It was not supposed to happen this way.
HAAH Automotive announced recently that they have filed for bankruptcy. They also announced that they will not be in the business of selling vehicles – period.
I first reported that HAAH was looking for a production facility to build vehicles under the T.Go and Vantas brands from Chinese automaker Chery. They would come from its Tiggo and Exeed lineup with mostly North American components by the middle of this decade.
Earlier this year, it was announced that HAAH was unable to secure a production facility in this country to fulfill that promise. Instead, the Irvine, California-based company would import these vehicles directly from China under these same brand names. This announcement coincided with a shake-up at HAAH.
For anyone involved with HAAH, including the potential dealerships that spent hundreds of thousands of dollars each to sell them, that was the “writing on the wall.” As everybody knows, importing vehicles from China can be pretty difficult these days because of the tariffs still in place by the previous American administration
One could argue whether it is more difficult for a start-up to the do exactly what General Motors and Volvo continue to do today. After all, our market already offers at least two Chinese-made vehicles – the Buick Envision and the Polestar 2.
T.Go and Vantas were primed to take advantage of current market conditions. With the average vehicle transaction cost scaling over $42,000, These Chery vehicles were set to be priced below that threshold.
The vehicles proposed to be sold by HAAH will leave a huge void in the US market considering what's happening right now. Vehicle prices continue to rise because of the supply chain issues over microchips, as well as looming issues that will threaten the supply of rubber and glass items for vehicles.
And, yet, we are seeing more expansion of the upper end of the automotive market, thanks to other start-up companies offering battery-electric vehicles for over $70,000. Companies, such as Lucid and Rivian, want to make a splash in a market dominated by Tesla for the sake of catering to those who can afford to rewire their garage for an at-home charger while snubbing their nose to anyone who cannot afford to go completely electric.
That is the kind of attitude that makes me wonder whether the middle class in this country – and in other countries with similar economic situations – can ever afford a new car that offers a lot of value for the money.
This is going to sound strange, but it could be about time that this market welcomes more Chinese-produced vehicles. Of course, these vehicles meet US crash test and emission controls. If you look at other markets where Chinese vehicles are sold, such as Australia, South Africa, the Philippines, and Chile, you will notice that they have been aggressively priced towards bringing new customers to their wares.
Don’t think that the rest of the automotive industry is aware of the runaway prices of their vehicles and how they are affecting this market – aside from supply chain issues. In a “fireside chat” sponsored by the Automotive Press Association in Detroit, Stellantis CEO Carlos Tavares pointed out this concern. According to Tavares, one of the pillars of Stellantis business is affordability. In particular, the affordability of their vehicles.
If people were listening to Tavares on this matter, then maybe we can understand why the runaway cost of buying and/or leasing a vehicle is a big concern to him and his company.
On the other hand, HAAH Automotive found out the hard way the rollercoaster that this country’s automotive market has turned out to be in 2021. With demand high, supply tight, and the resulting prices that reflect this situation – what was supposed to be a good idea turned into a sideways exit from it.
The window of opportunity has not closed entirely. We are sifting through projections and a mix of good and bad news regarding the economy and the continuing health situation that has taken another turn for the worst. While trying to stay optimistic, the experience of HAAH is a tale worth telling when a new entrant into our market makes their plans for us.
Eventually, we might see a Chinese automaker our market with affordable offerings worth looking at. They have taken notes of the experience that Hyundai, Kia, and Daewoo had when they began operations in this country towards the end of the last century. Note that two out of the three Korean automakers are extremely successful and became leaders in this marketplace. The third simply became part of General Motors.
For a new-to-the-USA-market Chinese (or Indian) automaker to make landfall here, a few things will have to change on both sides of the trade agreement. That list alone will take up all of your bandwidth to decipher.
Instead of wondering what might have been, let’s hope that the dealers who signed up to sell HAAH put in a claim on the bankruptcy docket to get their money back. Not to mention, the talent that made up all ranks of HAAH that was sent packing at the end.
Believe me, that would be a form of justice that has to happen due to this brilliant failure.
All photos by Randy Stern