Yet another delay for HAAH

LOS ANGELES — California startup HAAH Motors Holdings is again postponing its promised introduction of aggressively priced Chinese vehicles to the North American market, as well as delaying plans for a U.S. assembly site and "Made in America" sales pitch.

The latest twist in the yearslong journey by HAAH and dozens of franchised dealers comes after the distributor failed to complete its search for available U.S. factory space to assemble crossovers designed by China's Chery Automobile Co.

HAAH announced last week that it will instead import fully assembled Chery vehicles next year, pushing its new on-sale timeline to late 2022. It originally said it would launch sales in late 2019. That new delay has some dealers who signed up with an initial $150,000 per sales point worried about the return on their investments.

"I'm getting disturbed that this keeps getting pushed back," said one dealer who still supports the project. Losing the planned "Made in America" label is a disappointment, the dealer said, but the constant delays in getting vehicles on the ground are even more worrisome.

Another dealer said the appeal remains strong for retailing the first Chinese auto brands in the U.S. market, but the repeated setbacks are concerning.

HAAH founder and CEO Duke Hale told Automotive News that he understands the dealer frustration in the U.S. and Canada. But there are mitigating circumstances, he said, such as travel limits caused by the pandemic that have complicated the search for a U.S. site alongside Chinese partner Chery.

"We have been evaluating opportunities for an assembly facility in the U.S.," Hale said in an interview last week. "But COVID hasn't cooperated, which hasn't allowed us to bring some of our Chinese colleagues over. We have to do certain assessments that you can't do via Zoom," he said.

"We had to shift gears on the fly, and we decided that rather than further delay a [vehicle] introduction, it would be better to bring the first model or two out of China. It will give us more time to hopefully get through COVID and therefore move to a brownfield-type facility," Hale said.

The imports will incur a 27.5 percent tariff, but Hale said that HAAH and dealers can still make money, even as he promises sticker prices that are 15 to 20 percent lower than competing models.

Eventually, U.S. assembly and local parts sourcing will reduce tariffs, as could government action.

"Built in America is still our cry," Hale said. "I hope by the time we bring in the first fully assembled units that we're in a position to talk about the [U.S.] plant in great detail," he said.

"Someone could criticize us and say, 'Well, you said you were going to build them all in America.' Yeah, but I also have dealers at 130 selling points depending on me," Hale said.

In the short term, getting Chinese-made vehicles is preferable to having none as dealers get increasingly impatient.

"The dealers would like to have the cars yesterday," Hale said. "So would I. We are all aligned. But the reality is that we've had to deal with a lot of situations, particularly the COVID one."

The silver lining to the stated change of plans, Hale said, is the strengthening of HAAH's engineering agreement with Chery, which is a major automaker in China and the biggest exporter of vehicles to foreign markets. Chery has multiple brands and models in China, including some electric vehicles.

As part of its announcement last week, HAAH also said it has established a joint venture with Chery's wholly owned technology company Shanghai Sicar Automobile Technology Co.

Without giving specifics, Hale said Chery is the venture's majority owner, HAAH the second biggest equity partner and the government of the city of Wuhu, China, the third. State-owned Chery is headquartered in Wuhu.

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The first imported Chery vehicles to the U.S. will be sold under the recently created Vantas brand in the U.S. by late 2022, Hale said. The Vantas VX and TXL are midsize to large crossovers. Sometime after that, a crossover and pickup will be sold under the T-GO brand, Hale said.

HAAH's previous schedule for putting U.S.-made Chery vehicles in showrooms was early 2022. In a plan before that, HAAH was working with a different Chinese automaker and targeting U.S. imports by late 2019 or early 2020.

That schedule was pushed to 2021 before the companies parted ways last year.

HAAH also said last week that it plans to sell EVs in the U.S. market.

Hale declined to discuss media reports that HAAH had pursued a stake in the ailing Korean automaker SsangYong Motor.

"There's no intention right now to build any cars in Korea for Chery coming to the U.S., I can tell you that," he said.

Michael Dunne, CEO of ZoZo Go, a consultancy that specializes in Asian auto markets, gives HAAH credit for modifying its plans in response to changing conditions. Several other distributors have tried to bring Chinese vehicles to the U.S. market and failed, showing that it's a heavy lift.

"No one at HAAH could have planned for or imagined a scenario where, midstream, they're confronted with both COVID and a new 27.5 percent tariff on imports from China," Dunne said last week.

"It's perfectly understandable for them to say: 'We need to delay things and have a fresh look at what's realistic, what's feasible.' "