Who's Buying All That Brilliance Stock, And Why?
The Hong Kong Stock Exchange announced that the board of directors of Brilliance China Automotive Holdings Limited ” has noted the increase in share price and trading volume of the shares of the Company today and wishes to state that the Board is not aware of any reasons for such increase in share price and trading volume.”
Brilliance, BMW’s Chinese joint venture partner and maker of its own line of cars (which kind of look like Bimmers) “confirms that there are no negotiations or agreements relating to intended acquisitions or realizations which are discloseable.” In other words: They say they have no idea why their stock would move.
We called around a bit in China. Everybody is likewise flabbergasted. A source we trust, and which shall remain undisclosed to protect his job, says: “There is nothing unusual going on at Brilliance. They will announce some homegrown new models this year. No new BMW joint venture cars are planned.” So why the sudden interest in their stock?
It’s not that Brilliance’s sales record was too stellar. According to Gasgoo, “Brilliance Auto has met with its all-time slow in car sales. The company has sold only 285,000 vehicles in 2008, with its sales growth down 5 percent from last year.”
In 2005, Brilliance tried to export Bimmer-a-likes into the Hornet’s nest Germany. Hans Sachs, a former VW exec, launched an import company and ran into heavy fire. Imported Brilliances were crash tested (some say under a bit dubious circumstances) and failed miserably. Videos on YouTube. Death knell. A later test in Spain was ok, but the damage was done. A marketing consultant, asked for help by Sachs, recommended: “Put the cars on a ship and head for the biggest hurricane you can find.”
Yet, Brilliance hasn’t given up and calls it “a learning exercise.” They will be at the Detroit Auto Show, where they will put “nearly ready for US” cars on display. But again, who’s aggressively buying their shares and why? One wild assed guess is that it might be the hellhound itself. Cerberus. In order to have something to sell through their dealerships. They could buy TKD (kit cars) from Brilliance, assemble them in Mexico or in their disused Delaware plant and call them “Made in the U.S.A.”
It’s a far fetched assumption, but as the assumptee says, “funnier things have happened.” But why buy the shares if they just can buy the kits? Brilliance would be glad to sell them.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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@menno: Now that makes certainly sense. By the way, my sources say the Brilliances are not all that bad. The Bimmers they build are built with original Bavarian technology in plants devised by BMW and to BMW standards. For their homegrowns, they just need to get more inspired by how BMW constructs a safety cell, and not forget stuff like putting cross members into the doors etc., and they'll be right there. With a little input from a big company that has the computer simulators needed to build cars, their safety problems could be solved in a few months. I'm sure Chrysler has a lot of unused computer cycles to trade ...
The owner of the Houston rockets invested 100 million in Brilliance. That is who is buying all of that brilliance stock. He also has 50 years of experience in the auto industry.