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DANISH automotive designer Henrik Fisker and his wife Geeta Gupta-Fisker have paid a high price for ignoring the selling power of a franchised dealer network with the recent awakening that they needed dealers coming too late to prevent another slide into Chapter 11 bankruptcy.

This follows the break-up of Fisker Automotive in 2014 after just 2000 vehicles, the Fisker Karma, were sold.

The Fiskers founded Fisker Inc in 2016 and with a back-door entry to the New York Stock exchange found itself with a market capitalisation of  $A4.4 billion.

This second and latest move to US Chapter 11, where companies can pause their operations to develop court-approved restructuring and rearrangements of creditor liabilities, comes after the breakdown of talks with a major car maker (rumoured to be Nissan) that involved an injection of $A600 million.

But, more than more cash, Fisker needed sales and its decision to emulate Tesla, which was copying Apple stores as retail outlets limited the company’s exposure to potential buyers.

Fisker started out 2023 forecasting production of 23,000 cars but that target slowed to a range of between 13,000 and 17,000 by November.  

By December it had made only 10,100 examples of the Ocean crossover from the Magna-Steyr contract builder factory in Graz in Austria but delivered only 4700 units to customers and had already notched up three recalls for loss of power – not ideal in an electric car. It suspended vehicle production in Austria for six weeks to give the new dealer network a chance to move the excess stock of the Fisker Ocean.

Earlier this year Fisker Inc said it had decided to “evolve our business model” by adding more than 100 franchise dealers across the US, Canada and Europe and hoped to have them up and running by the end of March.

Significantly, Fisker said in a statement that it required “minimum upgrades” saying that it “does not plan to require dealer partners to make extensive, time-consuming or costly changes to their existing facilities”.

It said it had developed corporate identity features that can be installed quickly so the dealers can start selling and servicing its cars “as soon as possible”.

Fisker said that some direct sales outlets would remain in Europe under a hybrid sales model but in North America it would move to a dealership sales model completely with dealers’ handling service, finance and insurance, and warranty.

But it was too little too late and Fisker no longer has a factory to make its cars because it has run out of money.

Ocean

The relationship with Magna Steyr is now at an end and its Canadian parent Magna International is looking to see how it can replace the $A600 million it was expecting in revenue from Fisker production during 2024.  

Magna Steyr’s Graz plant in Austria has built vehicles on a contract basis since the 1980s. These are vehicles that have sales that are too small to insert into the assembly lines of major car plants but sell at significant enough premiums to justify boutique production; at which Magna-Steyr excels. 

Over the years these have included the Mercedes-Benz G-Wagen, M-Class and E-Class; Audi V8L, Aston Martin Rapide, Saab 9-3 Cabrio; Jeep Grand Cherokee and Commander; Chrysler Voyager and 300C; Mini Countryman and Paceman and the BMW 5-Series and X3.


Footnote: Fisker differed from Tesla in that Elon Musk’s approach (and his nightmare for many years) was learning how to build cars. 

Fisker chose to avoid these production headaches as well as the cost of settling up his own car plants by emulating the model adopted by Apple of getting experienced manufacturers which had already invested in and perfected their production system to build his cars for him.

Hence the Magna-Steyr arrangement. 

But the Fiskers made the mistake of failing to take that same thinking over into retailing and set out to follow the Apple example of Apple stores by opening their own Fisker outlets instead of getting existing dealers who would invest in the brand with facilities and staff to support Fisker across the market.

By Neil Dowling

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