNCLAS SHENYANG 000155

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: ECON ETRD EINV EFIN PGOV PREL CH

SUBJECT: China's Brilliance Automotive to Enter U.S. Market in
September

REF: A)Shenyang 00044, B)Shenyang 00056

1. Summary. Liu Xuemin, General Office Vice-Director of Huachen
Group told Econoff recently that, contrary to some trade reports
about delays, China's Brilliance Automotive -- the publicly traded
arm of state-owned Huachen Group -- will begin exports to the United
States in early September of this year (Ref A). The vehicles will
be marketed by Autokam, a Scottsdale, Arizona automobile importer.
Autokam has committed to import ten thousand vehicles initially and
another twenty thousand vehicles during 2008, according to Liu. All
vehicles will ship from Dalian Harbor's newly built Automotive
Terminal (Ref B). End Summary

2. Liu said flatly that trade reports indicating that Brilliance's
models would not reach the American market until 2008 are in error.
He said final certifications by safety and environmental testing
agencies in the United States will be completed by mid-August and
that the first vehicles should leave Dalian by late August for a
September U.S. debut, just as American companies introduce their new
models for the 2008 model year.

3. Brilliance will begin by shipping E5 and E7 sedans as well as its
new E3 roadster. The vehicles are built on the same production
lines as the BMW 3 and 5 series vehicles produced by the
BMW-Brilliance joint venture, collocated at Brilliance's Shenyang
plant. The Brilliance vehicles are roughly the same size as the
numerically corresponding BMW vehicles and are comparably equipped.
The Brilliance pricing points will be much lower, according to Mr.
Liu --the price for the top-end E7 will be in the mid-USD 20,000
range.

4. According to Liu, Brilliance plans to follow its initial entry
into the American market with a U.S. rollout of its SUV line in
mid-2008. The SUV line was well received at this year's Detroit
Auto Show, and the company has decided to move up its plans to
introduce the SUV line, which had been scheduled for 2009.

5. Vehicle sales in Europe have exceeded Brilliance's expectations,
with 7,000 units sold in the first half of 2007. According to Liu,
this increase in sales allowed Brilliance to return to profitability
for the first time in more than three years. He said the company is
optimistic that second-half sales will be even better than those in
the first half of 2007, already up 125 percent year-on-year.

6. Liu said that all vehicles for both the United States and
European markets would ship via Dalian's new automotive terminal.
He said Brilliance had signed an exclusive agreement with the Port
of Dalian in exchange for favorable rates for staging inventory at
the port. During a recent visit to the port, Econoff observed more
than one thousand Brilliance sedans ready for shipment.

WICKMAN

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