China's Zotye adding U.S. dealers while parent preps for 2nd brand

DETROIT — Zotye USA is looking to add 120 dealers — some taking multiple points or entire markets — by late 2020 while its holding company prepares to bring other Chinese manufacturers' vehicles to the U.S.

Duke Hale, CEO of HAAH Automotive Holdings in Lake Forest, Calif., told Automotive News to "stay tuned" for an announcement soon on HAAH adding another brand. He declined to elaborate.

Last fall, Zotye USA was created when HAAH signed a distributorship agreement with Chinese automaker Zotye Automobile International Co. Hale started HAAH with partners in 2014 with the plan of handling multiple brands.

"HAAH Automotive Holdings is a holding company really designed to handle shared services, so IT, legal, finance, HR, parts distribution, those kind of things are housed in HAAH Holdings. That was always the vision," Hale said. "Zotye USA happens to be the first brand we'll represent."

HAAH may manage "two or three brands, each having its own distinct team representing it and its own distinct dealers, so no consolidation or coordination between brands — each separate."

Zotye is inching closer with plans to bring its first vehicle — the T600 compact crossover — to the U.S. by the end of 2020 or first quarter of 2021, Zotye USA announced last week.

"It's a critical vehicle for us because obviously it'll be our first splash into the market," said Hale, who is also CEO of Zotye USA. "But I think it's great that we're going to play in what I would call the bread and butter of the market. We're going to hit the really hot segment of the market with the right product, at the right time, at the right price."

T600 pricing has not been announced, but Hale indicated the sticker price could be 20 percent lower than the target competition, which he described as similar vehicles from brands such as Volkswagen, Mazda, Mitsubishi, Kia, Hyundai and Nissan.

A midsize crossover — the T700 — will follow by the end of 2021 or beginning of 2022, Zotye executives confirmed. Hale said that vehicle might be followed by a full-size crossover or sedans.

The T600 for the U.S. is expected to have an inline four-cylinder, 1.6-liter turbocharged engine and a six-speed automatic transmission. No other vehicle specs were released as required certification for the T600 is proceeding, Zotye said.

Zotye has continued to recruit dealers since it announced in January at the National Automobile Dealers Association Show in San Francisco that it had signed agreements with 10 dealers for 19 new-vehicle stores.

Today, the company has agreements with 22 dealers for 60 sales points and has another 20 or so points in process, ahead of plan, said Bob Pradzinski, senior vice president of sales for Zotye USA and HAAH.

Added dealers include Joe Gunther, a Volkswagen retailer in Florida, who has signed up for five points in the state: Pompano Beach, Fort Lauderdale, Boynton Beach, Palm Beach and Port St. Lucie. Zotye also added Blake Corman, a retired Chrysler-Dodge-Jeep dealer with a small used-vehicle store, Grand Auto Sales, for the Grand Island, Neb., market. Sales points also have been taken by dealers in markets such as Tampa-St. Petersburg, Fla.; Austin, Texas; Baltimore; and Atlanta, Pradzinski said.

Meetings with interested dealers are slated for next week in Washington, D.C.; Newark, N.J.; and Boston.

When the T600 launches, Hale expects, Zotye will have 250 to 260 open sales points. And management hopes by the end of 2021 to have about 330 locations across the top 100 U.S. markets, Pradzinski said.

The company expects to have fewer than 140 dealers, something Pradzinski said will allow for personal relationships with all.

"We think that's going to be a huge key to our success," he said. "It's a little risky because we're putting all our eggs in a lot less baskets. But I think we can override that risk by just trying to pick the right dealers."

Zotye plans to offer its vehicles at one price and in a customer-friendly format that will include online sales.

"We want [dealers] that realize that things have to change because that's what customers are demanding," Pradzinski said.

Zotye also plans to offer dealer-friendly agreements and policies around facility requirements. It disclosed that its dealership management system, Advectus, will be cloud-based, allowing for dealers to get a part order to the manufacturer within seconds, for example.

Hale said Zotye plans to do a lot of things differently and may take some flak for it.

"We're going to be the brand that probably a lot of brands hate — and that's OK," Hale said.

Zotye isn't the only Chinese automaker with plans to enter the U.S. Guangzhou Automobile Group Co. is recruiting dealers, but its planned U.S. launch may be delayed until the first half of 2020, partly because of the threat of a U.S. trade war with China.

But trade talks have made progress in recent weeks, and the Trump administration has been optimistic that a deal can be reached.

Hale is hopeful there will be no more tariffs, but he believes the company could withstand 10 to 15 percent tariffs.

He said, "It won't stop us from coming to market."