Largest U.S. Auto Dealer Not Ready to Sell Chinese Brands

Detroit - The chief executive of Lithia Motors said the company is not currently interested in selling vehicles from Chinese brands in the United States, citing financial and structural hurdles rather than political concerns.

Bryan DeBoer, CEO of the Oregon-based dealership group, said the primary challenges involve cost, return on investment and the infrastructure required under U.S. franchise laws.

“It’s a big fundamental difference,” DeBoer told investors during the company’s earnings call, pointing to stricter franchise regulations in the U.S. compared with overseas markets.

Lithia already operates at least 10 stores in the United Kingdom that sell vehicles from three Chinese manufacturers. In the UK, dealership rules allow multiple competing brands to share a showroom under certain conditions, reducing setup costs.

DeBoer noted that adding a Chinese brand such as Chery Automobile to an existing UK showroom can cost less than $100,000. In contrast, entering the U.S. market would likely require new retail locations and service centers, significantly increasing investment.

Roughly half of Lithia’s profits come from service and parts operations, making after-sales infrastructure a key factor in expansion decisions.

While Chinese automakers have expanded rapidly overseas, none of the major China-based brands such as BYD or NIO currently sell vehicles in the U.S. under their own branding. Some China-produced vehicles are sold in America through established brands, including Buick and Volvo.

Global market share for Chinese automotive brands has risen sharply in recent years, increasing by nearly 70% over the past five years, according to industry estimates.

DeBoer said Lithia is monitoring developments and maintaining relationships with Chinese manufacturers but does not expect to be an early adopter in the U.S. or Canada.

“We’ll keep our minds open and look at what opportunities present in the future,” he said.

Lithia reported annual revenue growth of 4% and a 3.1% increase in gross profit during its latest earnings update.