Malcolm Bricklin to Sell Chinese Autos in U.S.
NEW YORK – Visionary Vehicles LLC, started by the man who brought the Yugo to America in the 1980s, has agreed to sell imported vehicles from China at bargain basement prices in the United States, the company said on Jan. 3, according to Reuters.
Malcolm Bricklin's Visionary Vehicles has signed a deal with China's Chery Automobile Co. with the goal of selling 250,000 vehicles in the first year and 1 million units by the fifth year, according to a statement.
The target price for the vehicles, which are expected to be launched for the 2007-model-year, will be about 30-percent lower than comparable models now sold and will carry a 10-year/100,000-mile warranty, Visionary said.
The first year's models will include a compact sedan, a mid-size sedan, a sport and luxury coupe, and a sport/utility vehicle.
"We have an exclusive North American distribution agreement with Chery to bring in five brand-new models for delivery in 2006 to go on sale January of 2007," Bricklin told the Detroit News. "We are shooting for 250,000 vehicles the first year."
The sale of the first Chinese vehicles to American consumers will be a watershed event both in the United States, where Asian automakers have been steadily taking market share from Detroit's Big Three, and in China, where hard-charging manufacturers like Chery are eager to expand globally.
Bricklin said that privately held Visionary Vehicles has committed to invest $200 million in the new product program at Chery – China's eighth-biggest automaker – for the U.S. market. The funding will be raised by Allen & Co., a blue-chip Manhattan investment firm whose clients include Disney, Coca-Cola, Universal Studios, and billionaire investor Warren Buffett. In addition, Bricklin said Visionary Vehicles is recruiting 250 U.S. auto dealers to invest in stand-alone showrooms for Chery's product line.
The president of government-owned Chery said that the Chinese automaker is "looking forward" to its historic entry into the U.S. auto market.
Entering the hyper-competitive U.S. market would represent an enormous step forward for Chery, which was founded in 1997 and sold only about 90,000 vehicles in China last year.
Bricklin said that design work on five all-new Chery vehicles, including two sedans and a sport/utility vehicle, has been under way since last year. He said the goal is to price the vehicles 30-percent below competing models in the U.S. market.
But bringing 250,000 new cars to market in less than three years – and passing U.S. regulations on safety and vehicle emissions in the process – is virtually unprecedented. If successful, the new brand would be as big as General Motors Corp.'s Saturn division or Ford Motor Co.'s Mercury brand.
But whether Chery can build vehicles to the standard of quality needed for the U.S. market remains to be seen, reported the Detroit News. The company's top-selling vehicle in China, the QQ, is the subject of a legal battle with GM, which charges that the small sedan is a direct copy of GM's Chevrolet Spark.
Visionary Vehicles has hired Troy-based manufacturing expert Ron Harbour, publisher of the Harbour Report on auto productivity, to assess Chery's assembly processes and manufacturing operations.
"It is inevitable that Chinese cars will be imported into this country within the next five years," Harbour said in an interview. "If it wasn't Malcolm doing it, it would be somebody else."
Visionary Vehicles is expected to hold a press conference detailing its plans in Detroit during the 2005 North American International Auto Show, which opens for media previews Jan. 9.
Bricklin said that Chery has engaged the Italian design houses Pininfarina and Bertone to design its U.S. models, and has contracted with the Austrian engineering firm AVL to develop new engines. But actual vehicle prototypes for the American market will face rigorous scrutiny by U.S. regulators to meet safety and emissions standards. The level of manufacturing expertise at Chery is unproven for the demanding U.S. market. And the goal of having 250 dealerships up and running in 24 months time seems wildly optimistic, according to the Detroit News article.
Even the brand name that Chery cars will be sold under in the United States has yet to be decided upon. Bricklin is confident that the 2007 timetable can be met.