Chery Motors Domestic Blocking Overseas Frustration

Brand strategy misses for 6 consecutive years

Chery Automobile was once the leader of China's own brand, but when did we not know when we opened Chery's transcripts with poor sales performance, we discovered that Chery’s journey in recent years was so arduous. Although the number of models under the multi-brand strategy has increased significantly, there are few places on the market that can earn a place. A00-class QQ performance is acceptable, but in addition to Chery, there are several good models Chery sells slightly. No more popular models. In fact, Chery’s brilliance is ultimately a brand strategy mistake.

According to the financial report, in 2008, Chery received local government subsidies of 470 million yuan, net profit of 314 million yuan; in 2009, after accepting government subsidies of 633 million yuan, net profit of 0.72 billion yuan. This also shows that if the government subsidy is deducted, Chery's operating profits in 2008 and 2009 actually lost 156 million yuan and 561 million yuan. In 2010, 2011, and 2012, Chery’s operating profit losses amounted to 614 million yuan, 415 million yuan, and 340 million yuan respectively.

In the first quarter of this year, Chery’s operating profit loss amounted to RMB 191 million. Although this figure has narrowed the loss of RMB 234 million in operating profit in the first quarter of 2012, Chery’s borrowing quota is still rising. The 2.877 billion yuan in the first quarter of this year increased to 3.67 billion yuan in the first quarter of this year, and the debt to assets ratio also rose from 73.58% in the same period last year to 74.22%.

According to statistics from the China Automobile Association, in the sales ranking of auto brands in May 2013, Chery finished fifth in sales volume of 31,100 units (the top four are Great Wall, Geely, Changan and BYD respectively). ), is the only independent brand with negative growth (down 35.1% year-on-year). In addition, from January to May 2013, with the exception of Chery, the sales volume of domestic top ten car companies all experienced rapid growth, with an increase rate of more than 25%, while Chery’s sales volume was 196,000 (including exports). Declined by 13.7%.

It is widely believed in the industry that Chery mainly relies on income from non-core business operations (including government subsidies, claim income, and disposal of net income from fixed assets) to generate profits, which will be detrimental to its future development. Moreover, in addition to the huge expenditures on R&D costs and marketing costs, Chery’s spending on financial costs and management costs in recent years has also been a key reason for its continuous loss in operating profit.

In addition to the excessive investment in vehicle development, Chery's rapid expansion of its distribution network, the high cost of manpower expenditure, and the continuous expansion of its production base during the past few years have also contributed to its continued losses.

If Chery’s loss in 2008 was mainly due to the impact of the global financial crisis, consecutive losses in subsequent years are obviously related to his own development strategy. In 2009, under the encouragement of the country's introduction of incentive policies for the automotive industry, Chery formally proposed the "multi-brand development" strategy and launched Chery, Ruiyi, Weilin and Kai Rui four brands, and at the same time planning more than 30 new products, the number of dealers and There has also been a surge in company personnel.

However, it turns out that this multi-brand strategy did not achieve the expected results of Chery, but instead dispersed Chery's R&D, product, and channel resources. The new brands, such as Ruiqi and Weilin, which are aimed at launching high-end markets, have been extremely dismal in the market of their models. The average monthly sales of each vehicle is less than 1,000 units.

Until 2011, Chery began to realize the problems of the “multi-brand” strategy. In that year, Chery officially withdrew Weilin Business Unit. At the same time, the sales of Weilin and Ruiqi brands were all assigned to Chery’s sales companies, and Chery formed the basis on this basis. Chery Automobile Sales Co. and Qiyun Sales Co., Ltd. have two sales fronts. However, due to the lack of product persuasiveness and other issues, Chery has still not been able to get out of market difficulties: In 2011, Chery’s overall sales volume was 643,000, which was a 5.7% year-on-year decline in 2010. Finally, in the second half of 2012, Chery announced that it will merge Cowin Sales into Chery Automobile Sales and establish Chery Sales Corporation. Shortly thereafter, Chery also abolished the Qiyun Automobile Business Unit and its affiliated Cowin Automobile Engineering Research Institute, and the Cowin Automobile Engineering Research Second Institute. Even so, Chery failed to regain sales, and its sales in 2012 still fell to 570,000 units.

Due to the failure of the brand strategy, Chery’s external expansion has continued while the issue of product competitiveness has not been resolved: Chery invested billions of dollars in investment in the Chery Jaguar Land Rover joint venture and the Qoro Motors project. In 2010, Chery announced that it will build a car project with a total investment of 20 billion yuan in Ordos; in addition, Chery will also be involved in the investment fields of real estate, shipbuilding, chemical engineering, construction machinery, marine equipment, and agricultural equipment. Under the influence of more than one industry, Chery's automotive business has also been greatly affected.

Domestic tackling overseas frustration

In April this year, Chery Automobile released a "Chery" strategy in Shanghai. The content includes the suspension of three brands, namely Ruilin, Weilin and Kairui. All products will be returned to the Chery mother brand, and Kai Rui will be stripped to Chery Holdings. After this re-adjustment, under the Chery brand, the company will reclassify four product lines, and gradually reduce from the current more than 20 products to 11 to 12 products. Prior to this, Chery Automobile implemented a multi-brand strategy with a product quantity of more than 20 models, each brand was fighting each other, the brand and price system was chaotic, and sales volume gradually declined.

Chery Automobile, which was suffering from the transformation pains, after a long period of preparation, released its strategic model Ariza 7 in Shanghai on July 26. This is also the first model after Chery’s new brand image was released. It is the flagship market for the A-class model. This market is also the largest market segment in the domestic car market.

It is understood that in order to build this model, Chery has not only established Asia's largest security crash test center, the largest NVH laboratory in China, the world-class K&C chassis, and the first-ever Lean Modeling Lab in its own brand. And spent a lot of money on the introduction of Meisterbock&;Cubing and other large amounts of advanced technology and equipment, also specially hired Volkswagen and Rhine company experts to help establish a quality control system, and introduced harsh AUDIT quality assessment system... Visible in Arrizo 7 The body has already carried Chery’s strong desire to survive after several transitions.

In fact, as one of the most important results of Chery’s transformation in recent years, since the release of Arrizo 7 to the final public offering, the public’s attention and discussion has remained stubbornly high, while the opposite has been the gradual decline of Chery. Sales. According to data compiled by Gasgoo.com, Chery sold a total of 228,800 vehicles in the first half of this year. In the past, the ranking of autonomous “boss” dropped to sixth place, while the sales of Great Wall Motors’ first-half sales were achieved in the first half of the year. 30.03 million vehicles.

However, Chery’s low profitability has long been an “open secret” in the industry. According to statistics released by Chery, during the four years from 2009 to 2012, Chery’s operating profits were -5.656 billion yuan, -8.74 billion yuan, -415 million yuan, -340 million yuan.

Even though Chery is always looking for changes, the sons of New Oriental, A3, G5 and other products are still notorious. According to the results of the inventory survey of car dealerships released in June by the China Automobile Dealers Association, Chery became the brand with the highest inventory coefficient in June, reaching 3.17, with an average of 35 units sold in a single store.

According to Brazilian media reports, Chery's next-generation main model, the Ariza 7, will enter the Brazilian market next year. After that, Arrizo 7 is expected to start production at the Chery Brazil plant. Obviously, Arrizo 7 is also seen as the key to saving Chery's overseas market. According to the data, Chery's sales in Brazil fell by 72.5% year-on-year in the first half of this year, and the ranking among car companies has dropped from 15th to 20th.

The recent ongoing civil unrest in Egypt also led to the suspension of Chery’s business operations in Egypt. According to the relevant personage of Chery Automobile, “For safety reasons, our company’s staff in Egypt have all withdrawn to the country. The partners there have also temporarily suspended production and sales.”

The Egyptian market is an important export market for Chery Automobile. On November 8, 2005, Chery Automobile and Egyptian DME Company signed an agreement on mutual cooperation between the two sides in Egypt in Wuhu, Anhui Province. The first Chery A5 model was officially launched on August 1, 2006. Chery has successfully launched various models such as the A5, Oriental Sons, and Tiggo in Egypt.

At present, Chery Egypt's DME plant already has four welding equipment production lines, with an annual production capacity of 35,000 vehicles, accounting for 12% of the annual production capacity of the entire automotive market in Egypt.

Chery’s annual sales in the Egyptian market are less than 20,000. In 2010, it achieved a top sales record of 18,000 units, which accounted for 7.4% of Egypt’s automotive market share. Chery has more than 50 sales outlets in Egypt. Most of these outlets were established by DME, a Chery automobile partner in Egypt.

From April this year, Chery announced its new brand strategy and iAUTO technology platform in Hefei. Before the launch of Arrizo 7, the first model born on this platform, the topic of Chery’s survival and development has never been interrupted. Layoffs, low profit margins, sluggish sales, Jiangbei auto projects, and Guangzhou Automobile Co.'s cooperation are deadlocked... Chery, both under pressure both inside and outside, can really rely on Ariza 7's "return to life"? This may only be waiting for verification.

The problem of abnormal noise of vehicles is often caused by the losses of owners of Chery Automobiles after years of losses. The quality problems of its automotive products have also been exposed. According to the reporter's understanding, only in a short period of six months, there were seven vehicle owners who complained in China Automotive Quality Network that the Chery Automobile they had purchased had abnormal vehicle noise.

Mr. Yu, who is the owner of the car, said that his car was bought at the beginning of last year. When he just bought a car, he felt that the engine sounded louder. He asked the staff of the 4S store. The staff member said that this was a normal phenomenon and there was no problem. It was found that the metal buckle of the front passenger seat belt was actually facing inwards, and the entire belt was still reversed. There was no way to adjust it. Mr. Yu was very angry and questioned Chery's factory quality inspection.

Mr. Yu’s problem is not an example. The new A3 hatchback purchased by Shaanxi’s Chen Ming (a pseudonym) in late October last year saw over 300 km of accelerating abnormal noise. The noise of the rut was particularly serious and the body resonated. Replaced the three-way catalytic assembly but no effect, he said that he repeatedly reflected the abnormal situation to the 4S shop, the clerk is perfunctory, he hopes to fundamentally solve the problem of abnormal sound.

The immediate problem is: "It is difficult for consumers to find an accreditation body to assess the quality of automobiles. At the same time, consumers with high appraisal fees cannot afford it."

Chery Automobile is a flag of the auto brand. Although there are some minor problems at the beginning of the launch, as an independent brand still in the development stage, consumers are still treated with an attitude of tolerance. Some people even believe that Chery can hold up the national brand rejuvenation. However, after so many years passed, the quality problems existing in the products have not been reduced as much as people think. Both old owners and new owners still suffer from Chery's quality problems. From the development of the domestic automobile industry to today, the pitiful rhetoric of “self-owned brands” and “our automotive industry is still in its development stage” can no longer be a shield for quality issues, and it cannot be used as an excuse for manufacturers to persuade vehicle owners. "Independent innovation, world-class, user first, quality first" can not only stay in the verbal, but to dissolve the slogan in R & D design, production management, production process and after-sales service.