Malcolm Bricklin Sues Chrysler's Chinese Partner, Chery Automobile

By Michelle Krebs July 21, 2008

By Michelle Krebs

Entrepreneur Malcolm Bricklin, famous for successfully establishing Subaru of America and infamous for bringing the failed and quality-deprived Yugo to the States, announced Monday he has sued Chinese automaker Chery Automobile Co. along with some of its affiliates and officials for corruption, stealing his ideas and reneging on a contract to make him the exclusive North American distributor of the China-built Chery cars.

Filed in U.S. District Court in Detroit, the suit stems from a 2004 deal supposedly negotiated between Bricklin's company, then called Visionary Vehicles, LLC and now known as Cars, LLC, and Chery to produce vehicles in China with Bricklin as the exclusive  importer and distributor of the cars North America.

Bricklin's suit claims his company would have made in excess of $14 billion on the deal over the life of the agreement. To that end, Bricklin said he raised excess of $26 million  before realizing Chery had no intention of executing the contract. The suit seeks to recover what money Bricklin raised, some of the future profits he would have made and his costs in the lawsuit.

Indeed, as Bricklin rightly asserts, the deal garnered international attention and made Chery a household name in the U.S.

However, Chery supposedly went behind Bricklin's back and negotiated another deal with the then DaimlerChrysler as well as Israeli-based Quantum LLC and its subsidiaries. Chrysler claims it is continuing to work with Chery on a jointly developed vehicle.

Filed under the U.S. Racketeer Influenced and Corrupt Organizations Act (RICO), more often reserved for cases involving mob activity, the suit calls Chery a "rogue" Chinese automobile company. Under the  RICO laws, the suit claims Chery "committed, and agreed and conspired to commit, dozens of acts of mail and wire fraud."

The lawsuit's language is as colorful as the publicity-hound Bricklin's.

"Since its illegal inception under Chinese law," the lawsuit charges, "Chery's operating modus has been to serially plunder Western technology and subvert employees of both partners and competitors to obtain valuable business information. Throughout its short history, Chery and its top management and others working in concert with it, have systematically broken contractual obligations, stolen plans for vehicles, made cars designed by Western companies without paying for their rights, and made deals without the slightest intention of carrying them out, all to the detriment of virtually every Western automobile and automobile-related company that has crossed its path."

"In reality," the 72-page lawsuit adds, "continuing a pattern of lies and deceit that had marked its previous involvement with Western companies, Chery used the high-profile attention that the announcement of the deal made in the Western and international press, and the plans and investments made by Visionary Vehicles and its investors, as a means to cut out Visionary Vehicles and secretly make two other deals for North America."

In addition to Chery, the suit also is filed against Quantum and its entities, Chery CEO Yin Tongyao and Kan Lei, identified as a German citizen residing in China.

Chery is no stranger to lawsuits by American enteritis. General Motors sued Chery in China over the Chery QQ, a knock-off of the Chevrolet Spark, GM contended - unsuccessfully in Chinese courts.

The suit, sent to AutoObserver by Bricklin's New York public relations agency, apparently was filed over the weekend in U.S. District Court in Detroit by Bricklin's Southfield, Mich., attorneys.

AutoObserver is attempting to reach Chery representatives for comment.

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LEAVE A COMMENT

fulcrumb says: 11:04 PM, 07.21.08

A little late in filing, Mr. Bricklin? A simple Google search turns up 345,000 hits for Daimler/Chrysler+Chery; including Michelle's 2/27/07 article in AO: "Chrysler Could Be First With a Chinese-Built car". Also, the lawsuit's charges decry what sneaky scoundrels they, Chery, have always been- why did Mr. Bricklin enter into an agreement with them in the first place, then?

mrauto39 says: 4:28 AM, 07.22.08

You have to laugh at how some people gather there facts.

Take for example the comment posted by 'fulcrumb' Bricklin started looking at China back in 2004. He then stumbled on Chery a unknown in the American market. His plans to bring Chinese built cars was developed back in 2004. Bricklin is a true visionary, he as been able to predict the automobile trend in the USA. He is no Saint, if you take the time and read the 72 page filing, you will have a better understanding of what occurred at least from his point of view. According to the filing they have reams of paper and electronic media that backs everything they are going after.

As for you comments then why did he get into an agreement with Chery, well we as a country can't compete with the Chinese. There labor rate is cents on the ever so falling US dollar. If we can only get the US workers and Unions to relies that there is no point in having a union that fights for higher wages and benefits if there is no company able to meet those demands.

I think unions need to fight for JOBS, bring work back to the USA. Reasonable benefits etc. It is unfortunate that the US Auto industry is stuck with legacy thinking unions, lets become a country that has pride in our products, and price our products accordingly.

Did you know that the Yugo was the fastest selling car? did you know that he sold Yugo prior to its fold. Which he had no control over (Yugoslavia is no more)

fulcrumb says: 7:24 PM, 07.22.08

I can agree with you, mrauto39, "he(Malcolm Bricklin) is no saint.".

The only part of Bricklin's suit I've read, or care to, is in the above article. But, for me, there is enough there to indicate that the suit is questionable, if not frivolous. My point was, even a cursory web search on the subject unearths a lot of data: a good deal of which conflicts with the excerpts from the suit. Your assertion that "Bricklin started looking at China back in 2004" helps make my point; in the roughly three years from '04 to Daimler/Chrysler's announcement of their joint venture in '07, NOTHING occurred or surfaced to make Bricklin a LITTLE suspicious?
Curiously, Daimler/Chrysler or Chrysler LLC aren't named in Bricklin's lawsuit. At least not in the excerpts from it above. Which is the only part of it I've read. Or care to.

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