Brilliance China Automotive (BCAHY) ready for Europe?
Today's Financial News - Posted March 26, 2009
China’s premier car exporter, Brilliance China Automotive (BCAHY) is heading into the European car market. What are the odds they hit it big this year?
by J. Christoph Amberger
Baltimore—TFN: Brilliance China Automotive Hldg. (OTC:BCAHY), also known as Huachen, predicts that it will have great success in Europe. The company intends to dazzle at the 79th Geneva International Motor Show.
This year’s centerpiece at the BSA booth will be the BS4 station wagon. Its European importer, HSO Motors Europe, sold about 1,000 Brilliance cars in Europe last year. For 2009, they’re aiming at 6,000 cars, and more than 10,000 for 2010.
Indeed, especially Germany would be an attractive market for the Chinese-made four-wheelers. After all, the government has just increased the cash reward for scrapping your old jalopy… both to decrease pollution caused by older cars and to indirectly subsidize the purchase of new, ideally German-made cars. And Germans have been downsizing their cars for decades.
But there’s a fly in the ointment. The German automotive club ADAC (imagine a mixture of AAA and National Highway Traffic Safety Administration with the clout of the NRA) had issued a zero-rating for safety for the BS6 back in 2007.
It just put the BS4 through its paces and yet again awarded zero out of five stars based on its crash tests. In matters of road safety, according to the ADAC, the BS4 reflects standards of the late 1990’s.
At $6 and change, the ADR of Brilliance China certainly looks underpriced considering the growing domestic market for its output in China. I just wouldn’t bet on European sales to provide an upward catalyst any time this decade.
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