Automotive News - February 11, 2008 - (Page 50) 50 • FEBRUARY 11, 2008 S TA R T U P TA R G E T S N O R T H A M E R I C A Chamco wants its dealers to invest in the company Diana T. Kurylko dkurylko@crain.com The price tag To get a franchise, dealers must either: Invest $300,000 for a 0.05 percent stake in Chamco Or deposit $250,000 with their application. Those dealers receive a $2,500 discount on each of the first 100 vehicles ordered. To run their operations, dealers must: Obtain a $1.5 million line of credit for floorplan financing Display at least 2 Chamco vehicles in the showroom Build a stand-alone showroom after selling 360 trucks Add new service bays after selling 5,000 trucks Spend $300 per vehicle for advertising Order at least 100 trucks Purchase a $40,000 marketing kit and $60,000 in spare parts Source: Chamco PARSIPPANY, N.J. — To raise cash, Chamco has asked its dealers, executives and employees to invest in the company. Chamco wants dealers to invest $300,000 apiece, although that is no longer mandatory. In return, the first 150 dealers who sign up to sell its Chinese light trucks get “membership units.” Dealer Jim Marsh, who owns a Chrysler-Jeep store in Las Vegas, says he recognizes the risk but says it’s worth the gamble. Chamco’s brochure claims the membership units could be worth $3.7 million apiece in 2011 but offers no guarantees. If Chamco signs up all those dealers, it would amass $45 million. Chairman Bill Pollack would not say what percentage of Chamco’s startup budget that would comprise. “We aren’t going to give up that number,” he says. “The most important part is that we are completely self-funding.” Consumer loans? While Chamco is willing to ask dealers for money, it’s unclear how much support it will offer dealers in return. In a brochure issued Jan. 28, Chamco claimed it had lined up two lenders to make consumer loans. Chamco says it signed up Scotia Bank to make loans in Canada and Mexico and AmeriCredit Corp. of Fort Worth, Texas, to handle U.S. loans. But John Hoffman, AmeriCredit’s vice president for public relations, insists that no such deal exists. “We do NOT have an agreement with Chamco to provide financing,” Hoffman wrote in an e-mail response. “We have held preliminary discussions with them. … But at this point, our only ‘agreement’ is to hold further discussions about exploring opportunities in 2009 and beyond.” Crapshoot Chamco also has not yet worked out details of its vehicle warranties. It is likely to offer the standard 3-year/36,000-mile package on the vehicle and up to 5 years/50,000 miles on the powertrain, Pollack says. Houston dealer Jim Archer says the deal is obviously risky. But Archer, owner of Archer Financial Holdings and Jim Archer Chrysler-Jeep, was among the first to plunk down $300,000. “The payoff could be quite substantial,” Archer says. “You only put in $300,000 — Malcolm Bricklin was asking for $2 million. Plus, these people have cars you can drive.” Archer says he’s not concerned that Chamco has no previous automotive experience. “They don’t have to,” Archer said. “All they have to do is import them. The dealers will do the rest. There is no rhyme or reason that we could not immediately sell every one of those cars that we get.” Las Vegas dealer Marsh says he JEFF GREEN Jim Marsh, a dealer who owns a Chrysler-Jeep store in Las Vegas and has signed up with Chamco: “I realize it is somewhat of a crapshoot.” doesn’t know whether Chamco has the capital to make the plan work. But, he says: “I like the product. I like the people that represented it. I realize it is somewhat of a crapshoot. I’ve taken chances before.” c Attention 20 Group Members! This is your Give us 30 se VE YOU SA next big idea WE’LL for 2008! $ conds and Is Chinese automaker ready for prime time? Lan Lan lanvera@gmail.com 30,000! Visit us at NADA Booth #1429W www.thirdlot.com SHANGHAI — Can an obscure Chinese automaker succeed in the world’s most competitive market? Hebei Zhongxing Automobile Co. believes it can. Last year, Zhongxing sold roughly 36,800 trucks, according to its Web site. That’s a pittance by international standards, but Zhongxing is expanding from its original plant in Baoding, China. A new assembly plant in Changchun will produce vehicles for export. The company’s partner in the venture is Changling Group, a stateowned motorcycle manufacturer. The company will export its Landmark SUV and Grand Tiger pickup to the United States, with different names. The Changchun plant’s Heibei Zhongxing makes the Landmark SUV. production capacity will total The company is confident of U.S. success. 40,000 trucks this year and will rise to 200,000 units in 2010, the made in the new factory. The plant Chinese partners say. Zhongxing’s will have new tooling — including roBaoding plant has an annual capacity bots — and a BASF paint shop. of 100,000 units, giving the company “We think the consistency in qualitotal capacity of 300,000 units when ty will be better from the new plant,” the new plant is complete. That’s he said. “This will cost us a few considerably less than the 460,000 months, but we’ll still have vehicles units that Zhongxing’s U.S. importer, to sell in Mexico this year.” Chamco, claims. The SUV and pickup to be sold in Last June, Robert Yu, a former Ford Mexico will look very similar to the Motor Co. executive, joined Zhong- U.S. vehicles, Pollack says. xing as president. Yu was born in Tim Dunne, a China-based indusCanada and worked for Ford for 20 try analyst for J.D. Power and Associyears in the United States. ates, questions whether a small comThe two Chinese partners and the pany like Zhongxing has the ability to provincial government are funding produce vehicles worthy of the U.S. the project. Chamco Chairman Bill market. Pollack says he is negotiating a stake Says Dunne: “Getting into the exin the factory with the Chinese part- port and distribution for 100,000 veners. hicles would take a lot of money and Pollack says all Chamco vehicles to power, and I don’t think ZX has be sold in North America will be that.” c http://www.thirdlot.com http://www.boomerangsystems.com http://www.boomerangsystems.com
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