Instead, HAAH is turning its focus to Chery, HAAH CEO Duke Hale told Automotive News last week.
HAAH has proposed selling Chery-engineered crossovers assembled in the U.S. under the new Vantas brand.
Both manufacturers are coping with financial challenges in their home market.
Troubles at Zotye emerged in 2018 when the Chinese auto market started contracting after nearly three decades of robust growth. A small player in China, Zotye was hit hard by the downturn, with sales slumping 26 percent to roughly 234,000 vehicles that year, according to the China Passenger Car Alliance, a data unit of the China Automobile Dealers Association.
The market declined further in 2019, and Zotye faced new regulatory challenges. China’s coastal provinces adopted tougher vehicle emission standards, equal to Europe’s stringent Euro 6 requirements. With limited technology capability, Zotye had difficulty upgrading its products accordingly, which made it unable to sell in those provinces.
As a result, Zotye sales plunged 50 percent to some 117,000 last year, and the company recorded a loss of more than 6 billion yuan ($840 million), compared with a net profit of about $112 million in 2018.
The coronavirus, which emerged in China late last year, delivered yet another blow. As sales further contracted, it lost the equivalent of $58.3 million in the first quarter of this year, Zotye said last month in regulatory filings. The company hasn’t disclosed its sales for the period.
“Zotye took an enormously big hit in China,” Hale said in explaining his California company’s decision. “They have to focus on home and get that turned around.”
HAAH could revive its U.S. plans with Zotye in the future, perhaps in two or three years, Hale added.
“We still are good friends of Zotye,” he said. “We’re still working with them. We’re going to work with them in Central America. And we have a long-term agreement with Zotye to bring their vehicles to the U.S. market — when it makes sense to do so.”
Certifying Zotye vehicles for U.S. sale right now would require millions of dollars of investment, he said.
“To tell them that we’re going to spend ‘X’ amount of dollars to homologate the first and second vehicles — in their current situation — does not make a lot of sense,” Hale said. “Hopefully, that starts to turn around.”
