Hudson's Blog

Feb 25, 2008 - The Shaky World of Automotive Investing

Until around 1950, there was a Wild West-like attitude in the American automotive industry. It was a frontier to be conquered. Throughout automotive history, there have been something like 5,000 individual makers of cars and trucks in the world with about 3,500 of them being situated in the United States.

Companies like General Motors, Ford, and Chrysler have survived, in one form or another, for over a century. General Motors turns 100 this year but its oldest parts (Cadillac, Buick, and the late Oldsmobile) are well over the century mark. Ford was founded in 1903. And while Chrysler was created in 1924 from the remains of Maxwell, parts of the company can be traced back to Rambler which dates back to 1903 as an automobile manufacturer.

There are a few minor vehicle manufacturers in the US. The most prominent of them is Panoz which is slowly approaching its 20th anniversary.

Outside of these tiny footnotes, there hasn't been a major successful American manufacturer founded since World War II. And even new import brands on US soil have been a rare find in the past 30 years.

Rare successes like Hyundai and Kia are at odds with struggling Mitsubishi and soon-to-be-gone Isuzu. So you might have to forgive my apprehension everytime someone announces a new venture.

When Bob Lutz announced the revival of Cunningham about eight years ago, I was excited. This was the first time in half a century that a new manufacturer would be coming to the US where I trusted the founder. Bob Lutz is the consumate car guy with REAL automotive experience working with the likes of BMW, General Motors, and Chrysler. Lutz even had novel, and as I saw it workable, approaches to manufacturing (which he laid out in two issues of Automotive Industries).

But when Lutz was hired by General Motors, it was obvious that all bets on the Cunningham were off. So if Lutz prefered to take the corporate route instead of laying the foundation for real history, I knew new car production was truly a tough nut to crack.

When people with questionable backgrounds talk about their automotive ventures, I automatically write them off in my head. People like Malcolm Bricklin, Gerald Weigert, and many others show great enthusiasm, some even know aspects of the automotive business, but most of them are just in business to make a quick buck.

So ventures trying to tap the Chinese automakers for the next big thing find their way to my "skeptical" list. I understand that these people are trying to do what the Germans did in the late 1940s, the Japanese did in the 1960s, and the Koreans in the 1980s...catch the next big wave at its beginning. People like Max Hoffman and Kjell Qvale did just that, but the market was vastly different than it is today.

The members of my list have included many different types of ventures. Importers of the ARO from Romania, the Proton from Malaysia, the TVR from the UK, the Citroen from France, the Alfa Romeo from Italy, and the Chery from China, among many others, have all announced their intentions in the past 20 years. Many times, these announcements have been followed by many different setbacks, some even could be just called frauds or scams.

So it was of no surprise that Automotive News revealed that the head of one of these latest ventures was hiding a shady past. CHAMCO is a New Jersey-based importer who has announced that they plan on selling Chinese trucks in the next few years. The head spokesperson for CHAMCO has stated that he's simply a consultant for the company, but it seems that his wife is actually the chief stockholder of the company. And his past, according to the newspaper, shows that "he did time for fraud" in an earlier trucking venture that he controlled.

I'm a huge car fan. I would love to see new and exciting choices in cars and trucks in the US. But each time a Build-To-Order or CHAMCO or ARO America is announced, I need to take a step back and see what's actually going on. The odds of any of these ventures getting off the ground, let alone becoming successful, are becoming smaller an

11:52 am | Categories: automotive history, general motors, ford, chrysler, cadillac, buick, oldsmobile, maxwell, rambler, panoz, hyundai, kia, mitsubishi, isuzu, bob lutz, cunningham, bmw, automotive industries, malcolm bricklin, gerald weigert, max hoffman, kjell qvale, aro, proton, tvr, citroen, alfa romeo, chery, automotive news, chamco, build-to-order Permalink | Alert Administrator

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