If promises were dollars, Malcolm Bricklin's cadre of U.S. dealers would grow rich selling his Chinese-made cars. But Bricklin's Chinese partner wants cash -- not promises.
Chery Automobile Co. officials say development of vehicles for export to the United States has ground to a halt because of a lack of funds from Bricklin's Visionary Vehicles LLC. Visionary Vehicles has pledged $200 million to a proposed joint venture with Chery -- money that would be used to design Chery's vehicles for export to the United States.
But Visionary Vehicles has yet to raise that amount from dealers and other investors.
"We need to have some kind of contract, and some kind of initial funding," says a Chery manager.
Chery engineers also need specifications for engine size and interior quality from Visionary Vehicles, says another Chery manager.
But Bricklin won't issue those specifications until he signs up enough dealers.
"They can't go forward with the interiors for my cars because I haven't picked them yet," Bricklin said in a telephone interview. "And I'm not going to pick them until I get 100 dealers in the same room. There are certain decisions that are better off waiting because we're looking for the input."
Bricklin has been trying to recruit dealers since February, when he announced plans to start importing five Chinese-made cars to the United States in 2007. Those cars were to be sold through 250 dealerships, each costing $15 million to build.
But signing up dealers has proven tough. Last week, Bricklin said he had signed up nearly 50 dealers. So far, only one has been confirmed by Automotive News. Tim Ciasulli of Union, N.J., has put up $2 million for the right to build a Chery dealership.
Bricklin would not identify other dealers he says he has signed up. And he wouldn't say how much money he has raised, saying only that the amount was "somewhere north of $25 million, and south of $100 million."
Once he has lined up dealers, Bricklin says he will complete negotiations with Chery to form a joint venture. The two sides have a letter of intent.
Bricklin says the venture also requires approval by the Chinese government.
A lack of funds is not the only problem confronting Chery and Bricklin. Developing cars for the United States has been more difficult than Chery engineers anticipated, say Chery managers and suppliers. As many as three models will be ready for the United States by 2007, they say, but five are not possible.
"Originally, we did underestimate the amount of time it takes to get all the permits" for selling models in the United States, says one of the managers.
Chery engineers also underestimated the safety standards and quality level the United States demands, a Chery supplier says.
For example, instrument panels had unprotected corners that would have failed a crash test, he says. Interiors also were a problem. Colors, materials and trim were different from those preferred by U.S. drivers, says the supplier. Instrument cluster and audio systems also failed to match Western tastes.
"Chery rushed quickly from the design studio to the production stage, but left out real engineering in the middle," the supplier said. "The suppliers have to go back and do it the right way to be in line with American standards for safety and performance."
Models under development for export include a sedan and SUV, both designed by Bertone of Italy, plus a crossover vehicle designed in Japan.
AVL List GmbH of Austria has helped Chery develop engines.
While development of U.S. models is stalled, development of models for Europe is going forward, Chery sources say.
The first model likely to be exported to any market is the crossover vehicle, say Chery managers. It is scheduled to be unveiled in a few months and features a 1.9-liter common-rail diesel engine and front-wheel drive.
You may e-mail Alysha Webb at [email protected]
You may e-mail Gail Kachadourian at [email protected]