Subaru and Yugo veteran Malcolm Bricklin: High quality, low cost
That's the plan according to a contract Bricklin signed with Chery Automobile Co. Ltd. On Dec. 16, they agreed that Bricklin would be the automaker's North American importer. Now he wants to sign up 250 dealers by the end of this year for a U.S. launch in January 2007.
And he projects a stunning 250,000 sales in the first year.
Bricklin did not discuss financial details of the arrangement. The deal combines one of China's aggressive independent automakers with a high-profile promoter who has launched a string of automotive sales ventures - most of which failed (see box, Page 36).
Bricklin's strategy hinges on Chery building stylish, high-quality vehicles that can sell for 30 percent less than the lowest-priced competitor in each segment. The low-price formula is similar to Bricklin's previous ventures: Subaru of America Inc., which succeeded, and Yugo America Inc., which flopped.
If successful, Chery would undercut Korean brands Hyundai and Kia, which appeal primarily to budget-conscious buyers. It also would challenge other automakers by offering low-priced vehicles in several segments.
"This is the new Japan," Bricklin says of China.
Bricklin says Chery will move rapidly toward hybrid powertrains and fuel cell vehicles.
Chery is one of the aggressive "Young Tigers" of the Chinese industry. It is owned by local government in the city of Wuhu, west of Shanghai.
Chery sold just 91,000 vehicles in 2003. It has contracted with Italy's Bertone and Pininfarina for design and engineering on a new generation of cars attuned to the traditional developed world.
Chery is also known for its knockoff of the China-market Chevrolet Spark minicar.
Challenge of credibility
Bricklin, 65, and his company, Visionary Vehicles LLC, must overcome several obstacles to turn his vision into reality.
Among them: Bricklin's reputation as a skilled promoter of ventures that often end up going bust.
Bricklin first made his mark on the industry in 1968 as the original importer of Subarus. That was followed by the failed Bricklin Vehicle Corp.; the 1985 launch, modest success and 1992 collapse of Yugo of America Inc.; and later a company that peddled electric bicycles.
With great optimism, Bricklin announced his last project in April 2002. That was a plan to import small cars from the same Serbian plant that produced the Yugo.
The Chinese venture rose from the ashes of the Serbian project.
"I thought it would be great to find a car company that could build vehicles that had great style, ride, price and service," Bricklin says.
When he determined that the Serbian plant wasn't the right choice, Bricklin says he began looking worldwide. His stops included a Daewoo plant in Poland and Tata Motors in India.
Bricklin doesn't apologize for difficulties of the past.
"Every business I've been in has been successful, if the factory did its job," he says. "This factory can do the job."
Bricklin has assembled a team that includes prominent names, who have or will have equity in Visionary Vehicles. Among them:
Vanden Heuvel says he met Bricklin about six months ago. "I was taken by his personality and his vision," he says.
Although he has no industry experience, vanden Heuvel says he shares Bricklin's vision that Chinese automakers will have a huge impact in the United States.
"To be the first importer of Chinese cars will be a huge achievement," he says. "I think Malcolm is a master salesman who got everyone to understand the dimensions of his vision."
According to Bricklin, Visionary Vehicles LLC is incorporated in Delaware and has three major shareholders: himself and his family; Allen and Co.; and Per Arneberg. Arneberg, a Bricklin partner in Yugo, is a founder of Bermuda-based FRAM Shipping Ltd., which expects to ship the Chery vehicles from China to the United States.
Bricklin plans to launch U.S. sales with five new models, none currently in production: an entry-level car, sedan, coupe, SUV and sport wagon.
Chery plans to emphasize diesel and hybrid powertrains for the U.S. models. Low wages in China will reduce costs for key parts such as battery packs, Bricklin says.
In addition to its contracts with Bertone and Pininfarina for design and engineering services, Chery is working with Austrian engineering company AVL to develop engines that meet stringent U.S. emissions standards.
Chery faces a credibility challenge of its own. In mid-December, GM Daewoo Auto & Technology Co. sued Chery. GM Daewoo alleges that the design of Chery's QQ minicar was copied from the Daewoo Matiz, sold as the Chevrolet Spark in China.
Chery counters that it bought the design from Daewoo before GM bought Daewoo in 2002.
Wanted: 250 dealers
Bricklin envisions the aggressive goal of selling 250,000 Chery units the first year on the market, and topping 1 million units by the fifth year.
To do that, he wants to start out with 250 dealers. Each dealer will be given a large territory so that they don't compete against each other, Bricklin says. But they will be required to have stand-alone stores.
"I don't know how much dealers will have to invest yet," Bricklin says. "But it's going to be an awful lot. That is absolutely mandatory. Dealers must invest everything necessary to make this work."
In Bricklin's trademark optimistic way, he says: "We want people to have the most amazing experience, whether they buy a car or not."
You may e-mail Dale Jewett at [email protected]