Chery Automobile (Part 1): Strategic shift in own-brand business
Consolidation to single brand; enhancements to commercial vehicle business
This two-part report describes a summary of operational developments at Chery Automobile, a leading Chinese automaker. This first report focuses on the company's mid-term business plans for its own-brand models and the recent moves for production in China. The second report will focus on its joint venture businesses with Israel Corporation, Jaguar Land Rover (JLR) and other foreign manufacturers, as well as Chery Automobile's oversea business.
* Signs of leveling off seen in sales in China and export
Chery Automobile's passenger car sales in China and factory shipment including export are showing signs of leveling off since its peak in 2010. Its production and sales in the first four months of 2014 slightly declined year-over-year.
* Major shift from sales expansion with low-priced models to sales of high-quality models; layoff of 9,000 workers
In 2013, Chery Automobile announced that it had laid off 9,000 workers in its own brand business. In addition, the automaker announced policy shift in its vehicle assembly business. The company's direction diverted from expansion in unit sales to more profit-oriented business by introducing vehicles with higher quality, better equipment, and higher profitability. In line with the policy change, the company is now reducing production of the Chery-brand vehicles for a while.
* Consolidation from four brands to a single brand
The company had four brands-the Chery, Karry, Riich and Rely, when it was aiming for the unit sales expansion. As the brand-oriented strategy has been converted, the four brands were consolidated to the single Chery brand.
Chery Automobile introduced four new-generation strategic models in recent years (the Arrizo 7, E3, and Tiggo 5 in 2013, and the all-new QQ in January to April 2014). The production ratio of the four models in the company's overall passenger car production volume is increasing from 10.6% in 2013 to 43.3% in 2014.
* Partnership with other manufacturers
Chery Automobile has joint ventures with foreign manufacturers such as the Qoros-brand cars with Israel Corporation and Jaguar- and Land Rover-brand cars. Additionally, the company has concluded partnership with Guangzhou Automobile Group aiming for more efficient utilization of business resources.
Beijing Auto Show 2014: Own-brand vehicles from seven Chinese OEMs (Jun. 2014),
Shanghai Motor Show 2013 (2): Six emerging major Chinese OEMs (Jun. 2013),
Chery Automobile: moves forward with joint venture projects with foreign partners (May 2012)
Production of Chery Automobile's own-brand vehicles
|Commercial vehicles||Mini truck||7,335||6,345||11,838||17,408||7,166||6,896|
|Total own-brand of Chery Automobile||691,924||637,423||563,951||477,166||171,425||134,170|