Tuesday, December 4, 2007

In China, Chery Automobile Drives an Industry Shift (and Al Gore's mentor stops by)

Every story has a story. This one, from the Wall Street Journal got me rummaging around in the link-vault. A short detour, by your leave, before the WSJ.
From the Detroit News Jan. 2, 2005:

First Chinese cars to hit U.S. shores
Malcolm Bricklin, the man behind the Yugo, to lead new import wave in 2007.

A newly formed company led by auto entrepreneur Malcolm Bricklin and the investment banking firm Allen & Co. has signed the first-ever deal to import cars made in China for sale in the United States.

Bricklin, known best for bringing the ultra-cheap Yugo car to the U.S. market in the 1980s, is expected to announce the agreement today between New York-based Visionary Vehicles LLC and Chery Automobile Co., one of the fastest-growing players in the fledgling Chinese auto industry.

...While Bricklin is chief executive officer of Visionary Vehicles, its management board is chaired by William vanden Heuvel, a senior advisor to Allen & Co. and former deputy U.S. representative to the United Nations.

In a recent interview with The News, vanden Heuvel compared the potential of bringing Chinese cars to the United States to the entrance of Japanese automakers into the American market more than 30 years ago.

"We think the opportunity is huge to be the first to go to market," vanden Heuvel said. "It's exactly the situation that Japan was in starting out."

Other partners in Visionary Vehicles include Maurice Strong, a former senior adviser to U.N. Secretary General Kofi Annan; Norwegian shipping magnate Per Arneberg; and New York construction executive John Cavanaugh.

That deal fell apart, as reported by AutoWeek:

...Chery's plan to export its own brand of cars to the United States and Europe is separate from negotiations with DaimlerChrysler about building a small car for export, Chery managers and industry sources said.

Billionaire George Soros still wants to invest in Chery, suppliers and other industry sources said. "Soros wants to put in more money, not less," the European supplier executive said.

Bricklin-Chery divorce
Under Chery's original plan, devised in 2004, Bricklin and Chery planned a joint venture to develop cars and sell them in North America. Bricklin raised money from car dealers and others, including Soros.

Last month at the Beijing auto show, Bricklin said his company, Visionary Vehicles LLC, and Chery had broken off negotiations.

The divorce marked the end of a tale that started two years ago. Bricklin evoked deep skepticism - and some chuckles - in industry circles when he announced his plan to import Chinese vehicles with Lexus quality and Chevrolet prices.

Bricklin had launched the Subaru brand in the United States but also such flops as the Yugo. His proposal had attracted a $200 million commitment from Soros' investment company, sources in China said.

Bricklin declined to confirm that Soros was the source of the money, but Bricklin said the $200 million was returned. The money never left an escrow account, he said.

Sources in China said Chery executives and Bricklin could not agree on how the $200 million should be used. Chery wanted more money for r&d, said sources familiar with the situation. Bricklin wanted to use it to build a U.S. distribution network.
In Canada some refer to Strong as "Chairman Mo"
With that lengthier than usual intro, here's the Journal's story:

Low Costs, High Output
Attract Global Partners;
Chrysler's Leap of Faith

In this city on the Yangtze River, more than 25,000 blue-uniformed workers are busy churning out cars for Chery Automobile Co. As they motor through double shifts using the latest imported technology, they're also helping to change the dynamics of the global auto industry.

Barely a decade after it was founded, state-owned Chery has emerged as China's largest independent vehicle maker -- and one that is determined to compete against the world's automobile giants.

"In the beginning, no one had confidence in us," says Yin Tongyao, Chery's chairman and general manager, in a rare interview. Now, he says, "we are looking globally for markets."

The tale of Chery's improbable rise is in large part the story of China's ballooning domestic car market, which has roughly doubled in size since 2004. Its products -- mostly inexpensive cars and SUVs -- are also gaining a following in developing countries hungry for low-cost vehicles....MORE

As of Jan. 2, 2006 there were still some kinks to work out.

From PaulTan.org:
(chart displaying areas where the driver and passanger gets the most injuries. Red=very, very bad)


More photos of the crash test.

Here's an old Vid of the Runaways "Cherry Bomb"