Some dealers are buying into Malcolm Bricklin's bold vision of importing vehicles into the United States from China in 2007, but others are wondering if they should take the plunge and invest the required $2 million for the rights to one of Visionary Vehicles LLC's 250 exclusive territories.
As of mid-November, dealers have signed contracts for 37 territories with several other contracts nearly finished, Bricklin tells Ward's. He expects to have 50 territories accounted for by Christmas.
Some dealers have paid for multiple territories, according to Paul Lambert, Visionary's president of North American marketing.
“We've had some dealers sign up for three territories, others two,” Lambert says. “We even have a group coming to New York in a couple of weeks talking about taking 10 territories. I'm guessing we'll have between 100 and 125 dealers owning all 250 territories.”
Bricklin's plan stipulates that, along with an exclusive territory and distributor rights, dealers will have an equity position with Visionary, which will own 40% of the joint venture with Chinese auto maker Chery Automobile Co. Ltd., including all facilities used to manufacture the models he imports.
Dealers wanting in are required to initially invest a $2 million standby letter of credit, which Smith Barney/Citigroup is offering to qualified dealers, and $1.5 million in working capital.
Some dealers are skeptical, though, citing Bricklin's past with Yugo, his missteps with his former chief operating officer, Pierre Gagnon, and questions regarding the firmness of the Chery partnership.
Also, there are Bricklin's showman-like tendencies and bold predictions of selling 2-million units in North America. “I think I'll keep my hand on my wallet,” one Midwestern dealer tells Ward's.
Other dealers have indicated they are going to wait and see how the venture plays out.
Another potential pitfall, General Motors Corp.'s lawsuit against Chery relating to the similarities of GM's Chevy Spark and Chery's QQ small cars was settled in November.
According to the settlement, the two sides agreed to not take any further legal action against one another.
“Look, we realize there is some risk involved,” Lambert says. “There's the political situation in China; and there's Malcolm and the $2 million investment.”
Lambert describes the initial group of dealers as being feisty, independent and pioneering types. “When dealers come to our offices in New York, they either click with Malcolm, or they don't,” he says. “It's not for everybody.”
According to Lambert, dealers on board fall into one of two categories. “Some are doing it for their children, while others see it as a smart business decision,” he says.
Dennis Reinbold, a luxury dealer in Indianapolis, IN, says he signed with Bricklin a month ago. “It's easy to get scared on a deal like this. But the more I looked at the concept, the more I liked it,” he says. “I'm impressed with the depth of their plans. Chinese cars will be here, so why not this plan?”
Tim Ciasulli, owner of Planet Honda in Union, NJ, was named the head of the Visionary Vehicles Dealer Council in October. He tells Ward's he began talking with Bricklin two-and-a-half years ago about selling foreign brands that aren't yet available in the U.S.
“He knows how to get through the red tape in the system,” he says. Also, Ciasulli likes the model of dealers having a say in production design and development of the retail infrastructure.
Bricklin currently is working on a joint venture with regional banks to create a captive finance program for Visionary. “Clearly, there is a need for this,” Ciasulli says. “We have had several discussions talking about the need to support high residuals right out of the box.”
He expects that Visionary will offer short-term leases initially to help create higher residuals for the vehicles.
Meanwhile, Ciasulli says he is laying plans for his Visionary facility. He plans to retrofit an existing building off the New Jersey turnpike for his Visionary standalone store.