Ateco takes aim at China

ATECO Automotive is looking to China for a volume-selling vehicle brand to fill the void created when it relinquishes distribution rights for Kia Motors in Australia next March.

GoAuto has learnt that Ateco is looking to distribute cars and light-commercial vehicles from China.

A full-scale operation could be up and running within two years, with the passenger car side of the business offering up to four possible models, from a 1.3-litre light car to a four-wheel drive wagon.

Ateco Automotive managing director, Ric Hull, told GoAuto that Ateco had been in talks with several independent Chinese car manufacturers – none of whom he was prepared to name – over the past six months.

He said Ateco was looking for a "long term" arrangement with a Chinese partner that could involve distributing up to 20,000 vehicles from the country in "four or five years".

"Ideally we’d like to start with commercial trucks and then introduce passenger cars," said Mr Hull, who has visited China several times over the past few months assessing possible operations.

Undaunted by the fact that there are almost 20 car marques struggling to achieve more than one per cent of market share in Australia, Mr Hull said the prospective Chinese brand would offer quality, low-cost vehicles that could even undercut some Korean models on price and equipment levels.

He ruled out selling a large-car entrant – "that’s far too hard a market to compete in" – as well as the prospect of selling copycat vehicles, a trend which is continuing in some sections of the Chinese auto sector.

In recent years, several Chinese manufacturers have been snared in legal wars with some of the big global auto manufacturers (General Motors is one) over rip-offs of products sold in western markets.

To the contrary, Mr Hull – who has a strong background in vehicle import start-up businesses, having established both the Hyundai and Daewoo brands here – said the intention was to create a strong brand image in co-operation with a new partner.

"The one thing the Chinese manufacturers don’t have is a brand - they are generally niche operators," he said.

Although in the early stages, Mr Hull said the business case was strong and the company was close to establishing a marketing plan to define dealership territories.

"I am confident that we can put together a good network, based on the fact we are already associated with about 180 dealers," he said.

Any arrangement to import the vehicles would also be independent of the cross-ownership joint-venture demands of foreign companies setting up in China.

Kia will be the fourth brand Ateco has handed to factory-backed operations, following Volkswagen, Audi and Suzuki.

Ateco, which also imports Alfa Romeo, Citroen and Fiat vehicles, and from next month will be responsible for Ferrari and Maserati, has held the rights for Kia distribution since 2000.

It took over from the Itochu Corporation, which had held the franchise since its introduction to Australia in 1997.

The change in Ateco’s role in the Australian distribution of Kia is part of a global policy change by the company designed to separate the Kia brand from its parent company Hyundai.