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Foton import plans hit price wall

Chinese take-away: Foton's P201 light truck, developed for western markets, could end up being too costly to compete in Australia.

Chinese impasse on pricing has importer WMC ready to walk out of Foton deal

14 Oct 2011

PLANS to introduce Chinese-built Foton utes into Australia are in limbo, with nominated importer WMC Group issuing an ultimatum to the Beijing-based company to come up with more attractive pricing or it will walk away from the deal this month.

GoAuto understands another independent importer – one of three that originally put their hands up for the business – is now in the running for the import rights for light vehicles from Foton, China’s biggest commercial vehicle manufacturer.

Sydney-based WMC had been well down the track with plans to import Foton vehicles, starting with the P201 one-tonne ute – called Tunlander in China – from January 2012, advertising in GoAuto News for dealers.

But the company – which already imports Chinese-built Higer buses and JAC trucks – has confirmed to GoAuto that the deal has stalled in recent days over pricing negotiations that have dragged on for three months, with WMC saying prices sought by Foton are too high for the ute to be viable against its target rivals from mainly Japanese companies, especially as many of those companies have trimmed prices recently.

Talks have been held in both China and Australia to try to settle the issue, without success.

64 center imageLeft: Foton P201 ute. Below: WMC managing director Jason Pecotic.

GoAuto has been told that Foton importers in South Africa and New Zealand have also baulked at the export prices being asked by Foton for the diesel-powered ute range, which has been designed from the ground up to compete in western markets, including the United States.

Warranty claims on previous generation Foton utes sold in South Africa and bouncing exchange rates have also been worrying WMC, which fears both factors could further erode any profit it might make.

Representatives of Beiqi Foton Motor Co Ltd – a subsidiary of China’s third biggest motor manufacturer, BAIC – were in Australia last week, talking with importer representatives.

WMC Group managing director Jason Pecotic is now in China on business with various companies, but has been in contact with Foton this week in a last-ditch effort to negotiate a more competitive price structure before he signs off on the formal import agreement.

Mr Pecotic told GoAuto that the matter would come to a head this month, and that unless realistic pricing was forthcoming, WMC would walk away from the deal.

He said WMC still had a distribution agreement, but it had given Foton an ultimatum, after three months of negotiations.

“We had some discussions yesterday, and if things don’t change, we will walk away,” he said. “It is far too expensive.

“There was a meeting about two weeks ago in Sydney, between South Africa, New Zealand and myself, and we all shared the same concerns regards pricing.”

Mr Pecotic said none of the three distributors had signed the order for production of the first vehicle – used for engineering validation.

That vehicle had been due in Australia next month for formal Department of Transport Australian Design Rule (ADR) validation checks ahead of mass production start-up.

The first model – a double cab pick-up powered by a Euro 5 2.8-litre Cummins diesel engine - had been destined to arrive in Australian showrooms in early 2012, with other variants such as extra cab and single cab 4x2 and 4x4 pick-up and cab-chassis models being rolled out at two-month intervals.

Plans for the Foton roll-out were announced in June, when WMC told GoAuto that Australia would be the first export market for the ute – codenamed P201 – ahead of its roll-out in mid 2012 in the US.

Unlike other Chinese utes such as the Great Wall V240, the P201 was designed specifically for western markets.

Longer and wider that the class-leading Toyota HiLux, the P201 was to be built in an all-new factory outside Beijing being built by Foton, which is a joint-venture partner of Germany’s Daimler in the Chinese truck market.

The ladder-chassis ute is also set to spawn a related SUV in the same way that Nissan’s Navara was the basis for the Pathfinder or Mitsubishi’s Triton delivered the Challenger.

That SUV was being considered by WMC for Australia, along with Foton’s first passenger cars that are under development.

The plan was to slip the ute into the Australian market between the high-ranking Japanese utes such as the HiLux, Navara and Triton, and other Chinese utes from Great Wall and new entrant ZX Auto.

But Mr Pecotic said the Japanese companies had recently sharpened pricing in response to the renewed competition, closing the gap on the Foton ute.

“The Japanese have reacted strongly to their pricing, and as we know, Toyota have come back on price, and that pricing we needed from Foton hasn’t come back,” he said.

“We don’t want to take the gamble at all of releasing a vehicle that is overpriced.”

Foton already has a presence in Australia through Foton Commercial Vehicles Australia – an offshoot of Western Star Trucks Australia – which has the Foton truck import rights.

WMC’s dealers are about to launch JAC trucks on the Australian market, along with a Joylong van that will be sold through the group’s existing Higer bus chain.

If a new distributor does take on the Foton light truck deal, it could bring to five the number of companies launching themselves into Chinese vehicles.

Ateco Automotive has two brands, Great Wall and Chery, while Perth-based Chinese Automotive Distributors has started with Geely and plans to take on ZX Auto utes.

WMC has Higer, JAC and soon Joylong, while Western Star has Foton trucks.

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