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Foton ute import deal falls through

Price problem: The WMC Group will not be the Australian importer for the Foton ute - called Tunland in China - after pricing negotiations fell through.

Price kills WMC’s plans to import Foton ute – but another importer is set to step up

Foton logo18 Oct 2011

CHINESE vehicle importer WMC Group has torn up its agreement to distribute Foton light vehicles in Australia after price negotiations fell through, leaving the door open for another independent importer to take on the brand.

As reported exclusively by GoAuto last week, WMC gave the Beijing-based company an ultimatum to reduce the asking price for the first Foton model earmarked for Australia, a ute codenamed P201, or it would walk away, as it believed the vehicle would not be competitive if priced directly against increasingly competitive Japanese one-tonner rivals.

GoAuto understood the deadline set by Sydney-based WMC for a fresh offer on pricing was this Thursday, but the importer announced on Monday night that the deal was off.

We also understand another importer – one of three that put up its hand for the business originally – has already been given the nod to take on the distribution rights, and is now wrapping up the details.

The WMC decision was announced in a statement by CEO Jason Pecotic who said his company – which also has the import rights for Higer buses, JAC trucks and cars and Joylong vans – was no longer in a position to move forward as the appointed distributor for Foton pick-ups and utility vehicles.

He said WMC issued a formal withdrawal notice to Foton on Monday.

“We have withdrawn from the distribution agreement for a number of important reasons, most significantly uncompetitive pricing, particularly on the back of an unstable US dollar and as a result of Japanese manufacturers lowering prices,” he said.

 center imageLeft: WMC CEO Jason Pecotic. Below: Foton Tunland.



“The other aspect that particularly worried us was that, despite Foton’s insistence on premium pricing for the upcoming P201 model, the fact is it has no history, and given the previous model (SUP) has had quality issues which WMC has been monitoring closely with the South African importer, we don’t believe this product can command a premium price.

“Despite protracted negotiations with Foton, they would not meet the pricing model that we believe was appropriate for a vehicle such as this in the Australian market in our view this would be 30 per cent below its Japanese rivals.

“WMC is sad to end its relationship and wishes Foton good fortune in its future endeavours in Australia.” Unlike other Chinese-made utes on sale in Australia or destined for this market, the Foton P201 – called Tunland in China – was designed from the ground up for western markets, including the United States where it would compete against the full-sized American pick-ups.

Bigger than the current crop of Japanese one-tonners such as the Toyota HiLux and Nissan Navara, the P201 pick-up was to have been equipped for Australia with the option of a Euro 5-compliant 2.8-litre Cummins ISF diesel engine in 96kW and 120kW states of tune, and a Mitsubishi-sourced 100kW 2.4-litre four-cylinder petrol engine.

A Getrag manual gearbox was to have been the sole transmission at launch, with a ZF automatic transmission to be offered later as WMC rolled out one fresh P201 variant every two months through 2012.

While the Mitsubishi engine is standard fare in Chinese light commercial vehicles such as the Great Wall Motors V240 and the upcoming ZX Auto range of utes bound for Australia, the Chinese-made Cummins engine – produced at an all-new factory outside Beijing – would have been unique.

Importer sources have suggested to GoAuto that the cost of the sophisticated diesel powertrain and western-sourced driveline was the Achilles heel of the P201, making it too expensive to offer at a reasonable price.

Cummins diesel engines are a common denominator across all Chinese brands imported by WMC, powering its existing range of Higer buses and new JAC trucks that are set to arrive in showrooms next month.

As well, WMC is set to introduce a new van from niche Chinese manufacturer Joylong, to be sold in the Higer dealership chain.

Mr Pecotic said Higer had registered significant growth, becoming one of the top-three bus sellers in Australia in 2011.

This could not be verified by GoAuto as Higer sales are not captured in the official FCAI VFACTS sales figures.

“In three years we have taken Higer from a start up with zero sales base to near market leadership,” Mr Pecotic said from China.

“We will be launching the first light-duty JAC trucks to the market during November and we have a range of new JAC vans set to be launched here in early 2012.

“WMC is also preparing to import Joylong vans into Australia and will have the first example of this new brand in the country around the end of November ahead of a full launch early in 2012.

“Along with these situations … we are continuing to explore other brand opportunities that we will continue to develop and exploit.” Although plans to import Foton light vehicles – the P201 ute, an SUV based on the same ladder-chassis platform, codenamed U201, and a planned light car range – are up in the air for now, Foton heavy trucks continue to be sold through Foton Commercial Vehicles Australia – an offshoot of Western Star Trucks Australia.

According to VFACTS, 64 Foton trucks have been registered in Australia this year, including 10 in September.

Government-owned Beiqi Foton Motor Co Ltd is China’s biggest commercial vehicle manufacturer, partnering with German giant Daimler in the world’s biggest motor market.

The truck-maker is a subsidiary of China’s third biggest motor company, Beijing Automotive Industry Holding Co Ltd (BAIC), which has joint ventures making Mercedes-Benz and Hyundai cars for China.

Foton has built a new factory outside Beijing to build the new P201/Tunlander – which would have been renamed for Australia – and U201 SUV twin, as well as its proposed range of passenger cars.

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