Would You Buy a Chinese Car from This Man?
Arriving in wuhu, China, last July after a 17-hour flight from New York, Malcolm Bricklin was so juiced up, so shot through with adrenaline, that he couldn't sleep. All night, he paced back and forth in his hotel room, killing time before his meeting the next day with Yin Tongyao, president of the Chery Automobile Co., the eighth largest of the 120 carmakers in China. Since Chery's founding in 1997, Yin has made it known that his ultimate goal is to sell cars in the U.S. For Bricklin, the 66-year-old CEO of Visionary Vehicles and the man who introduced Americans to both the Subaru and the Yugo, the meeting represented a thrilling opportunity. It was also a source of agitation. That's because Bricklin's advisers had warned him that he had to be uncharacteristically patient. In China, they had said, personal relationships must be developed before business can be done.
It was too much to ask. A few minutes into the breakfast with Yin and four other Chery executives, Bricklin shoved aside his PowerPoint presentation, as well as the handouts of his business plan. He then removed his tan suit jacket. The whole thing was captured on film by Bricklin's 28-year-old son, Jonathan, who is making a movie about his father's life and who had tagged along on the trip. As the older Bricklin began addressing the Chinese in English -- without a translator -- Jonathan zoomed in. "The word I hear about doing business in China is relationship," declared Bricklin, his face flushed. He then ratcheted down his red silk tie and punctuated his next words by unbuttoning his once-dry white shirt:
"The way I see it, [pop]
we have two choices. [pop]
We can either take our time [pop]
and get to know each other. [pop]
Or, we can get naked!"
With that, Bricklin tried to rip off his shirt -- only to be foiled by a button snagged in his belt. As the Chinese executives smirked and exchanged sideways glances, he applied a final burst and yanked the garment free, leaving his audience to gawk at a chest overgrown with white hair. "I came here as Malcolm Bricklin, but I'm leaving you as Visionary Vehicles," he declared, pulling on a baseball cap embroidered with his company logo.
Either because of or in spite of his theatrics, Bricklin had his deal by December: exclusive North American distribution rights for five new model lines from Chery starting in 2007.
"Everything he does is entertaining; he is never afraid to be politically incorrect or uncensored," says Jonathan Bricklin. "From eating cheeseburgers for breakfast to lying out in the sun all day without sunblock, Malcolm has a blatant disregard for what most people consider normal."
"The way I do something is to jump into the pool and start swimming," Malcolm Bricklin says. "Most people walk around the pool trying to figure out how the water is. I dive in and then decide if I like it or not." Throughout his life, these plunges have led to both scintillating success stories and equally fantastic failures. Bricklin has tried to peddle electric bikes, hovercrafts, and hardware stores. His drive to find his next deal without ever stooping to get a normal job has left his personal life in turmoil (three divorces) and his creditors abused (two personal bankruptcies and a string of lawsuits). But his charisma, resiliency, and fast talk -- he averaged 14,845 words per hour during a three-hour period taped by an Inc. correspondent in China -- also create an aura that sucks people into his orbit and doesn't make it easy for them to escape. Tellingly, all three of his ex-wives recently attended a Bricklin family party. He continues to persuade people to buy into his vision of the next big thing, sight unseen. "Most of us lead humdrum lives where we plug along, but Malcolm has a way to inspire us to become part of something bigger and better," says Malcolm Currie, former chairman and CEO of Hughes Aircraft and a former Bricklin partner.
Like most larger than life figures, however, Bricklin also has a larger than usual assortment of critics. Former colleagues at Subaru used to joke that Bricklin could hand someone a bucket and create the appearance that it was filled with jewels when it was really leaking sewage. Ron Tonkin, who owns 17 auto dealerships in Portland, Oreg., and has sold Bricklin's Yugos and electric bikes in the past, says he has lost several hundred thousand dollars by investing in Bricklin's failed ventures. This time, he swears he won't be fooled, no matter how persuasive the vision appears. "Malcolm should have been a carnival promoter," Tonkin says.
Bricklin's latest vision is far and away his most convincing yet. There's little disputing that China, already producing many high-quality high-technology products for a fraction of the price that they can be made in most other places, will become a force in the U.S. car market. Of the many automakers in China, Chery has one of the most modern manufacturing facilities going -- a state-of-the-art factory in Wuhu, a city of one million. Chery also has substantial support from the local and central government in China.
Bricklin is getting his seed money from Per Arneberg, a shipping mogul who has invested with him in the past. Allen & Co., the prominent investment banking firm, has signed on to help structure the financing for his dealership network. William J. vanden Heuvel, a permanent U.S. representative to the United Nations, and Maurice Strong, the U.N.'s undersecretary-general and director of the World Economic Forum Foundation, have joined the board of Visionary Vehicles.
"Who wouldn't want to be part of this?" Bricklin asks, adding that the Chery deal is the one he has been searching for his whole life -- his best opportunity to cause a sea change in the kinds of cars people buy and the way they go about buying them. "This is an industry in flux," he says. "Can you believe that General Motors would be rated the same as junk bonds? I'm only trying to take a bite out of a pie. This is easy for me, this is what I do."
That may very well be true. But while Bricklin now has a wealth of experience to draw from, he also has an enormous obstacle to overcome: the track record that comes with all that experience.
Malcolm Bricklin grew up among Philadelphia's row houses. He says one standout memory of his childhood is that he never liked to eat: "Stopping to eat meant I had to stop playing." He was also a budding go-getter who used to work in his family's furrier shop and stretch animal hides for 25 cents each. He later dropped out of the University of Florida at the age of 19 after his father folded a hardware supply business in Orlando. Stepping in where his dad had failed, Bricklin hired his father's best salesman and started selling hardware store franchises called Handyman in 1958. The chain grew to 149 stores, but eventually collapsed in a morass of disputes.
Seven years later, after abandoning an effort to sell an early version of a video jukebox (being ahead of his time is a repeated theme in the Bricklin chronology), he found himself in New York brokering a deal that netted the city's police force 25,000 Lambretta motor scooters from an Italian distributor desperate to unload them. Thinking he might be onto a trend, Bricklin started negotiating with a Japanese manufacturer, Fuji Heavy Industries, to import a different breed of scooters called Rabbits. (Volkswagen later paid Bricklin a modest sum for clear U.S. rights to the name.) Fuji crossed him up by deciding to cancel production of the Rabbit, but Bricklin learned that Fuji also owned a line of cars it called Subaru. He hurried off to Japan with his golfing buddy and partner Harvey Lamm and negotiated exclusive North American distribution rights for the Subaru model 360. Bricklin and Lamm together invested $75,000.
Because the tiny 360 weighed less than 1,000 pounds, U.S. Customs considered it a "covered motorcycle," which meant it was not subject to the usual safety standards of automobiles. Shares of the newly incorporated Subaru of America started trading on the Philadelphia Stock Exchange in 1968, and the company began taking delivery of thousands of the 965-pound steel boxes. Selling for $1,300, the Subaru 360 paved the way for the Japanese invasion of American highways.
Subaru also helped catapult Bricklin into the limelight and into a $150 million payday when he sold his shares and handed the reins over to Lamm. There were reports at the time of investor unhappiness with Bricklin's freewheeling spending style. One example: his office at New Jersey-based Subaru, a James Bond-like command center complete with remote-controlled 10-foot-tall oak doors, egg-shaped chairs, a video surveillance system, and a goldfish pond. Nonetheless, Bricklin had his windfall, one that he leveraged into pursuit of the dream of building his own car. Just three years after his visit to Japan, and not long after Consumer Reports named the 360 the most dangerous auto on the road, Bricklin started shopping the concept of a gull-winged, acrylic-bodied, V-8 powered sports car designed by ex-Ford employee Herb Grasse.
The Bricklin Safety-Vehicle, or SV-1, would sell for $9,000 and never dent or need paint. Bricklin acknowledges he didn't possess the expertise required to build a car. What he did know was that he wanted to make one that was "sexy," and that sex appeal was going to be the primary selling point. After striking out in his pitch to the Big Three, Bricklin found a champion in Richard Bennett Hatfield, premier of the Canadian province of New Brunswick. Hatfield helped Bricklin secure more than $20 million from the Canadian government to sponsor the first new car manufacturer in North America in over a century.
And it was that chance to build something new -- even something as risky as a new car -- that attracted people like Terry Tanner. Bricklin recruited Tanner from Ford to be the chief engineering manager for Bricklin Motors, a job Tanner says his wife thought he was crazy to take. For someone used to working as a cog in an assembly line, Tanner says, Bricklin's dream "to build a stupid car" was irresistible. Plus, "Malcolm could motivate a rock," he says. Most cars take seven years to get built: The Bricklin came together in seven months. But, like fellow stargazers Preston Tucker and John DeLorean, Bricklin couldn't make his car of the future go. Despite a classic Bricklin promotional effort -- including a launch party at the Four Seasons in Manhattan at which he actually used a branding iron to burn a giant B into the first car to come off the production line -- the company couldn't generate cash fast enough to satisfy its creditors. The factory closed its doors in September 1975 after only about 3,000 cars were produced. Tanner remains proud of the car he and his team cobbled together in less than a year. He later started a business in rural Virginia servicing Bricklins; 2,123 of them are still on the road today. "The car was a success," he says. "It was the business that failed." Bricklin, who says he spent nearly all his Subaru profits on the SV-1, was forced to declare personal bankruptcy and, for the first time in his life, confront failure. "It was the only 24 hours of my life that I was actually depressed," he says.
He retreated first to his desert ranch in Scottsdale, Ariz., and then to his 5,000-acre hideout in the Colorado Rockies, complete with an indoor shooting range, a riverfront swimming pool, a helipad, and a pet camel. There, Bricklin explored new options such as launching a business that would refurbish used cars, building an air car that would float six inches off the ground, and introducing a new and improved Bricklin SV-2. But it was another 10 years before he made headlines again, this time with the help of a Yugoslavian automaker. The Yugo, a hatchback universally panned for its lack of reliability, had only one strong selling point: a price tag of $3,000. Bricklin sold 35,959 Yugos in the first year and then the war in Yugoslavia interfered. He walked away from the venture after Mabon Nugent, a Wall Street investment firm, agreed to give him $20 million for it. This time it was Bricklin who would claim to have been fleeced. Mabon Nugent filed for protection from creditors under the Chapter 11 bankruptcy laws and never made the full payment. Simultaneously, John and Rebecca Bednarik of Accokeek, Md., won a $17.3 million judgment against Bricklin for failing to deliver Yugos to their dealership. Bricklin blames his attorney, who was disbarred during the case, for that one.
Despite his personal financial woes, Bricklin repeatedly attempted to launch the next big thing, such as a 1,000-shop national car dealership that went belly-up when his potential financier, Michael Milken, went to jail in 1998. By early 2002, Bricklin was balding and grayer but no less ready to go for it once again. He hired Ron Harbour, a renowned automotive industry expert and publisher of The Harbour Report, to begin scouring potential factory sites in developing nations like Poland, Romania, and India. The Yugoslavian government offered to donate an old Yugo factory to Bricklin free of charge. But there was a small catch: The factory had been bombed by NATO warplanes five times. Bricklin passed.
It wasn't until a chance encounter with a casual acquaintance in April 2004 that China came up. The man, a Russian who exported cars to South America, offered to set Bricklin up with a company called Chery, about which the Russian had heard great things. "I thought I was going to find some factory in the middle of a rice paddy," Bricklin recalls. Instead, when he arrived in Wuhu, he thought he had landed in heaven. Not only did he find a modern facility staffed by a motivated work force, he also found a man he now describes as his entrepreneurial soul mate. It was Yin, Chery's 42-year-old president. Yin had spent the bulk of his career in the car business with companies like Volkswagen before being picked to head Chery in 1997. Bricklin says the two of them hit it off right from the start. Yin told Bricklin he planned to turn his 8,000-employee company into a Chinese Toyota. "His dreams are even bigger than mine," says Bricklin. "And that really turns me on."
Bricklin began to see the fragments of his up-and-down career fitting together in a new way and producing something better than he had ever accomplished in the past. "For the first time in my life, after 40 years of working in this business, I know how to do everything I need to do to make this work," he says.
Even before Bricklin announced the Chery deal to the world this January at the Detroit auto show, he was working behind the scenes to ensure his story made as big a splash as possible. He was also conducting damage control because The Detroit News already had the scoop on the deal and was going to break the story before he made his announcement at the show. So Bricklin tracked down Keith Crain, publisher of Automotive News, the industry's leading trade magazine, to clue him in as well. At the time, Crain was lying in a hospital bed in White Plains, N.Y., recuperating from double knee replacement surgery. Throwing open the doors to Crain's room with Jonathan and his camera in tow, Bricklin walked in with a proclamation: "I'm back." "Nothing Malcolm does surprises me," says Crain. "He's like one of those toy clowns that when you punch it, it bounces right back up."
After the hardware stores, the scooters, the Subarus, the Bricklins, the Yugos, the used-car dealerships, and the electric bikes, Bricklin is pitching what he says will be his final endeavor. He forecasts that within five years, Americans will be buying one million Chinese-made cars from his dealers. The Chery product will be sheathed in Lexus-caliber luxury but will be priced 30% lower than its Japanese counterparts and carry a 10-year, 100,000-mile warranty. "We are going to produce better, prettier, and smarter cars for less money," says Bricklin. "We're not trying to see how cheap we can do it, we're trying to see how good we can get it."
Bricklin also wants to change the car-buying experience itself, taking what GM's Saturn division has accomplished and pushing the model even further. Bricklin is having Chery's 250 "Auto Shows," as he calls the dealerships he intends to build, designed to generate an experience. He envisions a multistory, glassed-in show room with over 22,000 square feet of display space, an outdoor movie screen stretching 100 feet, half-mile oval test tracks, fast-food vendors, and supervised daycare.
A Chery concept car -- a convertible created by the Italian firm Pininfarina, designer of the Ferrari -- won the top award at the Shanghai auto show in May. Bricklin intends to sell a version of that vehicle plus four other Chery models in the U.S. All are still in the earliest development stages.
Depending upon the size of the sales territory, Bricklin is asking each potential dealer to invest $2 million to $4 million for a Visionary Vehicles franchise -- an amount roughly equal to the going rate for Lexus or BMW, according to Gordon Page, a dealership broker in Tampa. The futuristic show rooms will cost another $10 million each, but Bricklin isn't requiring that these be built before the first cars are sold.
Bricklin says he already has tentative agreements with the 14 dealers he brought with him to tour China this past April and that he's still on track to line up 250 by the end of the year. "It's like a tipping scale," he says. "Once you crack the ice with the first few, it's all downhill from there."
But there certainly will be bumps in the road ahead. Keith Crain agrees with Bricklin that a lot of car dealers in America would love to get in on the next big industry avalanche. But he doubts Bricklin can turn his vision into a reality in anywhere close to the time frame he's staked out. "If you had an unlimited amount of money and resources, you might be able to build a car from the ground up in five years," he says. But both Chery and Bricklin are still a long way from assembling the critical mass required to enter the U.S. market in meaningful ways.
Meanwhile, General Motors has a pending lawsuit asserting that the design for Chery's current bestseller, the QQ, is a knockoff of the Chevy Spark. GM has also warned Bricklin in a letter that, as far as its lawyers are concerned, the Chery name is too close to its Chevy brand to be sold in the U.S.
GM has warned Bricklin in a letter that, as far as it is concerned, the Chery name is too close to Chevy.
Then there's David Shelburg -- the man who is likely to beat Bricklin in being the first to import Chinese-made cars to the U.S. In 1968, Shelburg read a press report about Bricklin's plan to bring Subarus into the U.S. Shelburg, who had worked at American Motors, hopped into his car and headed to the port in Newport Beach, Calif., to apply for a job. He was hired on the spot.
Today, some 40 years later, Shelburg, 75, has distribution agreements in hand from three Chinese automakers and the Department of Transportation is test-driving the four prototypes he parks in his garage in Scottsdale, Ariz. Shelburg himself commutes every day in a Chinese knockoff of a Lexus -- a far cry from the early model Subarus he helped Bricklin unload back in the 1960s. One of Shelburg's first tasks as a Subaru employee was to drive one of the newly imported 360s from Newport Beach to Los Angeles so that it could be featured at the Pan-Pacific Auto Show. The car never made it: Shelburg says about 10 miles into the journey, the 360's engine blew, flipping the car like a tin can and leaving him with a nasty head wound and a scar on his forehead that he still proudly points to today. "Believe it or not, working for Malcolm is still the most fun I've ever had in this business," he says. "Even though he's my competition, that man is all right by me."
Sidebar: How to be like Malcom
During a 50-year career in business (so far), Malcolm Bricklin has had highs and lows that are higher and lower than most. Example: He made a fortune importing Subarus and then blew most of it converting a rusting paint warehouse into a sports-car factory in Canada. Below are a few of his observations about what he's learned along the way.
On the importance of perseverance:
"Where would we be if Edison had stopped after 10,000 tries?"
"I love nepotism. My friends and family are smarter than most people and they certainly care more."
"As CEO, I don't have all the answers, just the questions."
"The things that people see as failures are often the steps to success. I got my fame and power from the failure of the Bricklin. What did I get for the biggest failure of my life? I got a stamp and a $20 coin in Canada with my car's likeness on them."
On dealing with international partners:
"I have gone out of my way not to learn other languages because I will inevitably say something incorrectly. Besides, listening to me is like listening to a fire hose. So I depend on an interpreter. If the person I'm speaking to isn't smiling, then I know the interpreter is saying the wrong thing."
On the right kind of savvy:
"Being smart can keep you from being wise. Logic is the biggest deterrent to awareness."
On the value of e-mail:
"If there are too many e-mails on my computer, I just turn it off. I had so many e-mails recently that I just got up and erased them all. If you want to be in touch with me, you'd better do it in person."
Darren Dahl is a staff reporter. Additional reporting by Anton Piech in China.
Darren Dahl is a contributing editor at Inc. Magazine, which he has written for since 2004. He also works as a collaborative writer and editor and has partnered with several high-profile authors. Dahl lives in Asheville, NC.