LOS ANGELES — HAAH Automotive Holdings is ending its seven-year effort to import Chinese vehicles and distribute them through a dedicated U.S. dealership network, CEO Duke Hale told Automotive News.
Hale cited tense U.S.-China relations that scared off potential investors.
The Irvine, Calif., startup will file for bankruptcy Monday after a conference call with prospective dealers, who have paid nonrefundable deposits from $100,000 to several hundred thousand dollars for franchise points in the U.S., Hale said.
"We don't see a way forward right now for Vantas and T-GO," Hale said of the two U.S. brands created to sell vehicles from China's Chery Automobile Co. "There's going to be no cars, there's going to be no parts, there's going to be no revenue," Hale said of the bankruptcy filing.
Although he said in a previous interview that HAAH would file for bankruptcy on Monday, Hale would not confirm that the filing had been made when asked on Tuesday. “Our attorney has asked that I not comment further,” Hale said in a text message to Automotive News. An electronic search for the bankruptcy filing did not turn up any results as of Tuesday afternoon.
HAAH pulled the plug after the investors it needed to move forward became increasingly risk averse because of tensions in U.S.-China trade relations, stiff auto tariffs and negative U.S. public sentiment toward China's role in the coronavirus pandemic, Hale said.
Hale said that half a dozen investors had expressed interest in the HAAH plan with Chery, which is a major Chinese automaker and top exporter. But in recent months, that interest dried up. And HAAH's previous confidence in raising the needed money dried up as well.
"All of the big investors moved away from the deal because of U.S.-China relations," Hale said. "They do not see it as the right place to invest. Even though I didn't want to hear it from the investors, it wasn't hard to understand."
He did not identify the investors.
"These were major Wall Street private equity types of investors," Hale said. "These were the big money guys.
"I don't have total insight into their decision, but basically the response is that China-U.S. relations are not very good, not very stable and really haven't gotten better under President Biden," Hale said. "Americans aren't very fond of where they believe COVID came from."