Not firing on all cylinders
U.S. firm struggles to import Romanian-made SUVs
U.S. firm struggles to import Romanian-made SUVs
By Shawn Langlois, MarketWatch
Last Update: 3:55 PM ET Feb. 23, 2005
Last Update: 3:55 PM ET Feb. 23, 2005
SAN FRANCISCO (MarketWatch) - After several false
starts, a Miami-based company is set to meet next week with Romania's new
reformist government in a bid to resolve roadblocks encountered in bringing a
Romanian-made off-road vehicle into the U.S. market.
Cross Lander USA founder John Perez planned to begin importing the rugged "sports recreation vehicle" this spring, but pushed the U.S. launch back to this coming fall due to bureaucratic wrangling. The company also is seeking a three-year waiver in the U.S. to allow sales of the 4X4 vehicle without airbags.
Cross Lander USA founder John Perez planned to begin importing the rugged "sports recreation vehicle" this spring, but pushed the U.S. launch back to this coming fall due to bureaucratic wrangling. The company also is seeking a three-year waiver in the U.S. to allow sales of the 4X4 vehicle without airbags.
Claiming local officials in Romania are stymieing
the U.S. rollout through extortion demands, Perez is scheduled to meet March 2
with representatives of newly elected Prime Minister Calin Popescu Tariceanu's
government.
"Unless we do it the way [local barons] want us to,
they shut down the power sources," said Perez, whose claims drew no comment from
the Romanian Embassy in Washington. "We are cautiously optimistic the new
government will help us resolve this local corruption problem."
The talks also will aim to resolve an ongoing
contract dispute over payments for a government-owned factory Cross Lander
bought two years ago. See story on travails of foreign firms doing business in
Romania.
A tough road
Perez, whose auto industry career spans 30 years
mostly running dealerships, first started distributing the Romanian-made ARO
vehicles in 1999 through his newly formed company Lacaro Auto. From 1999 to
2001, Lacaro sold about 800 AROs through dealerships mostly in Latin
America.
After that, Perez struck a deal with Kia Motors to
build a new assembly plant in Brazil, and that's when he formed Cross Lander
USA. During the push to build that factory, Cross Lander bought the entire ARO
operation from the Romanian government in 2003.
As Romania's national automaker, ARO had a
half-century track record of producing a military line of burly, four-wheel
drive vehicles with diesel engines.
Priced at around $20,000, the Cross Lander is a
more general-use vehicle aimed at serious off-road enthusiasts out for
backcountry adventure rides. It's a breed in between the typical SUV, whose
owners rarely engage their four-wheel drive, and the lumbering Hummer, with its
lofty price tag, poor reliability and low gas mileage.
"Off-roaders, hunters, fishermen and campers will
find the vehicle fits their needs in the SRV segment at a price substantially
less than those luxury vehicles that claim to be off-road vehicles," said Cross
Lander General Manager Bill Goetze.
Uncertain prospects
Industry watchers are decidedly mixed on the
prospects, however. How reliable can it really be? Will it succeed at a time
when consumer appetite for SUVs is slipping? Are image-conscious SUV buyers
willing to go low-end?
For starters, Eastern Europe has a history of
producing unreliable cars. (Remember the Yugo?) But the Cross Lander comes with
what looks to be a more solid pedigree.
"There's really not too much to be concerned about
regarding quality issues," said Mike Chung, Edmunds.com market and pricing
analyst. "This isn't some fly-by-night company. People have owned these vehicles
for decades in Romania, and they're still running strong."
If and when the vehicle finally makes its way to
the United States, there will be some changes, like a four-liter, V-6 gasoline
engine instead of the diesel, although a diesel-powered version could gain
traction down the road.
The Cross Lander produces 207 horsepower with 238
pounds of maximum torque, while logging a respectable 17 miles to the gallon in
the city and 22 on the highway. The Hummer H1, by comparison, flirts with single
digits when it comes to fuel economy.
"No frills, no nonsense," Chung said. "It's cheap
enough that you can buy it for the weekend, take it to the desert or the
mountains, thrash it and not care if it gets dirty. I can see the
attraction."
Joe Wiesenfelder, senior editor at Cars.com, wasn't
nearly as convinced as he pointed out that waning demand for truck-based SUVs
could hinder sales. "The Cross Lander can definitely compete in the showroom,
but it's unlikely to compete in the U.S. market as a whole," he
said.
Wiesenfelder added that American buyers' preference
for upper-scale interiors could be a headwind. "It's hard to tell if the lack of
amenities would hamstring a more affordable truck like the [Cross Lander]
244X."
Political roadblocks and the questionable domestic
appetite for the vehicle aside, the Cross Lander's fate in America may now rest
with federal regulators.
The company petitioned the National Highway
Traffic Safety Administration on Jan. 25 for a three-year exemption from air bag
requirements, claiming economic hardship.
In a letter to NHTSA, Cross Lander said the
regulatory relief is needed to begin U.S. sales in 2005 and "generate a cash
flow that can support the company's continued existence."
Shawn Langlois is a reporter for MarketWatch, and
the editor of its community message boards. Staff writer Robert Schroeder also
contributed to this story.
Copyright © 2005 MarketWatch, Inc.
Vali
EuroAtlantic Club: http://www.europe.org.ro/euroatlantic_club/
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Birou de traduceri autorizate. Oana Gheorghiu - tel/fax: 252.8681 / [EMAIL PROTECTED]
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