Chamco refuses to cut ties with Zhongxing Auto

Shanghai, August 15 (Gasgoo.com) Hebei Zhongxing Automobile, a Chinese maker of pickups and SUVs, recently sent a letter to its lawsuit-entangled U.S. partner Chamco Auto, asking for termination of their contract signed in January 2006, but Chamco's chairman responded that Zhongxing's decision to quit the deal failed to meet contractual requirements and was invalid, reported China Auto News.

Parsippany, New Jersey-based Chamco Auto (China American Cooperative Automotive Co.), founded by E. Michael Daspin two years ago with help from industry figures such as Steve Saleen and former Fiat executive Mario Ferla, planned to import pickups and SUVs made by Zhongxing Auto. Thirty-seven dealers then paid Chamco franchise fees of up to $300,000 for the right to sell the Zhongxing vehicles.

Soon after this, Daspin was accused of stealing money by other members of the company. Ferla, Saleen, and others then sued Daspin, who in turn counter-sued, and temporary control of the venture was given to a court-appointed trustee. Now that Chamco's importing arm, ZX Automobile, has been forced into involuntary bankruptcy. In a letter to the struggling company, Zhongxing declared it was backing out of their agreement because Chamco could no longer operate normally.

In a message posted on Chamco Auto's website and dated July 17, 2008, the company's chairman Bill Pollack said a letter of termination from Zhongxing Auto had failed to meet contractual requirements and was invalid. He said the court has ruled that his directorate remains legitimate and the trustee has stated that Chamco is operating normally. Pollack added that Zhongxing has no rights to build the assembly plant in Mexicao independently because this project was a key part of their joint venture.

Zhongxing Auto had planned to start making SUVs and pickups next year at the Tijuana, Mexico, assembly plant with an annual output of 150,000 units, 25% of them for duty-free export to the United States, Chamco said in June of last year. Zhongxing had postponed its Mexico production plans and would not start construction of the facility until it secured a replacement for Chamco.

Chamco Auto's chief operating officer, Thomas Del Franco, joined Zhongxing Auto in July as general manager of global sales at its subsidiary Zhongxing International. He is based in Baoding, Hebei province. Del Franco says his goal is extending Zhongxing Auto's reach into 40 countries. The ties between Zhong and Chamco seem not so fragile to break easily.