By on November 5, 2009

Did we mention that China’s Brilliance hasn’t been doing so, well, brilliantly? The joint venture partner of BMW, and maker of supposedly homegrown Ersatz-BMWs (the sight of which makes any BMW engineer reach for a bottle of Jägermeister) had racked up losses to the tune of 9b Chinese Yuan ($1.3b) in the first half of the year. And now, its European importer went kaputt. HSO Imports, located in tax-friendly Luxemburg, declared insolvency. To the tune of silent, but audible “hipp-hipp, hurrah!” amongst Germany’s automakers. Break out the bubbly, another attempted Chinese invasion has been repelled.

That Sachs. Picture courtesy  Autohaus.deHSO had been started three years ago by Hans-Ulrich Sachs, widely regarded amongst Germany’s tightly-knit Automobilproduzenten-circles as a turncoat, deserter and traitor. Sachs’ career had been a series of disasters. He was the head of one of the largest dealers in Germany, Schwabengarage. In 2000, the dealership was up for sale. A Swiss car dealer snapped it up for 150m Deutschmark (no € in 2000) about half of what Sachs had said it would fetch. That ended this career. To the bafflement of the industry, Sachs landed the job as sales chief of Volkswagen – for six months. Then he was fired by Piech – in the inimitable Piech way. Sachs went to the German certification agency DEKRA, where he ran one of their minor business units, the “DEKRA Akademie.” Soon, he lost even that low octane job. Between jobs, he tried his hands as a consultant. In 2005, he bought the Georg-von-Opel car dealership with a British investor group. A year after the purchase, the dealership was insolvent.

Was he driven by rationale or revenge when Sachs started out to bring Brilliance to Europe in 2006? Whatever the motive, the European car industry, led by the Germans, did everything to suffocate Sachs. The M.O. was always the same: A short while before the Frankfurt Auto Show, the ADAC, the German version of the AAA, supposedly took it upon itself to buy a Brilliance and to crash it. A horrific crash video appeared on all TV channels, and landed for eternity on Youtube. Months later, the crash was repeated by independent labs under legally mandated conditions. The test went positive. Brilliance cars are legal for sale in Europe.  But the damage was done. And a horrible crash gets way more play than a good one.

A crash test doesn’t come cheap, the test itself costs more than the car. A multiple of tests costs a multiple of that price. An industry insider quipped: “If you crash enough cars, you always find one that makes really shocking video.” The joke of those days was that early sales successes had stemmed from interested parties snapping up Brilliances for crash testing. It never became public who really paid for those tests. But only fools think that the ADAC used membership fees for the testing. The most recent crash test, in March of this year, was performed under very dubious circumstances. The matter stunk, but stuck.

Curiously, Sachs doesn’t finger his arch nemesis as the cause of the failure. He blames it on his buddies in China. Surprise, surprise, they were too expensive, Sachs said to Das Autohaus. “For months, we had discussions with the manufacturer about lowering the price, but we were unsuccessful. We couldn’t compete anymore.” It’s probably closer to the truth that Brilliance sales were anemic, to put it mildly. In the always very precise statistics of the German Kraftfahrtbundesamt, Brilliance doesn’t even show. Saab, with 47 units sold in October is listed. Brilliance? Never heard of it. After those tests, the cars were damaged goods. One prominent consultant, asked by Sachs what to do with the cars, recommended: “Put them on a ship and sail into an area with the highest likelihood of hurricanes.” It’s probably a good guess that HSO’s biggest creditor is Brilliance in China. With their European general importer bankrupt, they can write off those receivables also. Along with the hopes to penetrate the European market anytime soon.

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22 Comments on “Death Of A Chinese Car Salesman: European Brilliance Importer Crashes...”


  • avatar
    Stingray

    I saw the crash tests, said no chinese cars for me.

    Don’t know the results you’re mentioning, although I may have read something about them here.

    Why you don’t start representing/importing chinese cars to Europe?

    You know both sides of the equations. I think you might win.

  • avatar
    OldandSlow

    I’m not at all surprised by the “red carpet” treatment that was extended to the Chinese from European automotive industry.

    So, this is the same Chinese manufacturer that wants to purchase Volvo, yet loses 1.3 Billion dollars over two fiscal quarters? Go figure.

  • avatar
    another_pleb

    What happens when the Chinese start using high-strength steel for the floorpan, roof, window-pillars, sub-frames etc.

    Don’t we have enough choice already? Surely Skoda, Dacia, Hyundai, Kia etc. fill the budget/value-for-money end of the market very well. Chinese competetitors will not be given a free lunch by the established brands. Or is the supposed Chinese invasion only being held back by virtue of being commanded by numpties like Hans-Ulrich Sachs?

  • avatar
    no_slushbox

    Every recent auto making nation started out rough, but Japan and Korea are much different than China, they are the countries that the smart people left to.

    I predict that Land Rover and Jaguar owners will be proudly proclaiming that their cars are designed and engineered in India before China actually engineers and designs a car, on its own, that has any sales success in the West.

    China has no brains, except the political brilliance of the party, all it can do is steal outdated western designs (for home use) or buy outdated western designs (for export).

    And cars are not clothes or cheap plastic crap, making quality cars takes automation, not cheap desperate peasant labor.

    There is no capital/labor tradeoff (we can give you 1,000 peasants for the cost of one machine) possible with high quality automobile production, unlike clothes or lead painted toys.

    China cannot replace fully automated expensive German and Japanese manufacturing equipment with armies of peasants armed them with hammers and stick welders. When it tries you get the above result.

  • avatar
    no_slushbox

    re: Stinray:

    I believe that Bertel’s plan is to build Indian designed and engineered Tatas in China and export them to Latin America, thereby optimizing his ability to mix business with sex tourism.

  • avatar
    Lokkii

    RE: Chinese Car Industry

    I was very good friends with an engineer in Japan in the late 70′s and early 80′s. His company was in the middle of a huge debate about how to handle Korea. As we’d drink he’d tell this tale:

    First we sold them product.
    Then we started to assemble there
    Then we started making components and assembling.
    Then we started selling the equipment to make the components.
    Now they want to buy the designs for the equipment.

    The debate:

    Position A.

    They’ll develop their own engineering and outprice us on cheap labor, so we shouldn’t sell.

    Position B.

    It’s too late, and if we don’t sell them the designs, someone else will. They are coming anyhow, it’s just a matter of time.

    And so it is with China. It’s just a matter of time.

  • avatar
    Stingray

    China cannot replace fully automated expensive German and Japanese manufacturing equipment with armies of peasants armed them with hammers and stick welders. When it tries you get the above result.

    I talked with the former representative of a very reputable/established German supplier recently. He was in China for 3 years.

    They surely can buy. And buying/improving they are.

    @ no_slushbox

    I don’t know if he’s going to sell those cars down here as CBU. Many countries here are requesting assembly plants.

    His model has a chance as SKD/CKD kits.

  • avatar
    kurkosdr

    @ no_slushbox
    I agree. In order to make a quality product you need to either spend time developing an all new design that will work, or buy a license for someone’s elses design.

    But no, this is China, an they want to have their rice and eat it too. Why bother making a good car, when you can hire a bunch of peasant farmers and push them into the enginnering room, and have them design it for pennies? Then hire another bunch of underpaid farmers, equip them with hummers and lots of glue (welding is expensive), and presto, you ‘ve got your own firm.

    Then, we all know how it goes: Since the government doesn’t want to see their hard earned cash been lost on foreign cars, and since not even the locals want to buy the cars their indegious firms produce, huge import duties are introduced in order to protect the aforementioned indegious firms. While all is going well, the goverment decides to make some hard cash by selling these cars to unsuspecting buyers of the west.

    The wrinkle in this plan is that western people, like the Germans, have high standards, because competition actually works there,
    And this is how the Chinese miracle falls apart when fair play actually exists.

    I ‘ve been to China, and their only vehicles are the VW Santana (special type of VW made by Chinese for Chinese), BYD F3, Geely, Cherry QQ, Toyota (like the Santana) and cars that look like BMWs, with BMW badges on them (note: they are not real BMWs).
    There are NO imports in China! See, when it comes to Chinese people, their parents have grown with an ox, and they grew up with a BYD, so they can’t tell the difference, so Brilliance is brilliant to them.

    And believe, if all these Chinese had a choice to work in some other country, they would. So the Chinese miracle is yet another evil dictator abusing it’s people after all.

  • avatar
    Daniel J. Stern

    @kurkosdr:
    There are NO imports in China!

    Oh really? Y’better put in a call to Audi and set them straight; they think they’ve sold about 120,000 cars (and counting) in China so far this year.

  • avatar
    YZS

    It’s only a matter of time.

    But consider this: There was a time when we thought that it will be forever before China will be a larger auto market than the US. That was 18 months ago.

    So while Gen X or Gen Y may not ever consider a Chinese car, many of their children will be spending their hard earned money on one.

  • avatar
    YZS

    Oh and to those that say China has no brains, they just sent a man to space and back alive. Either there wasn’t much copying, or their spies have brains, either way.

    This from a country that 30 years ago, had an average wage of $15/month.

  • avatar
    rnc

    So, this is the same Chinese manufacturer that wants to purchase Volvo, yet loses 1.3 Billion dollars over two fiscal quarters? Go figure.

    Geely wants to buy Volvo, Brilliance lost 1.3 billion

  • avatar
    hreardon

    China may not be able to apply its traditional methods of cost savings to make its cars significantly less expensive enough to gain much traction outside of China.

    To build a car to the standards that most Europeans and Americans demand takes expensive materials and relatively complex and costly manufacturing techniques. One cannot throw a handful of peasants at a hump of steel with some hammers and glue and get a BMW 535 out of it. Well, I suppose you can, but it sure won’t be like the 535 manufactured in Germany.

    China is getting better at complicated manufacturing, but the standards and competition in the auto market are so high right now that I think they’re going to have a significantly more difficult road to hoe than most people think.

  • avatar
    keepaustinweird

    Based on some of the discussion here some of you seem to seriously underestimate the potential of Chinese engineering and innovation. Are they there today? No. Will they get there sooner than you think/expect? Likely.

    The Chinese educational system blows the US out of the water when it comes to math and science. And you can’t have engineers without math and science. They will kill us with the quality of that education and the sheer scale of their numbers.

    China generates more PhDs than anywhere else today. They are hungry and they are huge. Look out.

  • avatar
    Mr Carpenter

    Out of fairness, let’s look at the second Euro crash test, which garnered 3 stars, and which was done less than 3 months after the first.

    Yes, the cars were all improved to be sold with the 3-star rating. (Which essentially means they were safer than a used car of only a few years in age).

  • avatar
    kurkosdr

    Oh really? Y’better put in a call to Audi and set them straight; they think they’ve sold about 120,000 cars (and counting) in China so far this year.

    They are cars that look like Audi’s, with Audi badges on them. The badge on the hood may shout “import”, but the car itself is made in a sweatshop in China (the same one that makes the Santana).
    The only thing getting close to the Western standards in China is Shanghai-GM/Buick. But even this is Chinese made. Not an import.

    What I am saying is that the Chinese people cannot buy an import. The Chinese government does not allow a car to be taken (bought) from a factory in Japan and sold in Cantona (unless you are really filthy rich).

    If a company wants to sell stuff to the Chinese, it has to make a sweatshop in China and build them there. They are not allowed to ship them to China. This was done to prevent money lost on imported cars (an by imported I mean litterally imported from outside the nation) and to force foreign companies into bringing now-how to China

    And this is how China is doing business today. By abusing it’s people and banning foreigners from selling their products in China (but the west allows imports from China, not fair eh?)

  • avatar
    Srynerson

    I won’t claim to be an expert on Chinese automotive engineering, but an awful lot of the snark about Chinese workmanship sounds like the same sort of criticism you heard about Japanese workmanship even into the 1970s and we know how that one turned out.

  • avatar
    YZS

    1. You can buy any Ferrari, Bently, or Rolls in China, and I’m pretty sure they don’t manufacture those cars in China.

    2. iPhones and most of the Mac hardware are made in China. They have pretty good reputation for quality hardware wise (operating system and software is another issue, and shouldn’t be discussed here).

    How much do you think an iPhone will cost if it was made in the US or Germany?

  • avatar

    @Kurkosdr:

    I ‘ve been to China, and their only vehicles are the VW Santana (special type of VW made by Chinese for Chinese), BYD F3, Geely, Cherry QQ, Toyota (like the Santana) and cars that look like BMWs, with BMW badges on them (note: they are not real BMWs).
    There are NO imports in China!

    They are cars that look like Audi’s, with Audi badges on them. The badge on the hood may shout “import”, but the car itself is made in a sweatshop in China (the same one that makes the Santana).
    The only thing getting close to the Western standards in China is Shanghai-GM/Buick. But even this is Chinese made. Not an import.

    What I am saying is that the Chinese people cannot buy an import. The Chinese government does not allow a car to be taken (bought) from a factory in Japan and sold in Cantona (unless you are really filthy rich).

    If a company wants to sell stuff to the Chinese, it has to make a sweatshop in China and build them there. They are not allowed to ship them to China.

    I don’t know when you were in China. Sounds it was when Mao was still at the helm. But there were no BYDs, QQs, or any of the cars mentioned back when. So you must have been there quite recently. Spent too much time in KTVs?

    Prejudice can be hazardous to your health. It can cause blindness. Some items to help you regain your vision:

    - The annual value of imported cars to China stands at around $10 billion.

    - It’s not just that you can buy Ferraris, Rollers, and Bentleys in China (as noted.) China is one of the topmost export destinations for many carmakers.

    - Mazda imports cars to China. Lexus imports cars to China. Kia imports cars to China. Renault imports cars to China. Toyota imports cars to China. Chrysler only imports cars to China. Volkswagen imports so many cars to China that they have their own dealer network just for imported cars. Even friggen Fiat imports cars to China. You couldn’t be farther off the mark.

    - Yours truly owns an imported Volkswagen Sharan in China, bought in China. It provides my driver (even a TTAC writer can afford a driver in China – if he owns a company on the side) with free German lessons. He knows that “Waschwasser auffuellen” means to replenish the water supply for the wipers.

    - This year, there was the first car show only for imported cars in Beijing.

    - The Santana is not a “special type of VW made by Chinese for Chinese,” it is a Passat-derivative developed by Volkswagen in the early 80s. The plant was exported to China in 1984 where it launched to auto boom.

    - The BMWs with BMW badges on them, the Audis with Audi badges on them, the VWs with VW badges on them, the Toyotas with Toyota badges on them, the Mercedeses with Mercedes badges on them and any and all cars built in China under joint venture contracts are the real thing, made according to foreign standards in factories that adhere to foreign standards. (The Audis are not made in a sweatshop, and certainly not in the same that makes the Santana. The Santana is built by SAIC, the Audis are built by FAW.)

    - As far as homegrown brands go, they have some catching-up to do. They lack the history, experience, and financial power of the imports and joint-ventures. However even J. D. Power agrees that the quality of Chinese-built vehicles is approaching that of global brands. Which, as we all are painfully aware, can have their own issues.

    How can someone who’s been to China be so far off? Now, tell us the tales of your most favorite KTVs.

  • avatar
    Via Nocturna

    Oh my. That’s…that’s not very good at all.

  • avatar
    gimmeamanual

    Bertel, good response, I couldn’t believe how misinformed kurkosdr‘s response was. Amazing.

    To the rest of the B&B, if you haven’t been in an auto plant in China, I think you’d be surprised. Sweatshops full of bare-footed farmers and dirt floors they are not. Some of them put the “highly sophisticated” US plants to shame.

  • avatar
    Accords

    Wih the words “highly sophisticated” comes to mind the ZR1 build in Kentucky…
    A 100k car is made in a place where Gomer can rub his hand over the hatch… say he can do an adjustment… but wont.
     
    Thats what I call highly sophisticated!


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