Two Texans Buy Stake in Brilliance China Automotive Holdings

By Brendan Moore

03.24.2008

Two wealthy Texan businessmen have apparently decided that Chinese auto companies are a good investment. Specifically, Brilliance China Automotive Holdings, and that is where they’re placing a sizable bet.

According to an article in the Houston Business Journal, Les Alexander, owner of the Houston Rockets, the NBA pro basketball franchise, and Billy Joe “Red” McCombs, a San Antonio billionaire who made his first fortune in auto retailing, have formed a joint venture that will spend $100 million USD to purchase between 10% and 15% of Brilliance Auto. The purchase will be made through a new share offering by Brilliance.

Part of the investment strategy is for McCombs to use his auto retailing experience to assist Brilliance in building sales in their home country of China, establishing a sales network in the important European market, and, launching sales in the North America (U.S. and Canada), the most important market of all, in 2009 or 2010.

The Brilliance strategy is to provide a higher-quality car than the Korean manufacturers (and by default, then, some of the Japanese manufacturers) at prices below the prices of those Korean auto makers like Kia, who sell at the low end of the pricing segment.

From the Houston Business Journal article: “McCombs brings 50 years of auto expertise into the Chinese market with the Brilliance Auto deal. The new funding will help the company develop dealership networks, auto financing, used car operations and Internet auto sales. The capital infusion also will allow Shenyang-based Brilliance Auto to expand production of Brilliance-BMW vehicles, manufactured in partnership with German automaker BMW Group.
Wu Xiao An, chairman of Brilliance Auto, outlined the company’s strategy in a statement: “The industry expertise, global network, brand-building expertise and synergies created from the partnership will give Brilliance new momentum to firmly establish ourselves as a key player in the automotive industry in China and beyond.”

Brilliance has taken some lumps in the media as of late as a result of the spectacular failure of their BS6 sedan in the German crash tests in June 2007. The car has since been redesigned and has passed the similar Spanish crash test in September 2007. The Brilliance BS6 luxury saloon, the top vehicle in the Brilliance lineup, sells for approximately $33,000 USD.

HSO Motors Europe has inked a deal to bring in almost 160,000 BS6 sedans a year into Europe over the next 60 months, and a page of their website is actively seeking new retail dealers for Brilliance.

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Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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2 Comments

  1. Whatever your opinion of Brilliance cars, you have to believe this is an investment that is going to pay off in a big way.

  2. 33 grand for a chinese car? Are you freaking nuts? Who is going to pay that much for a Chinese car in America?

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