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Great Wall Motors eyes foothold in Europe

While some of China's larger automakers intend to leap into the European car market in coming years, Great Wall Motors, China's largest producer of SUVs and pick-up trucks, is looking to sneak in by the back door.

Great Wall Motors has targeted the EU's poorest and newest members as test markets for their eventual arrival in western Europe. The company plans to sell about 1,000 units of their Hover SUV this year in Romania. Great Wall's Romanian importer, Alexandrion Group, also has the rights to sell in Hungary, Bulgaria, Moldova and Macedonia. "At this point, they really have no idea about the European market," says Spiros Iosifidis, head of Alexandrion's Rochin Motors dealership, which sells the Hover. "So they made the decision to use Romania as a pilot project." Romania makes sense, Iosifidis said, because the market is more price-sensitive than western Europe and is growing so quickly. Romanians bought about 250,000 new passenger vehicles last year, up from 90,000 in 2000. That is expected to climb to 450,000 by 2010.

RoChin and Great Wall hope the Hover can exploit the same conditions that made Logan so successful. Produced by Dacia, Renault's Romanian subsidiary, using old Renault and Nissan component designs, the Logan is a cheap but spacious saloon starting at $8,600. It sold 96,000 in Romania last year. The Hover design is also low on originality, using several Mitsubishi components. It starts in Romania at €13,000 ($17,500). The four-wheel version with air bags, ABS and other extras reaches €17,000. That could make the Hover tempting even for Romanians who earn well above the average net monthly salary of about 270 euros. But some market analysts have doubts.

Dan Vardie, senior editor at Romania's Automedia publishing group, says his countrymen may be price-sensitive, but are also brand-conscious. "People want to trust a brand, and Great Wall has no name here." Vardie said Chinese makers can prosper in Romania but not before they establish a reputation for quality and service. "I'm skeptical at the moment that they can catch the market, but in five or 10 years it will be totally different," he said. Great Wall, whose largest export markets are in Russia and the Middle East, also expects to move slowly. Jie Zhu, head of the company's international trade division, said Great Wall is taking a "cautious attitude" toward the European market. (