Saturday, September 26, 2009

If you build it, will they come?

A group of Chinese investors is planning to build a hybrid car plant in Alabama. HK Motors ("Hybrid Kinetic", not "Hong Kong") would begin operations in 2013 and create 5000 jobs.

The venture is headed by Yang Rong, former head of China Brilliance, an auto company headquartered in Shenyang, Liaoning Province. Brilliance continues to operate in Shenyang, primarily through a JV with BMW, but it also produces some of its own-branded vehicles. Yang apparently had to leave Brilliance a few years ago after a falling out with the local government, which then took ownership of Brilliance and made it into an SOE. (More on Yang's story here at Automotive News, sub reqd.)

But all of that is beside the point. What I don't understand is how any venture can expect to sell vehicles when they have no brand. And in an industry suffering from significant over-capacity, what will differentiate HK's cars from all of the other established names?

A factory that would provide 5000 jobs will be able to turn out a substantial number of cars. What gives Yang Rong the confidence that anyone will buy them?