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Discussion Starter · #1 ·
http://today.reuters.com/summit/sum...443435_RTRUKOC_0_US-AUTOS-SUMMIT-BRICKLIN.xml

Bricklin delays plans for importing Chinese cars
Wed Sep 13, 2006 6:23 PM ET

By Poornima Gupta

DETROIT (Reuters) - Maverick entrepreneur Malcolm Bricklin, best known for bringing the low-cost Yugo car to America, has delayed for the third time his ambitious plan to import Chinese-made cars to the United States.

"I was jumping a little bit faster than my host could handle,"
Bricklin told the Reuters Autos Summit in Detroit on Wednesday. "At the end of 2008 and beginning of 2009, the first cars will hit the shores."

The energetic and outspoken Bricklin had initially set a target of January 2007 for the first sales of the vehicles. He later moved back the date to the summer of 2007 and then to the end of the year.

Bricklin said that he now has 50 dealers on board, far below his targeted 250 dealers, and is planning to launch models priced from $15,000 to $45,000. The cars are expected to compete with top-line luxury brands such as BMW, Audi and Mercedes.

Bricklin has a long but spotty track record importing and selling cars in the United States. His most successful venture to date has been the launch of Fuji Heavy Industries Ltd.'s (7270.T: Quote, Profile, Research) Subaru brand in America in the late 1960s. Chief among his flops was the Canadian-made Bricklin SV-1 sports car that was in production for a mere two years.

Dealers have to invest $2 million to sign up, he said.

"We have stoped officially taking money from dealers until the joint venture is signed, which is imminent," he said.

The 67-year-old, who formed his company, Visionary Vehicles, for importing cars, is in the process of finalizing a joint venture with China's Chery Automobile with Chery holding 60 percent and Visionary taking a 40 percent stake.

Bricklin said he expects to sign the joint venture agreement by the end of October or early November.

Privately held Visionary Vehicles will launch 20 vehicle models over five years, starting with one model on sale in late 2008 or early 2009 and four other models on display in showrooms, Bricklin said.

From then on, the company plans to introduce a new car every three months.

"I think we can do 150,000 cars the first year," Bricklin said.

So far, many industry watchers have been skeptical about Bricklin's vision, especially given the delays in launch and slow progress in signing on dealers to sell the cars.

But Bricklin remains confident.

"We are putting our face out there and saying, 'Look at us.' And if we do our job, we're going to win this game," Bricklin said. "And if we don't, we're going to get our ass kicked right on the first day."
I told you. :lol: :lol: :lol: :lol:
 

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Discussion Starter · #3 ·
http://www.canada.com/nationalpost/...=642989d1-cdec-4b78-86c0-006b4d70681d&k=19503

Malcolm Bricklin's next adventure: make the Chery a hit in North America

Jason Kirby, Financial Post
Published: Saturday, September 16, 2006

Malcolm Bricklin sure knows how to put on a show. For more than a year the famous, or perhaps infamous, automotive entrepreneur has been orchestrating what could turn out to be the biggest blockbuster in U.S. automotive history -- a plan to sell quality Chinese-built cars on U.S. soil at rock-bottom prices by 2008.

He has assembled a colourful cast. Mr. Bricklin, whose past schemes to import or build his own cars have flamed out in acrimonious lawsuits and bankruptcies, takes the lead roll as the importer. There's the manufacturer, Chery Automobile Co., one of China's star automakers. Maurice Strong, the Canadian businessman, environmental crusader and international man of intrigue, has signed on as an advisor. Billionaire George Soros is reportedly writing the cheques.

And it's all being captured on video for posterity. "This interview is being recorded right now," Mr. Bricklin said on the phone from New York.

Whether North American automakers are ready for the curtain call or not, Chinese cars are on the way. China already exports more cars than it imports, to countries such as Russia, Algeria and Vietnam. Chery is designing models for sales in the West, and will put them through a barrage of tests to meet stringent U.S. standards. The cars will be relatively cheap, too, selling for 30% less than comparable models.

This is the latest in a string of import ventures for Mr. Bricklin. His efforts to bring Yugos and Subarus into the United States ended in disaster. His plan to build a car in New Brunswick in the 1970s left taxpayers there with a nasty bill. Now through his company, Visionary Vehicles, he is establishing a network of more than 200 dealers to sell Chery models.

Mr. Bricklin said he was drawn to Chery immediately upon visiting the company. For its export vehicles the carmaker has tapped international expertise, using an Italian design house to sculpt the bodies while turning to the Germans for engineering. On his Web site Mr. Bricklin bills the vehicles as "international cars with American soul."

Likewise Mr. Bricklin is aligning himself with prominent individuals such as Mr. Strong, a former United Nations diplomat and favourite of conspiracy theorists everywhere for his global rolodex. Mr. Strong spends much of his time in China these days as a consultant. He stepped down from the board of directors at Toyota to be an environmental advisor for Chery. Mr. Bricklin has also given him the distribution rights to sell Chery cars in Canada, though that's a ways off.

Mr. Strong said he fully expects North Americans will eventually be driving Chinese-built cars.

"The Chinese recognize the automobile industry has always been a major factor in any industrialized country, and they are aspiring to be the largest producer in the world," said Mr. Strong during a brief interview in the lobby of his Shanghai hotel before he was to catch a flight back to his office in Beijing.

Through Mr. Strong's office, Chery declined to make any of its executives available for interviews, though it offered a tour of its factory in Wuhu, a city roughly 500 kilometres west of Shanghai. The phone has been ringing off the hook since Mr. Bricklin began promoting his plans to sell Chery cars in the United States, explained Mr. Strong. The company just wants to focus on its business.

It could also be that Chery is growing wary of having its name dragged through the mud. The U.S. business media have jumped on the Bricklin/Chery story, and each article dregs up Mr. Bricklin's zany past. One western automotive executive familiar with Chery said the company views Mr. Bricklin's Visionary Vehicles as "an interesting part-time recreational event while they really go about what they want to do for export. They figure they might even learn something from his experiences, even if they weren't good experiences."

So far the script hasn't played out quite as smoothly as Mr. Bricklin would like. His office has yet to finalize the import agreement with Chery. The launch date for Chery in the United States has been pushed back a year to 2008. And a group of senior Chery executives recently walked out the door, threatening to delay things further.

Meanwhile, the Chinese government has started talking about export limits in the auto sector.

"If a Chinese car comes into the U.S. and bombs, people will think all Chinese cars are the same," said Mr. Strong. Already Geely, another Chinese car company, has scrapped its export plans because its cars wouldn't meet U.S. standards.

Even Mr. Strong seems to be hedging his bets.

"I wanted to position myself so that if the deal with Visionary doesn't go ahead, that I could still help [Chery] because they're going to go ahead with [their export plan] anyway," he said.

Mr. Bricklin still has his believers. Tim Ciasulli, a New Jersey car dealer, has plunked down $4-million to be one of Mr. Bricklin's U.S. dealers. While he called Mr. Bricklin "the poster child for ADD, he's liked what he's seen. Mr. Ciasulli first went to China in the late 1980s. Last year he went back and visited Chery's plant.

"I expected to see sweatshops full of thousands of people when what I saw was the most roboticized plant I'd ever seen," he said. "They seem more capitalistic than we are. I know with that mentality they have, given a well-engineered product, the quality we're going to get is going to be world class."
Dealers burned by Malcolm Bricklin won't touch Chery even if the VV goes bankrupt and Chery decides to go alone. Bad words of mouth goes around fast, you know.
 

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Chery should enter the US as Chery North America, Inc. and not take the short-cut in the form of M. Bricklin. The American auto market is simply too advanced for the Chinese at the moment.

Slow and steady can still win the race.
 

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Discussion Starter · #6 ·

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who would pay $45,000 for a car anyways ! damn lucky rich ppl ! :p
 

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Malcom is going to screw things up for a lot of people, including myself.

First off, the designs are ok, but not quite there.

second, he needs to keep the price down below US priced cars, and offer great quality instead of luxury.

He is trying to jumpstart the companies Venture into the US by jumping into the luxury segment.

Not going to happen.

People do not buy luxury cars from companies they never heard of, not in the US anyway.

150,000 units in the first year? That means each dealer will need to sell 3000 cars a year, or about 10 a day. Not with cars up to 45k.



I have tried to contact Cherry, and VV, to no success. I tried to contact Cherry to offer advice, and VV to try to get in to try to talk some sense into Bricklen.

A front wheel drive sports coupe from China with a 4 cyl will not compete with a rwd mercedes convertible. No matter how he slices it.

While he may have been in charge of Subaru entering the US, he was also behind Yugo entering the US. It seems he is going the opposite of that one, and making the cars too high to enter the US. With Yugo, they made no changes and sold them in the US for dirt cheap, this is why they collapsed. If they would have made changes to make the cars more appealing and higher quality), they would have lasted.

He is the reason why many companies won't talk to me about a US-venture, they are already seeing things are going bad.

I got a couple of words I would really like to say to him. :nono:
 

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Colvindesign said:
Malcom is going to screw things up for a lot of people, including myself.

First off, the designs are ok, but not quite there.

second, he needs to keep the price down below US priced cars, and offer great quality instead of luxury.

He is trying to jumpstart the companies Venture into the US by jumping into the luxury segment.

Not going to happen.

People do not buy luxury cars from companies they never heard of, not in the US anyway.

150,000 units in the first year? That means each dealer will need to sell 3000 cars a year, or about 10 a day. Not with cars up to 45k.



I have tried to contact Cherry, and VV, to no success. I tried to contact Cherry to offer advice, and VV to try to get in to try to talk some sense into Bricklen.

A front wheel drive sports coupe from China with a 4 cyl will not compete with a rwd mercedes convertible. No matter how he slices it.

While he may have been in charge of Subaru entering the US, he was also behind Yugo entering the US. It seems he is going the opposite of that one, and making the cars too high to enter the US. With Yugo, they made no changes and sold them in the US for dirt cheap, this is why they collapsed. If they would have made changes to make the cars more appealing and higher quality), they would have lasted.

He is the reason why many companies won't talk to me about a US-venture, they are already seeing things are going bad.

I got a couple of words I would really like to say to him. :nono:
i think what malcom wants to do is get into the us market in another way. everyone is brainwashed in a way where, a new car company must start making shitty cars with a low price and beating all the competition just because they have a low price. well malcom wants chery to enter in a different style. instead of " ill buy this chery because its cheeper than any other car in the same class" he wants "if i am going to spend $20 000 on an shitty chevy aveo hatch, with crappy performance and cheep handling why dont i spend it on a m14 hardtop convertible with better styling, more power, and better handling etc etc."
 

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gr8 said:
i think what malcom wants to do is get into the us market in another way. everyone is brainwashed in a way where, a new car company must start making shitty cars with a low price and beating all the competition just because they have a low price. well malcom wants chery to enter in a different style. instead of " ill buy this chery because its cheeper than any other car in the same class" he wants "if i am going to spend $20 000 on an shitty chevy aveo hatch, with crappy performance and cheep handling why dont i spend it on a m14 hardtop convertible with better styling, more power, and better handling etc etc."
sorry to disagree.

20k can get you a MX-5 Miata.An Aveo is 9k to 13k. Even the Solstice has a base price of 20k. Sure you can't get one today for 20k, but in 3 years when the Cherry comes out, you will. BMW is even talking about a 4cyl 20k roadster. Malcom has said the sports car will compete directly with the Mercedes SLK.

Let's see, if I was ready to spend 20k on a new car, I would not consider a fwd convertible over a rwd convertible. Much less if I was considering a Mercedes would I consider a FWD coupe made in China. The only thing that you can compare is that they both have retractable hard tops. Now the Pontiac G6 coupe has that as well (28k). That is from a trusted and known name in the US and you don't see many of them on the road.

I understand the point you are trying to make, and what you believe he is doing, however there is a much better way to do it. I'd rather not say as it is part of my plan that I am marketing to several Chinese companies right now, but there is another way that would be much more effective.

Simply put, the most effective way to enter the US market is to use the smaller cheaper cars, and sell them for less than the competition (not the main part of my plan). That is the what enabled Hyunda and Kia to get to the point where they could invest in new models that look and perform better. Since Cherry is starting with a clean slate (so they say), they can really make a lot of models that could do well in the 10-20k range.

Instead, they are trying to take cheap cars and load them up with leather and power equipment and sell them for the same prices as mid level cars in the US. Plus I wonder what he plans on selling for 45k. Is it going to be a FWD 4 cyl sedan? I haven't heard of them using a V6. This simply will not work.

Plus the numbers don't work. 150k in the first year? Not going to happen. New brands take years to establish a footing. Hyundai and Kia had years where they sold less than 50k units.

I understand what you are saying, and what you think he is trying to do, but as someone who has spent years studying and working in the auto industry, it simply will not work.

In order to make a success of the Chinese to US venture, you need to take advantage of the strengths and benefits of their current abilities. Making mid range to luxury cars is not the best thing they do.

Remember this is the guy who did Yugo and Bricklen sports cars, both spectacular failures. Also Subaru only survived their first decades because they made very dependable cheap cars, despite Malcom Bricklen's association. Today they are a company that barely gets over 150k units a year. They started here in the 1960's. THey have had 40 years to work up to 150k units, he wants to do that in the first year.
 

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Discussion Starter · #13 ·
everyone is brainwashed in a way where, a new car company must start making shitty cars with a low price and beating all the competition just because they have a low price.
Newbies always start from the bottom, not from the top.

he wants "if i am going to spend $20 000 on an shitty chevy aveo hatch
And where on earth do you pay $20,000 for a Aveo hatchback? $20,000 is a Civic Si territory.

with crappy performance and cheep handling why dont i spend it on a m14 hardtop convertible with better styling, more power, and better handling etc etc.
M14 doesn't stand a chance against Honda Civic Si in same price range.

This is Chinese car's problem; they are not really cheaper than Japanese and Korean cars once you start throwing in all the equipment required to be US and Euro regulation compliant. Chinese cars are cheap now because they don't have 6 airbags, ABS, and safety engineering.
 

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You can't take Bricklin at face value - the guy is a marketing/sales/hype machine. He's good for one thing, that is to generate buzz.

Think about it, would there be so much media exposure if he wasn't so pompus?

Had he said he's going to bring cars here in 2012 and sell 5,000 the first year, and grow 5% after that, would anyone care???

I for one, never believed he would achieve his original targets. But his strategy of shooting for the stars and land on the moon (or shoot for the moon and land in the bushes) is a great approach. The only way to get big is to dream big.
 

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In terms of the strategy for entering the US market - it's pretty simple.

Offer more for less money. That's it, nothing more.

The only question is which segment you go after first, and I like Bricklin's strategy. It's risky, but offers the biggest reward - if done correctly.

The average transaction price of a new car these days is well over 20K, so we know that is the heart of the market - so why not position all of your cars in this price range? You know that people's got this kind of money. But then, how do you get people to spend their 20+K on your product? Give them more for their money. Leather, Nav, 4WD, V8, 10 year warranty and maintenance, free car washes, etc. etc. Again, great strategy, if done right.

To do this "right", the product must be up to par with the others, and that is the biggest question mark in my opinion.

Going after the 10K market? No profit whatsoever, so why bother. Sure there's less risk and less effort, but Bricklin is not into a 20 year plan for greatness, he's looking at 10. Business 101, rule #1 - Profit is king, everything else comes in second.

The 45K car? I think I read somewhere it'll be like a MBZ S-Class, full-size RWD sedan with V8 and every possible feature. Again, if done right, I'd think people would buy one - I would.
 

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Real_I_Hate_China said:
Newbies always start from the bottom, not from the top.


And where on earth do you pay $20,000 for a Aveo hatchback? $20,000 is a Civic Si territory.


M14 doesn't stand a chance against Honda Civic Si in same price range.

This is Chinese car's problem; they are not really cheaper than Japanese and Korean cars once you start throwing in all the equipment required to be US and Euro regulation compliant. Chinese cars are cheap now because they don't have 6 airbags, ABS, and safety engineering.
you're right. But the labor and overhead costs in China are much lower.

US cars do not require 6 airbags. They require a driver and passenger airbag, I think they will require side impact bags soon, but 4 is much different than 6. Also, ABS is not required, but it is usually standard here as a selling point. It would cost less to build the cars in China, using Chinese equipment and labor, that's it. So there is a price advantage, not like they can build a car for 5k in China and sell it for 25k here, but there is some advantage. Or else it would not even be worth it. There are a ton of epa and DOT and National Highway standards that are required to be met. This does drive up the cost of development, and sometimes the cost of building the car.

New companies do have to start at the bottom. Unless they are going into supercar territory, which between 95-99% of those fail as well.
 

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BringIt said:
In terms of the strategy for entering the US market - it's pretty simple.

Offer more for less money. That's it, nothing more.

The only question is which segment you go after first, and I like Bricklin's strategy. It's risky, but offers the biggest reward - if done correctly.

The average transaction price of a new car these days is well over 20K, so we know that is the heart of the market - so why not position all of your cars in this price range? You know that people's got this kind of money. But then, how do you get people to spend their 20+K on your product? Give them more for their money. Leather, Nav, 4WD, V8, 10 year warranty and maintenance, free car washes, etc. etc. Again, great strategy, if done right.

To do this "right", the product must be up to par with the others, and that is the biggest question mark in my opinion.

Going after the 10K market? No profit whatsoever, so why bother. Sure there's less risk and less effort, but Bricklin is not into a 20 year plan for greatness, he's looking at 10. Business 101, rule #1 - Profit is king, everything else comes in second.

The 45K car? I think I read somewhere it'll be like a MBZ S-Class, full-size RWD sedan with V8 and every possible feature. Again, if done right, I'd think people would buy one - I would.
the 10k market is the largest. If done right, they can make 2k per vehicle and sell 200,000 (one model) of them in a few years. That will beat out 5-10,000 per vehicle times 5,000 units (per model) any way you try to do the math, and at the prices he's talking, those are the more realistic projected production numbers. You have to think about the costs of vehicles from one end to the other. you have from under 10,000 dollars all the way up to over 1.3 million. Sure, there is only a few sold at 1.3m, but that plus all the ones sold for over 50,000 affect that average car price. If 1/2 of the cars in the world were sold for under 10,000 and half were sold for 30,000 or more, your average would be over 20,000, but that does not mean it is the largest market.

It is not profitable to US companies because of their added costs and overhead. You have to remember that the US car companies have billions of dollars of overhead for executive teams, management teams, strategy teams, bean counters, analysts, etc etc. You enter that arena with a company that is streamlined to the gills and has a tiny fraction of the overhead, you will make a profit. These companies do not have billions of dollars in overhead. It simply does not cost that much to do the same thing over there.
 

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The 10K market is the largest? I guess you're including used car sales? I was only talking about new car sales.

Because Chinese car makers don't yet have the efficiency, technology, and the economy of scale the major players enjoy, I really don't think they can really make cars much cheaper than the major players - think Hyundai and Toyota, not GM or Ford. So to assume Chinese car makers can make a good profit in the razor thin profit segment of 10K cars is a coin toss - none of the existing car makers make much of a profit on sub 15K cars, if fact, most of them sell them at a loss for the sake of market share and future repeat buyers. Nearly all of the profit is generated via 20K or above sales.
 

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BringIt said:
The 10K market is the largest? I guess you're including used car sales? I was only talking about new car sales.

Because Chinese car makers don't yet have the efficiency, technology, and the economy of scale the major players enjoy, I really don't think they can really make cars much cheaper than the major players - think Hyundai and Toyota, not GM or Ford. So to assume Chinese car makers can make a good profit in the razor thin profit segment of 10K cars is a coin toss - none of the existing car makers make much of a profit on sub 15K cars, if fact, most of them sell them at a loss for the sake of market share and future repeat buyers. Nearly all of the profit is generated via 20K or above sales.

by volume, the 10k segment will beat any other car-segment by volume. If you look at production numbers, the lower the price, the higher the numbers.

yes, nearly all profit is generated at 20k and above by existing US and Euro companies, but the fact is that Chinese companies have the means to be profitable at 10k. If they can't there is no use for them to come to the US until they can product quality and performance equalling US and Euro vehicles. But they can be profitable at 10k. Not a huge profit per vehicle, but the volume makes up for that. Plus, they also will be building up a future buyer base with that 10k car they are making a profit on.

I am not by any means saying the 10k car should be their only segment. I think they should go up to 40 with high end sports and luxury cars. But the 10k segment can be dominated by the Chinese, because they can do it cheaper, and if it is engineered and designed right, it will blow away the competition.

Simple business economics, if you sell something at 11 dollars and make 1 dollar profit, let's say it will sell 1 million units, that is 1 million dollars profit. If you take the same item and sell it for 100 dollars, you will (by all economic data) probably sell about 1000, bringing you 90,000 in profit. Sure, you are making more profit per item, but the volume will never reach enough to be the same. Data shows, the lower the price, there are simply more people who can afford it, and more sales.

I understand better than most the state of the US auto industry and know that the three US auto makers take a loss on all cars under a certain price. There is also a legacy cost of 2800 dollars per vehicle to pay for the people who have retired from the company. THen there is the 2500 in labor cost for the people who do build it. Where in China this will be less than 15% of that cost. RIght there you knocked off 5000 dollars. THen there is overhead. In China you can build a factory for 1m dollars (I know people who have). In the US, a new factory costs hundreds of millions.

It is simply a lot cheaper to do things in China.

Economies of scale are different as well. There are more than 50 companies in China producing under 5,000 units a year, and making a profit.



The one and only thing holding back the chinese auto industry is the chinese way of doing business. As soon as they figure out that they need to do things differently to make it in other markets, they will take over extremely quickly. Also, the copyright law (and lack of enforcement) are a major factor in keeping companies from investing to make new products in China, but this is part of their way of doing business.
 

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Hate to beat a dead horse, but you keep saying the 10K segment is the largest - in the US of A??? Really??? I'd like to see some data on that. You must be including used cars, yes?

I read a study a while back, most Americans buy new cars based on "want", not "need". In other words, not a lot of American buyers buy new cars because they had to, but because they want to. With that said, who's going to "want" to buy a cheapo 10K new car? One can't show off with a 10K car let along get a date. ("Cheap" cars are selling briskly these days because of gas prices.)

Now let's include used car sales. Used cars outsell new cars 3 to 1 and transact at a much lower price point. New cars can't possibly compete with old cars on price. (Lots of people would take a 2 year old Accord over a new Hyundai, for example). So the margin is not going to be so good. Much cost of selling a vehicle goes into distribution, marketing, logistics, supply chain, dealerships, etc. etc., just having cheap labor may not make it.

Which car segment to enter is always up for debate, but the bottom line is this: Product quality.

If China can make cars of great quality, go as high up in price as possible - chase after the highest profit. If the quality is only so-so, stick to 10K segment because that is the only possible option - since people are more forgiving with bad quality at this price point.
 
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