China Automotive Systems Inc. is opening a Detroit-area office to sell steering systems to U.S. automakers as it looks to expand beyond China's own rapidly growing car companies, a member of the company's board said on Friday.
China Automotive already supplies steering components to two Chinese automakers that are considering exporting to the Unite States and believes the Chinese-built vehicles it supplies could soon be on American roads.
"I'm sure that will happen within the next few years," Robert Tung, a Washington, D.C.-based independent director for CAS told Reuters.
The Nasdaq-listed company, whose sales grew 51 percent in 2006, expects its sales to continue to exceed the growth of the overall vehicle market in China, Tung said.
Passenger car sales in China could grow 20 percent a year over the next five years, he said.
Wuhan-based China Automotive, the top independent supplier of steering system supplier in China by volume, supplies about 80 percent of the steering components used by Brilliance China Automotive Holdings Ltd.
Brilliance has begun to export sedans to the European market and is working on a similar plan for the United States, executives have said.
China Automotive is also a major supplier to fast-growing Chery Automobile Co. and stands to benefit as that company firms up its own expansion plans, Tung said.
Chery, which takes about 70 percent of its steering components from China Automotive, has concluded a preliminary agreement with Chrysler Group to build Chrysler-branded small cars for export to the United States and other markets.
But final approval of the deal has been delayed by DaimlerChrysler AG's (DCXGn.DE) decision to spin off Detroit- based Chrysler to private equity firm Cerberus Capital Management.
"At this point, we will have to wait for the new ownership," Tung said.
On Thursday, China Automotive announced its first deal to supply an established global automaker.
China Automotive said it signed a one-year contract to supply steering systems for Volkswagen Jetta and Audi vehicles in China through two joint-ventures, FAW Volkswagen and Shanghai Volkswagen.
FAW Volkswagen, a joint venture between FAW Group Corp. and Volkswagen AG (VOWG.DE), ranks as China's top-selling automaker, ahead of General Motors Corp.(NYSE:GM - news)
By clinching the supply deal with VW, China Automotive is showing it can engineer and build components to world-class standards, Tung said.
"It's a great recognition," he added.
As the company expands to target U.S. automakers, part of its pitch will be China Automotive's ability to allow them to shorten product development cycles and cut costs based on its experience in China's market, Tung said.
