The Challengers: A New Honda, Or a New Yugo? There are dozens of Chinese carmakers, and many aim to crack the U.S. market. But not all are created equal.

Byline: George Wehrfritz (With Duncan Hewitt in Shanghai)

Two decades after Toyota, Nissan and Honda began grabbing market share from the Big Three American automakers, South Korean upstarts Hyundai and Kia proved that the model could be replicated. Now a new country has appeared in the rearview mirror: China. Its booming domestic auto industry is looking to expand beyond its borders, and five automakers have announced plans to enter the U.S. passenger-vehicle market as early as next year. Is another foreign-car invasion in the cards?

Not just yet. Most industry analysts agree that China has what it takes to make globally competitive vehicles in the not-too-distant future. But they also note that the U.S. market barely resembles the inefficient, Detroit-centered oligopoly Japan cracked open two generations ago with snappy, well-engineered cars like the Toyota Corolla and Datsun 240Z. Today's America more closely resembles Europe--which is to say, a market that is relatively unprotected and therefore crowded with all the world's top brands, each fighting hammer and tongs for a small market share. Furthermore, today's cars are hardly the Brats and Bugs that once rolled off ships from Asia or Europe. "There are more microprocessors on the cheapest car sold today than on Neil Armstrong's lunar lander," says Denis Cuneo, a senior vice president at Toyota.

The conventional view is that Chinese cars won't start trickling into showrooms until 2009, though many plan to arrive sooner. As with Japanese and Korean firms before them, their makers will need to counter consumer suspicions and establish brand appeal, as well as national distribution, sales and service networks--all of which can take years to accomplish. Still, there is a push factor. Within China, a battle for domestic dominance now rages among a handful of big players; the first ones to establish themselves as global brands are the most likely to win government backing when the inevitable pressure to consolidate builds from Beijing. "Chinese cars are a fait accompli in America," writes Chris Brown, senior editor of the U.S. automotive trade journal Business Fleet. "Not because America's mature auto market needs a new set of nameplates, but because the Chinese government is behind an export push."

Of the many Chinese automakers that aspire to storm the American market, Zhejiang-based Geely Automotive Holdings leads the pack in timing, says Tina Jantzi, manager of North American forecasting for J.D. Power Automotive Forecasting. Its strategy borrows heavily from its Japanese and Korean predecessors, like relative newcomer Kia: establish a small footprint in the market with affordable economy cars, gain information about consumer preferences, build brand confidence and expand slowly. The company is building a U.S.-based executive staff led by American John Harmer, and this year sent 6,000 subcompacts to Puerto Rico as a test market. Geely says its sedan has met U.S. rollover standards, although in March Harmer said its engine failed U.S. emissions tests (Geely's home office denies this). Whatever the case, Geely has yet to reveal details about ...