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.
HSO 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.