Yugo 45. The worst car in history?

Michael Bricklin - Super Salesman But Trainee Businessman

Malcolm Bricklin was a salesman extraordinaire could probably have sold snow to Alaskans if he had set his mind to it. His father ran a building supply business and in 1962 at the age of 23 he hit on the idea of setting up a national building supply franchise. The plan was that he would buy products in bulk, and distribute them to his franchisees at prices below those they were currently paying, but which still gave him a profit. There would be a central computerised stock keeping system and heavy advertising. The business was to be called Handyman America Inc. The drawback however was that he had little cash of his own to finance this venture.

He saw this as no problem at all really though; he planned to sell enough franchises at $15,000 each to raise enough capital. Unfortunately it didn't quite work out the way he planned; since his venture existed mainly on paper there was no stampede of buyers. Not a man to give up easily he decided to sell licenses to other people who could then sell franchises on his behalf, for the whopping fee of $250,000 each! The type of investor who had that sort of money to spend was usually pretty hardheaded but several were drawn in; they claimed later however that Bricklin had been somewhat economical with the truth when he had described the assets that the company had.

By 1965 investors were demanding their money back and the company was bankrupt; a word that was to follow Bricklin several times over the coming years.

He claimed that he had come out of the whole affair a millionaire but not everyone was convinced. Certainly he and his wife moved to a cheap rented apartment rather than to a millionaire's mansion. However he had not lost his sales ability and when he found out that the Italian scooter firm Lambretta had tried unsuccessfully to sell their scooters in the United States, and they had a huge stock of unsold ones there, he offered to get rid of them for them. He did, too. This encouraged him to sell another scooter called The Rabbit which was built by a Japanese company called Fuji heavy industries; who owned the car manufacturer Subaru. They in turn built a strange, tiny car called a Subaru 360.

This was not an attractive car. It was powered by a 356 cc twin cylinder two-stroke engine; it was necessary to mix oil with the petrol that fuelled it which meant that emissions were pretty awful. The engine put out a measly 16 brake horsepower and it was capable – allegedly – of reaching 50 mph within a full 37 seconds. Hitting the brakes at its maximum speed; once it has actually reached it; could cause it to buck all over the road. It had one major characteristic to recommend it though, and that was the fact that it weighed less than 1000lbs, which meant that it was exempt from USA safety and emissions regulations!

This car was very popular in Japan but the management at Subaru reckoned that it wouldn't sell in America, in fact at the time even Honda and Nissan were having problems breaking into the American market. Bricklin however believed that he could sell large numbers of them; he was wrong and the Subaru management were right. However an agreement was made with Bricklin and a partner named Harvey Lamm under which they could buy 2000 cars in the first year with increasing numbers thereafter. One major problem with this of course was that the amount of money that the two partners could raise for their company, Subaru of America, was just $75,000. No problem however; Bricklin would just sell a lot more franchises to car dealers!

The super salesman Bricklin got on the road and managed to sign up around 80 dealers at $1000 each and then he floated the company on the Philadelphia Stock Exchange and finally raised enough money to set up a distribution centre and pay for a delivery of cars. This is when one of Bricklin's major failings became apparent; he spent a small fortune on non-essential luxuries including electrically operated 10 foot tall doors to his office in solid oak! More funds were raised and he bought a yacht and a private plane. The income from selling the cars however went nowhere towards paying for all this.

By 1969 the company was losing money hand over fist; sales had dwindled away and yet the partners signed another deal with Subaru under which they would be obliged to import a minimum of 130,000 cars over the next 13 years!

Failure seemed inevitable at this time; and it was made unavoidable by a review of the car by an independent non-profit product testing organisation called Consumer Reports. They absolutely panned the car, and particularly pointed out that it was positively dangerous to be inside it in the event of an accident. One comment was that it would come off second-best in a collision with a watermelon. Sales dropped even further.

What do you do with a whole stock of about 850 unsold cars that have been branded as unsafe? Bricklin decided to use them in place of go-karts and set up yet another company called Fastrack International Inc. True to his past he sold more franchises and borrowed more money building up a complex structure of robbing Peter to pay Paul. Eventually however a financier and dealmaker called Burton Koffman took Subaru off his hands and he was given his marching orders. All the company debts were paid off but Bricklin still had personal liabilities to meet; these would come back to haunt him later.

Mr Koffman and his family were amongst the very few people who did well long term out of a deal with Bricklin. Subaru of America is now a major corporation with around 1500 employees selling Subaru cars and spare parts through more than 600 American dealers.

The meanwhile Bricklin had not given up his dreams and was moving on to his next project, which proved to be a complete fiasco!

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Is A Yugo Insurable?

Meet The Yugo     |     Enter Michael Bricklin     |     The Bricklin SV1 Fiasco     |     Bricklin Faces Bankrupcy Again     |     The First Yugo In America     |     How Bricklin Promised Zastava The Moon     |     Lipstick Is Put On The Yugo Pig     |     America Decides The Yugo Is Awful     |     The Proton Saga     |     The End Of The Yugo