It takes four to five years for Chery to convert overseas profit models

Through the implementation of “Fine Farming 2010”, Chery has created five brands including Chery, Ruiqi, Weilin, Kairui, and Qiyun, and formed a full range of cars, off-road vehicles, commercial vehicles, mini-vehicles, and micro-cards, from low-end to high-end. product. However, as with most of the domestic auto brands, Chery still faces a low profit margin.

In the 12th Five-Year Plan newly formulated by Chery, apart from mentioning that during the 12th Five-Year Plan period, the total vehicle sales will reach 2 million vehicles/year, and by 2015, the target for sales of new energy vehicles will be 50,000 vehicles/year. It also confirmed Chery’s intention to increase profitability in the future. According to the plan formulated by Chery, the transformation of export strategy, the continued adherence to the middle- and high-end road, and the development of new energy vehicles will directly determine Chery’s future profitability.

In the past two years, Chery's mid-to-high-end brands have not achieved significant results. The biggest problem with the Ruiqi brand is that although there are a lot of sales, the ones that sell the most are low-end vehicles. In fact, in order to ensure the profit of the dealers and maintain the network, Chery had to launch two X1 and M1 cars under the high-end Ruiqi brand.

However, at the Guangzhou Auto Show on December 20, the general manager of the Chery Sales Co., Ltd. Ma Dejun clearly stated in an interview: “M1 and X1 are just the initial products created by Ruiqi Brand, and Ruiyi Brand will continue to be updated with higher technical requirements in the next two years. "Ma Dejun said that while the development of high-end brands in China's auto industry will be difficult, the world's famous high-end brands have encountered similar problems, and Chery's progress and speed are fast.

The biggest problem now is that consumers still do not recognize Chery's high-end brands. In response, Xie Baoxin, head of the Chery Automobile Research Institute, believes that the Chery 12th Five-Year Plan will use two to three years to further improve the performance and quality of Realtek, which will enable the brand to achieve an annual sales of 100,000 vehicles in two to three years. On this basis, in the next four or five years, Chery will have the opportunity to compete with the joint venture brand on the brand.

Xie Baoxin compared this to the same trend that China's home appliance industry replaced mainstream foreign brands. Although the car is not upgrading faster than home appliances, but Jie Baoxin believes that after five years China's overall self-owned brand sales will account for 50% of the country's total car sales, and at that time has been a firm foothold in the high-end Chery, is expected to profit Joint ventures sit on an equal footing.

At the Guangzhou Auto Show, Chery launched the Ruiqi G5 2.0TCI AT, demonstrating the latest technological achievements of Chery in the mid-to-high-level areas. Ma Dejun revealed that during the 12th Five-Year Plan period, Chery plans to create high-end brands will not change, and after the Ruiqi brand is recognized in the domestic market, it will also go overseas.

“Before 2010, it was a strategy to go global. After 2010, it was a strategy to enter.” Jin Yibo, Assistant Spokesperson for Chery’s Assistant General Manager, told the reporter that Chery’s internationalization is gradually transitioning from exporting complete vehicle products to the international market. Based on the global market research and development, procurement, sales and services.

Egypt is a pilot of this strategy. In the Egyptian market, Chery first imported through local agents, and as the scale increased, it signed a cooperation agreement with its partners for technical output. After winning the first place in China’s own brand sales in Egypt and successfully squeezing into the top five local car brands, Chery has a new plan. "If possible, the two sides will consider further joint ventures based on the technical output." Jin Yibo called this model, because Chery is a technical output, while car sales can also directly gain revenue, and once the market matures, it will rejoin the joint venture. The risk is also greatly reduced. Jin Yibo said frankly that they hope to find a breakthrough and profitable space for overseas markets through this model.

In addition to the Egyptian market, Chery Automobile is planning to acquire FSO shares and localize local production from the hands of Ukrainian FSO controlling shareholder U Kravto. Recently, Chery launched a project to invest US$400 million in Sao Paulo, Brazil.

“Always running behind others is not good. We must think about how to surpass others. We must sell our products to the United States and sell them to Japan.” The figure envisioned by Yin Tongyue is that Chery will export 200,000 vehicles each year in the future. To 300,000 vehicles, but also into the mature market, to further prove the strength of Chery, get more recognition of consumers.

However, for mature markets, local regulations have become a barrier for many Chinese companies to enter the international market. Chery had planned to help Chrysler foundry, the curve into the United States, but because the United States to implement the new fuel consumption law, the last thing to do nothing.