China's Brilliance: Back from Disaster?

BMW's Chinese partner, aiming to compete in Europe and the U.S., could rebound from devastating safety tests faster than anyone expects

by Gail Edmondson

It was a devastating blow for the ambitious executives at Chinese automaker Brilliance Auto (CBAMF) . Soon after a June crash test in Germany of its sleek BS6 midsize sedan rated the car as unsafe, a humiliating film of the mangled model circled the globe on YouTube. German automotive publications slammed the BS6 as a disaster on wheels. As German automotive consumer group ADAC reported: "Given the results of the frontal crash at 64 kph [40 miles per hour], it's better not to even get into the driver's seat."

Skeptics say the Brilliance quality stumble confirms that it will take Chinese automakers 10 years to learn how to build cars that can compete in Europe and the U.S. But the rapid response of Brilliance to the quality debacle suggests it may move up the learning curve faster than anyone expects. The company, which is China's 16th-largest automaker, was founded in 1990 and had sales of $1.3 billion in 2006, largely on the strength of its minibus and auto-parts units. It had been traded on the New York Stock Exchange until July, when it de-listed its American Depositary Shares after the ADAC tests were reported.

German Front

At a Sept. 11 press conference at the Frankfurt Auto Show, a German distributor for Brilliance announced the results of a new crash test on a reengineered pre-production prototype of the BS6. It claimed the revised model should win a three-star Euro NCAP rating, an average performance within the NCAP five-star system, and up sharply from the dismal one-star rating it earned in June. "Sixty-five parts were changed. There's been a big improvement in the car's safety," says Hans-Ulrich Sachs, head of HSO Motors Europe, which aims to sell Brilliance cars in Germany. In addition, the car's pillars were reinforced to prevent deformation during a crash, the door lining was modified to improve strength, door sills were stabilized, as were parts of the floor plate, the roof pillar, and the roof skin of the vehicle.

Brilliance, BMW Group's (BMWG) joint venture partner in China, boldly chose Germany as its base for attacking the European market with its elegant-looking sedans. It unveiled its stylish models at the upmarket Geneva Auto Show in March—the first serious effort by any Chinese automaker to win a foothold in the U.S. or Europe. Brilliance was eager to get a rapid read back from the most demanding car culture in the world, especially on its €22,000 ($30,000) BS6 flagship. "We believe that if we can sell cars to the high standards of Germans, we can succeed in the rest of the world," says Chi Ye, head of global sales for Brilliance Auto.

Coming to Market

The June crash test conducted by ADAC dented Brilliance's rollout plans. But Sachs says ADAC's critique in June was not a surprise for him or Brilliance. Last November, HSO put a pre-production BS6 through a simulated European crash test and the results were subpar, indicating the car would receive only two stars. "We sent the data to Brilliance and said they need to improve quality. They initiated a reengineering project in January," says Sachs, who insists that Brilliance's cars have passed a standard European Union safety test that differs from the Euro NCAP test. NCAP tests involve a head-on crash at 64 kph (40 mph), while the EU safety test is simulated at 56 kph (35 mph)—a difference of 30% more power on impact, Sachs says.

As ADAC was announcing the failure of the BS6 in June, Brilliance was already running the revised BS6 through its quality paces. Tests were conducted at the full-scale crash-test facilities of IDIADA Automotive Technology in Tarragona, Spain. Brilliance now plans to bring the upgraded car to market in March, 2008, setting back its thrust into the European market by only six months. Brilliance's target: sales of 100,000 cars in Europe, or 0.8% of the market, within five years.