Author / TSHUI
Editor / Xu Jinkai
In the era of intelligent electric vehicles, it is imperative for Chery to reform.
Recently, the news that “Chery is acquired by Luxshare” has attracted the attention of the industry.
According to the news, Chery Automobile Co., Ltd. has undergone commercial changes, with more than ten companies including Chery Holding Co., Ltd. and Anhui Province Credit Financing Guarantee Group Co., Ltd. withdrawing from the shareholder ranks, and Luxshare Precision Industry Co., Ltd. and Shanghai Hushan Investment Center (Limited Partnership) becoming shareholders. Among them, Luxshare Precision Industry Co., Ltd. holds about 76.72% of the shares, making it the largest shareholder.
In response, Chery Holding Group and Chery Automobile issued a joint statement, stating that:
At present, the main shareholders of Chery Automobile Co., Ltd. and the number of shares held by them have not changed, and the top four shareholders are respectively Chery Holding Group Co., Ltd., Anhui Province Credit Financing Guarantee Group Co., Ltd., Wuhu City Construction Investment Co., Ltd., and Luxshare Precision Industry Co., Ltd. Among them, Luxshare Precision Industry Co., Ltd. holds a shareholding ratio of 7.87%. Chery is currently correcting the commercial information of relevant institutions and platforms.
Although it was a misunderstanding, the industry seems to be looking forward to Luxshare’s increased control over Chery in the era of intelligent electric vehicles.
This is mainly because Chery has not demonstrated its due strength in the new era of intelligent electric vehicles.
According to Chery’s official information released, in the just past November, Chery Group’s overall sales were 100,531 vehicles.
In the first 11 months of this year, Chery Group sold a total of 1,127,289 vehicles, an increase of 32.6% year-on-year.
Among them, the cumulative sales of new energy vehicles (including new energy passenger vehicles and commercial vehicles) were 220,918 vehicles, an increase of 147.9% year-on-year.
Looking at the sales data alone, Chery is on an upward development trajectory, and the rapid growth of new energy vehicles has become the key to supporting Chery’s rapid development.
However, if we look at it in detail, Chery’s performance in the new energy market mainly focuses on the micro-car field. Cars such as Little Ant and QQ Ice Cream support Chery’s half of the sky in the new energy market. However, these types of models mostly rely on cost-effectiveness to capture the market and cannot reflect Chery’s technological accumulation in the new energy market.“`
In the context of Geely, Great Wall, SAIC, Dongfeng, Changan each launching new brands such as Zeekr, Salon, IM, Voyah, and Aweita, and making a big push into the intelligent electric vehicle market, Chery’s absence in the mid-to-high-end new energy market has to some extent exposed its weakness.
As a “technology trend” among domestic brands, the former Chery was once in the ascendant.
Starting from December 18, 1999, when the first car rolled off the production line, Chery has been in the automotive market for a full 22 years.
In 2001, Chery’s first car, Fengyun, was officially launched, selling 28,000 units in a single brand that year.
In 2002, Chery’s car output and sales exceeded 50,000, successfully entering the domestic car industry’s “top eight” ranks.
In 2005, it sold 189,000 units and ranked seventh in the sedan industry.
On July 27, 2011, Chery’s 3 millionth car rolled off the assembly line, making it the first domestic independent brand passenger car company to produce more than 3 million cars.
By 2022, Chery will also achieve its goal of selling a million cars a year, realizing the dream of being a million-car company for many years.
Although Chery’s market performance has drawn an upward trend despite ups and downs, there is still room for improvement in terms of sales quality.
As Chinese automobile brands, new energy, and intelligence competition prompt rapid iteration in the industry, Chery seems to be gradually overtaken and forgotten.
Regarding this, Chairman Yin Tongyue believes that Chery’s “slowness” is actually an antidote for impetuousness. However, in the face of the rapid pace of the automotive industry’s development, the “slow” Chery is becoming increasingly marginal among domestic independent car companies.
In addition to developing “slowly,” Chery’s listing process is also slow to follow.
In the early days of Chery's mixed reform, Yin Tongyue stated that after the mixed reform, Chery would promote the listing process. Chery should have gone public ten years ago but missed the opportunity.
How to change the status quo?
Chery's answer is transformation towards high-end.
However, looking back at Chery's history, its two previous high-end transformations have all ended in failure.
In 2009, Chery Automobile had already firmly occupied the position of the independent brand sales champion. However, Chery divided the car brand into four, creating Chery, Riich, Karry, and Weilin brands, aiming to create two brands of mid-to-low-end and high-end for passenger cars and commercial vehicles respectively.
However, although Chery wanted to work hard to tear off its "cheap" and "low-end" label, "Riich" still couldn’t reverse the trend in terms of sales.
In four years, Riich accumulated sales of only 120,000 units, of which the high-end models in the Riich series sold less than 1,400 units.
After failing in the first attempt to move towards high-end, Chery tried again and established a joint venture company, Qoros Auto, with an Israeli group.
Its sales are still bleak.
What the market did not expect was that before selling Qoros, Chery launched the EXEED (Xingtu) high-end series in September 2017.
In January 2018, Chery Automobile announced the launch of a brand new product series belonging to Chery Commercial Vehicle (Karry) - Jetour.
It is hard not to doubt whether Chery is repeating the same mistake.
From the data, the sales volume of the models under the Xingtu brand in 2019, 2020, and 2021 were 14,300, 18,300, and 37,200 units respectively.
In fact, during the same period, Great Wall's WEY series and Geely's Lynk & Co series have reached annual sales of 100,000 and 200,000 units respectively.
From January to October this year, Xingtu sold 42,922 units, with monthly sales of only 4,000 units. Not to mention that in terms of terminal sales price, Xingtu is also difficult to describe as "high-end".
From the perspective of fuel vehicles, there is a significant gap between the StarRides and Lynk & Co, while from the perspective of new energy vehicles, StarRides’ electric models have not officially debuted. Against the background of many brands scrambling to seize the high-end new energy market, Chery has lagged behind.
Analysis shows that from Ruilin, to Exeed, and now StarRides, when each brand was launched, there were similar competitive brands or models. The ambiguities of product positioning among different brands and the high similarity between different models of the same brand have made Chery’s already difficult brand upgrade even worse.
After 22 years of experience in the market, Chery seems to have not yet emerged from the influence of the “QQ era”, and high-end upgrade is still a difficult dream for Chery to achieve.
Seizing Consumer Awareness, The Most Difficult Task for Chery in Electrification
In the face of the upcoming smart electric age, the Chinese automotive market has formed a new pattern of traditional car companies extending new brands and internet companies “cross-border building cars”.
The tug-of-war between the two sides has made the automotive market more interesting.
First, traditional car brands launched high-end new energy brands, such as Jinkela, Ora, Fareed, IM, Voyah, and Avita.
Then, internet giants also began to build cars, such as Xiaomi, Baidu, and Huawei, followed by the rise of new car-making forces, all of which greatly enhanced the autonomy of self-owned brands in the era of intelligent electric vehicles.
Compared with joint venture car brands, independent car brands have obvious advantages in electrification and intelligence. This is not only reflected in the absolute leading position of self-owned brands in the new energy market but also in the layout of related technologies among various brands.
Take the current hot hybrid technology as an example. Besides BYD’s popular DM-i Super Hybrid, Geely’s Leyue Hybrid, Great Wall’s Lemon Hybrid, and Changan’s iDD Hybrid System car models are all being introduced, to catch up with this development trend, Chery has also launched the Kunkun Hybrid System.
From the trend of market development, the internal competition pattern of the hybrid market has greatly enhanced the overall discourse power of self-owned brands; from the development of Chery’s single brand, it is difficult for Chery to win in the market where many experts are competing.
One who seizes the market first can define the market and win the initiative. This principle is vividly portrayed in the sharp contrast between Chery's Keen 50 and BYD DM-i.
Ignoring the hybrid market that has gradually taken shape, attention is focused on the field of intelligent pure electric vehicles, where a story is also unfolding. Not to mention that Tesla has already achieved a commanding lead, Chery's Arrizo highlighted services, intelligent driving, and top-of-the-line home use, and received good market feedback.
Looking ahead, Zeekr, which has just launched the L7 Snake Performance high-performance version, has set its sights on the label of driving control, and Landtu, which loves collision testing, has gradually made safety the key to brand breakthroughs. Coupled with Jetta and Huawei, Changan, Ningde Times and stronger support from Avita...
There aren't many labels left for Chery in the era of intelligent Electric vehicles.
## Investing More in Scientific Research and Accelerating Racing
How should Chery's dilemma be resolved?
Chery has given the answer itself--increasing research and development investment to use technology and productization as a competitive force.
Yin Tongyue also stated that "faced with the great changes that the automotive industry has not seen in a century, China's automobile industry should seize the opportunity of key new-old track transformation. Chery will set sail again in this crucial period."
This time, he is no longer "impetuous" or "slow." He believes that "Chery's action should be faster."
Based on the "Yaoguang 2025" strategy announced by Chery earlier, Chery plans to invest more than 100 billion yuan in research and development in the next five years, train more than 20,000 research and development personnel, and establish 300 Yaoguang laboratories.
More market attention is given to Chery's cooperation with Huawei on the Huawei Smart Selection car model.
It is reported that Chery's new high-end smart EV brand is based on the E0X platform with vehicle codes such as E03, E0Y, and E05, among five high-end intelligent electric vehicle models.
title: Chery’s Plan to Launch Two Models Worth Over ¥300,000 USD in 2023
Chery and standing in opposition to Tesla, plan to launch two of their car models in 2023, one of which is estimated to be priced over ¥300,000.
Additionally, Chery will simultaneously establish six research and development centers located in Wuhu, Shanghai, North America, South America, Europe, and Central Asia in order to fully support the realization of its YG 2025 plan.
The “YG 2025” plan represents Chery’s ambition to take the commanding heights in both new energy and intelligent interconnectivity. Yin Tongyue, spokesperson for Chery Motors has declared that by 2025 the company plans to have achieved 100% electrification, to reach mastering new energy and intelligent network interconnection technology, and commercialize L3 level autonomous driving.
However, there are doubts in the market about this plan. Firstly, there is still a huge need for software technology personnel in the new energy vehicle industry and building L3 Autonomous technology is the main challenge for Chery. Secondly, hiring a technical team of 20,000 people would be a huge investment, especially for Chery, which is not a rich company.
On the one hand, Chery needs to build teams to complete the construction of the “Automotive New Era”. Meanwhile, it also needs to find a stable source of funding. On the basis of completing these “basic tasks”, Chery also needs to accelerate its layout in the intelligent electric vehicle market, and take a more active posture to occupy consumer and market share, laying a foundation to develop in the future.
Be it Luxshare Precision Industry or supported by Huawei, the fleeting market opportunities require Chery to speed up their pace, so that Chery, the “Car King” of the past, can shine again in the new era of intelligent electric vehicles.
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This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.