New Qoros from China may be formidable competitor, but not yet

China may not be able to mount a serious threat to European and American automotive manufacturers on their home turf for perhaps 10 years, but the unveiling of the new Qoros 3 at the annual Geneva car show demonstrates that when the time comes, the menace will be formidable.

According to Bernstein Research analyst Max Warburton, given China’s progress with technology projects like space, stealth fighters and high-speed trains, a globally competitive automotive presence is guaranteed, one day.

“We believe it will be at least five years – and probably nearer 10  – before China develops a full competitive car,” Warburton said in a report published before the show.

But the first credible threat from China was unveiled at the Geneva show, and this 1.6 liter VW Golf or even Audi A3 competitor looked good, with high quality finish inside and out. It is not clear yet whether Qoros is capable of repeating this in production versions, or whether it drives well. There will also be a turbo engine when it goes on sale across Europe late this year, at a starting price below $36,000 in Germany, after tax. Unlike initial Korean forays into Europe, clearly Qoros is not aiming at the cheap and basic end of the market. There no announced plans to sell in the U.S. yet.

Qoros Automotive Co Ltd is a joint partnership of Chery of China and Israel Corporation. Israel Corporation is controlled by Idan Ofer, said by Bloomberg to be Israel’s richest man, who has also backed Better Place, the Israeli electric car battery sharing venture. In Geneva, Qoros said the 3 will compete on value, not price, and with its long-wheel base and short overhangs, has much internal space and promises good handling. Next year Qoros plans a gasoline electric hybrid, and there’s a wagon on the horizon. Qoros plans to build seven vehicles in all, including a small SUV.

Earlier Chinese attempts to assault Europe failed on quality and safety grounds. Even if this Qoros is successful, the lack of a dealer network will slow penetration.

Credit Suisse analyst Erich Hauser said the new Qoros suggested the Chinese might be able to penetrate faster than the Koreans because unlike early Hyundais and Kias, the product looked matched to Western tastes both inside and out. The Chinese have invested heavily in Western expertise using front-line component makers like Magna Steyr, TRW, Continental, Bosch, and Getrag.

“The backgrounds of key personnel, Volker Steinwascher, former head of VW North America, co-heads the board whilst six out of the eight key management positions are seemingly held by Europeans who bring with them experience from VW, BMW, Saab, Volvo, and GM,” Hauser said.

The Qoros though has much to prove.

“We are not aware of any independent road or crash safety tests to date, but on the surface the company would appear a genuine competitive threat to Europe’s mass market players. A belief which may be somewhat vindicated by the disproportionately high number of executives from other manufacturers which we witnessed on the Qoros stand (in Geneva),” Hauser said.

Qoros 3 on the stand in Geneva