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Detroit 3 looking to Asia for brand sales

 

Brand sales are difficult in the U.S. and Europe, where there has been little interest thus far

Brand sales are difficult in the U.S. and Europe, where there has been little interest thus far

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Tough times are a unifying theme of the economic and sales reports of the last six months, especially in the car industry. Finding ways to pull itself up by the bootstraps is proving harder than imagined by some, but the effort is pushing the Detroit 3 to consider a window of opportunity in Asia, where globally-recognizable brand names are in high demand.

Detroit's relationship with Asia until now has been largely one of co-opting low-cost small cars to supplement its operations elsewhere in the world, while each of the three carmakers focused on building mid-sized and larger vehicles. The tables may be turning, however, as Detroit is seeking to interest Asian carmakers in purchasing their non-core brands, such as Volvo and Saab, reports Reuters.

Getting a toehold in the European and American markets is a difficult task - the barriers to successful entry, in terms of brand recognition and distribution infrastructure are huge. The Hyundai/Kia conglomerate, for example, has spent the better part of a decade establishing its position in the market, and still has much work ahead of it to develop a true luxury reputation for its Hyundai brand.

Short-circuiting that laborious and expensive process by acquiring an already-known brand could prove attractive to many Asian carmakers, especially those in China. Talk of Chery's interest in Volvo has been circulating for nearly a year now, while SAIC and Geely have also been among the list of potential suitors.

On the other hand, the Asian companies are aware that now is not the time to be attempting to expand globally and sell significantly more vehicles. Sales figures are contracting around the world, and growth will be effectively impossible until the credit markets straighten themselves out.

Nevertheless, that very crisis is what is presenting the opportunity, and the carmakers in Detroit are playing up the opportunity and minimizing the risks in order to move their brands and improve their financial positions.

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