Chery

This article is about the Chinese automaker. For other uses, see Chery (disambiguation).
Chery Automobile Co., Ltd.
Government-owned corporation
Industry Automotive
Founded March 18, 1997
Headquarters Wuhu, Anhui, China
Key people
 Yin Tongyue (Chairman)
Products Automobiles
Engines
Subsidiaries Chery Jaguar Land Rover (50%)
Qoros (50%)
Website cheryinternational.com
Chery
Simplified Chinese 奇瑞汽车股份有限公司
Traditional Chinese 奇瑞汽車股份有限公司
Literal meaning Chery Automobile Co., Ltd.

Chery Automobile Co., Ltd.,[1] trading as Chery (/ˈʃɛri/) and sometimes known by the pinyin transcription of its Chinese name, Qirui,[2] is a Chinese automobile manufacturing company headquartered in Wuhu, Anhui Province, China. It was founded by the Government of China in 1997 and is a state-owned corporation. Chery's principal products are passenger cars, minivans, and SUVs; it sells passenger cars under the Chery marque and commercial vehicles under the Karry brand. Chery is the tenth-largest China-based automaker measured by 2012 output (around 590,000 units).

Chery began the production of automobiles in 1999 and their export from China in 2001. It has been China's largest passenger car exporter since 2003 and in 2011 exported around 25% of its total production.[3] It operates a 50:50 joint venture with Israel Corporation, Qoros, which was formed in 2007 and is developing a range of premium vehicles for sale worldwide. In 2012 Jaguar Land Rover formed 50:50 joint venture Chery Jaguar Land Rover for the production of Jaguar and Land Rover cars in China with Chery.

Chery has several vehicle assembly and component manufacturing facilities in mainland China, and its vehicles are assembled in around 15 other countries—primarily in factories not owned by the company that utilize either complete or semi-complete knock-down kits. It has two domestic R&D centers and invests around 7% of its total revenues in product development. Its QQ city car, considered to be the best-known Chery model,[4] spawned a sub-brand in its own right; the QQ6 and the QQme are two other cars produced by the company, and the original QQ may now be designated the QQ3.

In the early 2000s, Chery received criticism from General Motors for alleged infringement of its intellectual property rights.

History

1997 to 2010

Chery was founded in 1997 as a state-owned enterprise by a group of officials from Anhui province and began automobile production in 1999[5] using a chassis licensed from Volkswagen's SEAT Toledo.[6] Called the Fengyun, Chery's first car sold nearly 30,000 units.[5]

The Wall Street Journal has described Chery's corporate culture as "an odd hybrid of Communist state enterprise and entrepreneurial start-up",[5] and entrepreneurial risk-taking is evident in its early history. Initial production was technically illegal as the company was only awarded a passenger car production license in 2003,[7] and so while its first product rolled off the line in December 1999, it couldn't be legally sold until 2001.[5] In that year Chery solved the problem by piggybacking on a SAIC Motor license,[5] which it did until 2003.[7] Perhaps the 20% ownership stake in Chery that SAIC once held[8] was a compensation for this early favor, but the ownership was soon sold due to rising tensions between Chery and another SAIC partner, General Motors.[9] GM is not the only foreign partner of SAIC to have been exasperated with Chery; Volkswagen claims Chery was using tooling from an old VW factory to produce a model that resembled a Jetta c. 2003.[10]

In the late 2000s, Chery began to actively seek a partnership with a foreign automaker, a hallmark of major Chinese car makers. Tie-ups with both Chrysler and Fiat were touted but fell through. In 2007, Chrysler planned a cooperation with Chery that would have seen the Chery A1 sold as a Dodge-brand car in the US and abroad.[11] The plan would have quickly increased the Chrysler small car stable, and the two companies participated in a signing ceremony in late 2007.[12] In early 2008, a similar deal was reached between Chrysler and Nissan, however, and the Chrysler-Chery cooperation was abandoned.[13] Around the time of the 2009 Chrysler Chapter 11 reorganization, Chrysler discussed the possibility of an asset sale with Chery.[14]

Chery V5, produced since 2008

In 2007, Fiat and Chery signed a memorandum of understanding for the creation of a car-making joint venture. Intended to begin operations in 2009, it was to manufacture Fiat and Alfa Romeo-branded products for the Chinese market and be located in Wuhu, Anhui province.[15] The deal was put on hold in March 2009.[16] As of 2012, Fiat produces in China with local partner GAC Group.[17]

Qoros, a car making joint venture between Chery and an Israeli company, was established in 2007.[18]

In October 2009, Chery announced plans for an assembly plant in Turkey to be built in cooperation with the Turkish automaker Mermerler Otomotiv at a cost of $500 million.[19][20] The plant is planned to have an initial capacity of 20,000 units per year, rising to 100,000 by 2017.[20] As of 2012, the plant has yet to commence production.[21] When it comes online, this production base will add to a handful of joint venture factories that Chery has in places like Argentina[22] and Iran.[23] These stand in contrast to a number of factories outside China that assemble Chery vehicles but in which Chery does not have an ownership stake.

In 2009, Chery produced 508,500 units,[24] and at this time it had an annual production capacity of around 650,000 units.[25] More than 400,000 of its 2009 sales were sedans.[26] Production capacity figures may consider engines and vehicles as discrete.

2010 to present

Chery became the 7th most-productive Chinese vehicle manufacturer in 2010 by selling nearly 700,000 units.[27] Slipping sales marked 2011 and 2012; in these years the company produced more than 640,000 and near 590,000 units, respectively, and it moved from a seventh to a tenth place ranking.[28] This decrease may be due to Chery's manufacturing mix being significantly different than that of other, major Chinese automakers; the company does make commercial vehicles but SUVs comprise only 14% of its product line.

An agreement with Tata Motors was struck in March 2012 to produce Jaguar Land Rover models in China. In 2013 a Tata executive stated that this deal was "still on track",[29] and some expect the planned production base to start output in 2014.[30]

In June 2012, plans to build a production base in Malaysia were announced, and as of July 2012 this project is proceeding without a local partner.[31] The planned factory will have a production capacity of 10,000 units per year.[31]

After having introduced the Karry, Rely, and Riich sub-brands in 2009, its sprawling production policy and lineup became a problem for Chery.[32] With over 100 new models in the works, even though its sales still mainly depend on the Tiggo SUV and the QQ microcar, Chery decided in the fall of 2012 to cancel the Rely and Riich brands and to narrow their focus.[32] Currently, 30 new models are planned a significant reduction from the prior future lineup.[32]

Operations

Chery A3

Mainland China

Chery's main production base in the mainland of China is located in Anhui.[11][33][34] As of 2007 the company had two auto-making production bases, two engine-making facilities and a gearbox production base.[33] Another car-making production base located in Dalian, Liaoning province, became operational in 2012.[34][35]

Chery invests around 7% of its total sales in research and development,[36] and, as of 2011, had over 4,000 patents.[37] It has R&D facilities in Wuhu, Anhui province,[38] and Changshu, Jiangsu province.[39]

Other

There are a number of factories in developing countries that manufacture Chery vehicles from either complete or semi-complete knock-down kits. With the exception of an Argentinian cooperation[22] and an Iranian factory,[23] these are not owned by Chery. As of the beginning of 2012, 13 operational factories produced Chery vehicles and an additional three were in development.[40]

These factories have appeared in Argentina, Egypt, Indonesia,[41] Iran,[23] Malaysia,[41] the Middle East,[22] North Africa,[22] Pakistan,[42] Uruguay,[41] Russia,[41] Taiwan,[43] Thailand, Ukraine,[41] and Vietnam.[44]

Brazil

Chery has agreed to the construction of a Jacarei, Brazil, production base that should be finished by 2013 in a joint effort with the Government of the state of São Paulo.[45] In July 2011 work commenced on an industrial park with a planned 150,000 units per year production capacity.[40]

Egypt

Assembly of Chery cars from complete knock-down kits began in Egypt in 2004 according to the company itself,[46] but news reports indicate that it only expressed initial interest in doing so that year.[47] As of 2011 some Chery models may be sold here under the brand name Speranza.[48][49] One Egyptian factory making Chery models from semi-complete knock-down kits had a 2009 production capacity of 30,000 vehicles/year.[50]

In 2011, Chery stated the part localization ratio for Egypt was 45%.[37]

Indonesia

In this country, Chery models have been assembled from knock-down kits since 2006.[51]

Iran

The making of prepackaged models from kits in Iran dates from as early as 2004.[47] In late 2007 Chery stated that it held a minority ownership in a joint venture with Iranian Khodro and Canadian Solitac as its partners.[23] This JV controlled a knock down factory in Babol, Mazandaran. Making a QQ6 renamed the S21, it may be sold both inside and outside Iran[23] and carry a brand name other than Chery, as well.

Malaysia

A small facility may have become operational c. 2004,[47] and by 2008, a factory assembling Chery models from knock-down kits opened in Johor Bahru, Johor.[51] As of 2012, another factory is expected to be built and operational in Malaysia by 2015.[52]

Myanmar

As of May 2011, a 3,000 to 5,000 units per year production facility is planned in the country.[40] As of 2012, the Chery QQ is apparently popular in Yangon.[53]

Pakistan

In 2004 Chery expressed interest in exporting knock-down kits to this country,[47] and at present some assembly may occur.

Russia

In Russia TagAZ produces Chery vehicles, but these usually carry non-Chery badges such as "Vortex".[54]

Taiwan

The Chery A3 is assembled since August 2009 in Taichung, Taiwan, by Shengrong Auto, a subsidiary of Prince Motors (Chinese: 太子汽車; pinyin: Tàizǐ Qìchē), a Taiwanese car company.[43][55]

Thailand

In 2008, Chery agreed to export knock-down kits to this country,[56] and while an assembly factory was supposed to have become operational in 2010,[51] as of late 2011 Xinhua reported that Chery was conducting a "feasibility study" in regards to "moving production to Thailand".[57]

Turkey

A production site was planned to be raised in the province of Sakarya, in a collaboration with the local Chery dealer, Mermerler Otomotiv.[20]

Ukraine

ZAZ Forza

Chery is a partner of ZAZ since 2006[58] and manufactures from kits at sites in Zaporizhia and Illichivsk. Since February 2011, the Chery A13 is manufactured in Ukraine where it is rebadged as a ZAZ Forza.[59]

Uruguay

Affiliated Argentinian company SOCMA Group[22] manufactures Chery vehicles in the Oferol factory in Barra de Carrasco, Canelones, Uruguay.[60] The Tiggo was officially launched in Uruguay in October 2007.[61][62]

Venezuela

First introduced to this country in mid-2006, Chery vehicles continued to be the only licensed Chinese car exports to Venezuela as of 2011 according to the company.[37] Opened in September 2011, a new Chery production site in the north-central state of Aragua, owned by the ZGT joint venture, produces A1 and A3 models.[63]

Joint ventures

Chery operates car-making joint ventures with Jaguar Land Rover and Israel Corporation,[18] and automotive component manufacturing joint ventures with Arvin Meritor, Johnson Controls and PPG Industries.[64]

Chery Jaguar Land Rover

In March 2012, Chery and the UK-based luxury automaker Jaguar Land Rover agreed to invest an initial US$2.78 billion in a new China-based joint venture that will sell and manufacture Jaguar and Land Rover vehicles and engines as well as establish a research and development facility and create a new "own-brand" automobile marque.[65] The joint venture received regulatory approval in September 2012.[66] An initital production base will be built in Changshu, a county-level city close to Shanghai.[67]

Qoros

Qoros 3
Main article: Qoros

Its first car-making joint venture with a foreign firm, Qoros was established by Chery in cooperation with an Israeli company, Israel Corporation, in 2007 and may begin selling models as early as 2013.[68] Set to unveil a sedan atop a brand-new platform[68] at the 2013 Shanghai Auto Show,[69] Qoros' debut models will not be electric vehicles (as some sources may have reported).[68] A proposed production base for the venture will be built in Changshu, Jiangsu province, and become operational in 2012.[70] Production capacity will be 150,000 units a year,[39] but the location may not run at full capacity until 2015 or 2016.[71] While Qoros professes its desire to sell to young city dwellers[72] in China and Europe,[68] the brand could very well target fast-growing countries in the Middle East as well as later sell electric vehicles in warm, tiny Israel. The company does have plans to include electric vehicles in its lineup.[68]

Higher-end Qoros cars are built with components and systems from foreign suppliers such as American Visteon and French Valeo.[73] Its engine design also required assistance from a foreign firm,[71] and Qoros has attracted western talent including former employees of Volkswagen and Mini.[39] It has sites in Austria and Germany as of 2012.[72]

Although initially known as Chery Quantum Auto Co Ltd, its legal name is now Qoros Auto Co Ltd.[68] The eponymous brand name sounds like the English word "chorus".[68]

Products and services

Vehicles

Chery A5

From 2009 until around 2013, Chery vehicles sold under four brand names: Chery, Karry, Rely, and Riich.[74] In September 2012 Chery announced the cancellation of the last two brands, as they had not caught on with buyers. Only the Chery (passenger cars) and the Karry brand (for commercial vehicles) are to remain.[32]

Chery makes cars, minivans, and SUVs. The parts used in their manufacture may be foreign designed, and some may be imported; Chery has cooperative agreements with many foreign component firms, including the American ArvinMeritor,[75] American Autoliv,[76] American Delphi Automotive,[76] the Australian company Futuris,[76] German Robert Bosch GmbH,[75] American PPG Industries,[75] German Siemens VDO,[75] French Valeo,[75] and the American Visteon.[77] Some have helped Chery establish a local supply chain.[75]

Discontinued

Current

Karry S22
Chery M1
The Chery Ant concept car
The Chery Ant 2.0 concept car

Concepts

Engines

The company makes and has exported engines under the brands ACTECO and CAC. Chery engines have been bought by Fiat and exported to the US.[33][89]

After-sales service

The company has a customer service network that spans at least 31 Chinese provinces, autonomous regions, and direct-controlled municipalities.[90][91]

Electric vehicles

An electric Chery M1 on display at the 2010 Kuala Lumpur International Motor Show

Chery currently offers a few hybrid and full-electric models, and it has established a tentative agreement with a foreign company for mass-production. China subsidizes oil (an incentive for the State to encourage use and manufacture of electric cars),[92] and some of its automakers see opportunities in less mature electric vehicles because Western companies have yet to develop much of a lead in the technology.[93]

In 2010 Chery signed a memorandum of understanding with the American company Better Place for the development of prototype electric vehicles to be used in pilot projects.[94]

Electric models

In 2009 Chery announced that it had built an all-electric car, the S18.[95]

In early 2009 the company showed an all-electric Chery Riich M1 to journalists.[25] This car, also referred to as the S18, may have entered production in 2010.[38]

C. 2011 Chery stated that it was investing heavily in research and development of electric cars,[96] and three hybrid as well astwo all-electric models are listed on its website as of 2012.[97] Hybrid models may use a start-stop system solely.

Sales

The Chery Tiggo

Chery has been the top Chinese auto exporter since 2003, and many of its exports may be in the form of knock-down kits destined for overseas assembly. The fact that, prior to 2012, it lacked a joint venture with an established western automaker may explain its export focus; a 2009 report by the US Congressional Research Service asserted that such joint ventures, commonplace in the Chinese auto industry, restrained overseas sales.[98]

Making its first export to Syria in 2001,[99] as of 2010 Chery was the top exporter among Chinese automakers, a title it held since 2003.[100] Many of these exports may be in the form of knock-down kits. One of Chery's strategic goals is to expand in developing countries first and then in developed countries.

Selling in several other continents besides, Chery dealerships exist in Russia, Ukraine, Belarus, Iran, Serbia, Macedonia, Turkey and Italy through the DR Motor Company.[101] Other notable nations where Chery models are on offer as of 2012 include Australia,[102] Singapore,[103] and South Africa.[104] In Ukraine, Chery models are sold by UkrAVTO Corp,[105] and partner firms operate sales outlets in other markets as well. In some nations companies Chery cooperates with build models in their own small factories.

As of early 2011, the Tiggo was Chery's most popular model in export markets.[105]

Motorsport

Chery participated in the Dakar Rally in 2010 and 2011, racing with Rely X5 SUVs in both editions.[106][107]

Safety record

An informal, 2007 Russian crash test yielded a poor score for a Chery model named the Amulet.[108]

Some Chery models have received good marks for safety, however. In 2009[109] the A3 received a five-star safety rating in the Chinese new-car-safety tests, C-NCAP,[110] becoming the first indigenous car to achieve such a high-test rating.[91][111] The Chery Riich G3 has also been awarded a five-star rating.[112]

Controversies

Copying claims

The Chery QQ (left) and Daewoo Matiz (right)

In June 2003 American company General Motors sued Chery accusing it of copying the first generation Daewoo Matiz (developed by a GM subsidiary, GM Daewoo) in its design for the Chery QQ.[113] General Motors also claimed a disguised Matiz was used in a crash test in place of the Chery car.[114]

GM executives claimed design duplication with many parts interchangeable between the QQ and the Matiz,[8] and GM China Group stated the two vehicles, "shared remarkably identical body structure, exterior design, interior design and key components."[115]

While some Chery cars are not copies, such as the Pininfarina-designed A3,[116] the QQ may not be the sole Chery model that wears famous-name designs; the Chery Tiggo is criticized for resembling the second generation Toyota RAV4.[117] Other model using the Matiz technology found in the QQ include the closely related QQ6. The Eastar and its derivatives (V4, B12, and B22) have also been considered to be copies of the Daewoo Magnus.[118]

GM lawsuit

After mediation attempts failed, then-GM Daewoo (now known as GM Korea) brought a case against Chery in a Shanghai court, but by 2005 jurisdiction had been moved[8] to the Beijing No.1 Intermediate People's Court.[119]

Around that time Chinese state officials, including a vice-minister of commerce and a vice-director of the State Intellectual Property Office, publicly supported Chery. The Chinese have claimed that GM didn't properly patent their technology.[119] In late 2005 the lawsuit was settled.[114]

Bricklin U.S. court case

An American entrepreneur with past experience importing developing country autos to the U.S., Malcolm Bricklin, sued Chery in 2008 for contracting a different company after previously contracting Bricklin.[120]

See also

References

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  3. ↑ This assertion is supported by multiple sources:
  4. ↑ Geoff Dyer, in Shanghai. "FT.Com Site : Proton in Talks with Chery Over Manufacturing." FT.Com (Mar 30, 2006)
  5. ↑ 5.0 5.1 5.2 5.3 5.4 Fairclough, G. (2007, Dec 04). "Accelerating growth: In china, chery automobile drives an industry shift; low costs, high output attract global partners; chrysler's leap of faith". Wall Street Journal, pp. A.1-A.1
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  44. ↑ "Chery Officially Enters Vietnamese Market". Chery Inc. 2009-04-22.
  45. ↑ "Chery Plans Production Base in Jacareí, Brazil". ChinaAutoWeb. 2010-09-17.
  46. ↑ "Chery is Developing Fast Towards an International Brand". Chery Inc. 2011-07-21. Archived from the original on 25 November 2011.
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  49. ↑ "Speranza Egypt". Retrieved 2010-10-05.
  50. ↑ "VIDEO : Chinese cars made in Egypt". Inside the Middle East. CNN.com Blogs. 2009-11-23.
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  55. ↑ "Chery crosses Straits to assemble its A3". China Daily. 2009-06-29.
  56. ↑ "Chery Officially Enters Thai Market". Chery Inc. 2008-11-13.
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  62. ↑ "Ramping up Business in Brazil, Chinese Chery Deeply Exploiting South American Auto Market". Chery Inc. 2009-09-03.
  63. ↑ "Chery holds ceremony for new Venezuelan factory". Gasgoo. 2011-09-01.
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