China's Chery will be next Toyota, U.S. importer says

SHANGHAI - It's the last thing the U.S. auto industry needs: another Toyota Motor Corp.

But that's exactly what Malcolm Bricklin, the energetic 66-year-old founder and CEO of Visionary Vehicles, is predicting will become of China's Chery Automobile Co., whose cars he plans to begin selling in the United States in January 2007.

"We're going to make billions from this business," Bricklin said in an interview at Chery's booth at the bustling Shanghai auto show, which opened to the public on Friday.

"Chery is going to be the next Toyota," he told Reuters.

He intends to help the Chinese maker join the ranks of General Motors Corp. Ford Motor Co. and Toyota to sell at least 2 million cars in the world's biggest auto market.

If Bricklin's calculations go to plan, the day when Chery emulates the world's second-largest and most profitable car maker could come as early as in several years.

The man best known for importing the cheap Yugo hatchback into the United States in the 1980s wants to sell 250,000 Chery cars in the first year through 250 dealerships nationwide.

By 2010, the Visionary/Chery partnership would have 18 models including two-door, four-door and sport-utility vehicles, to help sales to 1 million units. The line-up will not include the QQ minicar, which General Motor Corp. claims is a copy of its Chevrolet Spark and for which it is suing Chery.

"The problem is going to be that we're not going to be able to build enough cars to satisfy demand," he said.

Chery, China's eighth-largest car maker, sold 90,000 vehicles last year including 8,000 exports, mostly to Malaysia and Iran.

To hear Bricklin tell it, his business model of "redefining the price of luxury" is fool-proof.

"We're bringing Chinese cars that are beautiful, luxurious, built in state-of-the-art facilities, and we're going to sell them for far less than the competition," he said.

"Our SUV is going to compete with the BMW X3 and sell for less than a Subaru. It will compare to a $35,000 car and we will sell it for $19,000."

PERFECT MATCH

The entrepreneur says he searched all over the world for the right partner, travelling to Romania, Poland, India and England, among other countries, before ending up at Chery, based in the eastern Chinese province of Anhui.

"They are so head-and-shoulders above anybody who ever broke into the car business," he said. "They know what they're doing, they're sophisticated, they're intelligent, they're hard-working and ambitious -- every good quality you'd ever want to have."

Despite having ambitions to broaden its exports, including to Europe, it was Chery that stalled, following Chinese tradition of taking its time to gauge a potential business partner's personal character before signing any deals.

When Chery management insisted they needed to get to know him better before offering a contract on Bricklin's second visit to China, the charismatic entrepreneur volunteered to bare all.

"He took off his shirt down to his skin and said to them, 'This is me! This is who I am!'," his son Jonathan, a filmmaker who is working on a documentary of the partnership, said.

Chery eventually gave Bricklin the deal of his dreams.

It's a prospect that frightens Detroit's heavyweights, both of which are already losing market share to Asian brands, to the point where Ford hinted that trade barriers might be in order.

"How long will the U.S. be an open market for whatever comes in? It won't be forever," said Ford President Jim Padilla.

"Unlimited growth of imports is something that has to be balanced over time," he told reporters in Shanghai.

Balancing imports is exactly what Bricklin intends to do.

After the first million cars sold, Visionary/Chery would build a manufacturing base in the U.S. to avoid any political backlash -- "just like Toyota does", he said.

"What we're saying to the world is, 'Don't worry about us. We're not coming in and taking over everybody.'"

Bricklin warned, however, that other Chinese makers would probably follow in his footsteps, bringing more unwanted competition to a saturated market.

"They'd be crazy not to," he says. "I'd expect two to two-and-a-half million cars a year to be imported from China."

Source: Reuters

Tags: China | Cars | Technology