Chrysler Auto

Chery Automobile Ltd

Chery Automobile Company, Ltd., was founded in 1997 and is based out of Wuhu by local state owned investment companies with an initial capitalization of RMB 3.2 billion. Plant construction began on March 18, 1997 in Wuhu, Anhui Province, China. The first car was produced on December 18, 1999. And on August 22, 2007, Chery had already produced 1 million cars successfully, which indicates the companies' success in building a strong and independent Chinese brand. Chery is rapidly growing and and creating a world famous brand through opening and innovation.

Source

History:

1997:

Chery was founded as a state-owned enterprise by the investments of the provincial government, in an effort to improve the economic condition of the Wuhu region of China. Due to the structure of the company and China's economic system, selling their vehicles across the country was not made possible. They acquired a contract with the region to produce taxis until they joined the Shanghai Automotive Industry Company. Once they were part of this larger organization, they were able to take use of their seller's license and improve profitability.

1999:

Auto production begins. On December 18th, the very first car goes out of production.

2001:

Chery begins to send their vehicles to other countries, Syria being one of the first. 28, 000 cars were sold with just this first model.

2002:

Chery exceeds to become one of the top eight manufacturers of China.

2003:

The company funds an R&D organization to begin work with foreign consultant firms to improve technology and quality. They hired a Japanese engineer from Mitsubishi to be in charge of Chery's len/six sigma production series systems. This was the first time the new system was applied to the cars. Chery also opens a factory in Iran, their first foreign plant.

2004:

Chery adopts DURR paint systems, making them one of the only five auto firms in the world to use this advanced paint system. Chery bought SAIC stock back, causing tension between partners, such as General Motors and Volkswagen. They came up with small 3 and 4 cylinder engines they sold locally. GM sued Chery with the claim that this was a direct copy of GM's Daewoo model. The case was dropped, but those cars were never released in areas dominated by GM.

2005:

Their production quality to ISO/TS 16949:2002 is upgraded, which is the highest and most controlled quality control system in the world of the auto industry. They began to work with Visinary Vehicles, a Malcolm Bricklin's company, in order to ease connections with the United States. They wanted to be one of the first Chinese firms to export to the United States. The deal with Visionary Vehicles collapsed, not allowing Chery to open the 250 dealerships they had planned to open in the United States. After their plans fell through, they began to focus on designing cars to fit American and European consumer markets, as well as the Chinese market. Their aesthetic designs are influenced by the help of Bertone and Pininfarina from Italy, which are the designers of Ferrari and Lamborghini.

2006:

At this point, Chery exports to 29 different countries. An alliance with China Automotive Systems is signed, under the name of Wuhu Henglong Auto Steering Systems (WHAS). Chery begins exportation to North America at the beginning of the year.

2007:

Exportation to Europe begins. The Italian auto firm, Fiat signs agreement with Chery to receive their ACTECO engines for fiat cars. Chery provides Fiat with 100, 000 engines a year. Daimler Chrysler enters a joint venture with chery, due to their lack of small cars in the North American market. Daimler Chrysler wants chery to build a car suitable to sell under the Dodge brand in North America.

2008:

The Chery A3 model was launched.

2009-Now:

Chery, being the first Chinese auto firm to export products remains the leading exporter. The company plans to continue implementing their aggressive exportation plan and expansion of production to 29 different countries. Having produced more than 1, 000, 000 cars, the company sees this as the point to revamp innovation and boost exploration in technology and management. When it comes to exporting, Chery focuses on developing countries first, and then developed countries as well as cooperating in new countries before joining joint ventures, and also establishing wholly owned subsidiaries to control overseas marketing channels. Today, chery has factories overseas in eight different countries, consisting of Thailand, Malaysia, Uruguay, Indonesia, Egypt, Iran, Ukraine, and Russia. Chery is also working with Austrian firm AVL in the production of engines. Their new technology is to meet the Euro IV emissions standards. Chery also has partnerships with Bosch which aids them in the design of modern transmissions, as well as Lotus Engineering, with the development of design and quality. Chery is in the process of building China's first hybrid car, with the assistance of Ricardo Consulting Engineers. When Chery begins exporting their cars into the United States, it is said they will not use the name Chery, due to the close similarity of name to American brand Chevrolet, "Chevy". In addition Chery's plant in Russia begins operation.

Production History:

Chery's Assembly Line

2000: 2, 000

2001: 28, 000

2002: 50, 000

2003: 90, 000

2004:86, 000

2005: 188, 000

2006: 305, 000

2007: 392, 000+

Chery Products/Models:

5 sub-brands:

Chery: models include A3, A1, A5, Tiggo, Cowin, QQ

3, QQ6, QQme

Rely: SUV, MPV, and minivan product line with the philosophy of "Engines & Drivers"

Karry: comes from the English word to carry, models include minivans and pickup trucks

Riich: high and middle class vehicles

Xuan Yuan: new brand of "super luxury" vehicles not yet released

Models:

QQ3: "city car" the first sedan in china to cater to fashionable people. Established its' own automotive culture.

QQ6: based on concept of "high level fashionable mini-car". Features a chassis for high level class AO sedans while having the space of a mainstream Class A sedan. Includes electronic interactive safety equipment and intelligent devices, it integrates comfort at a reasonable price.

A1: the first "world car" in china that was developed for global markets. It is a refined hatchback sedan made at international standards. Its advanced engine has strong power, and is designed to fit the north American, European, and Chinese markets.

A3 hatchback: designed by Pininfarina, (the designer of Lamborghini). Its hatchback gives it a more sportive look while still having the high safety and performance quality.

A3: based on the latest styles and techniques popular in Europe as well as global trends. It is a refined family sedan that targets young and fashion conscious customers.

A5: features a super large body of 4552x 175x 1483 mm, as well as the cell body structure known as the "safety cell", providing the customer with higher value for less costs.

Eastar: this mid-size sedan combines seriousness of commercial sedans with dynamic features and fashionable elements, while at the same time maintaining durability and dignity.

Cowin: Chery's first car to carry the ACTECO 1.5L engine technology. It includes a multi-valve design which ensures efficient combustion and economical fuel consumption.

Tiggo: compact SUV that brings customer great driving pleasure due to its lightweight technology.

Eastar Cross: a mid and high level MPV with seven seats that can be varied for extra space. This MPV has a unique dynamic atmosphere with fashionable interior trimmings and leather seating.

Karry: small panel van known as the first international "mini-van". This van has a strong brand image of large capacity and great tolerance.

Riich: a new generation of mid-high level mini bus that contains a streamline body and "cute" delta shaped face.

Competitive Environment of the Industry:

The Chinese auto industry is a highly segmented and somewhat unique industry. Because most of the firms have strong ties to their province's respective local government, the competitive environment on each province can be determined by regulation mandated by each government.

Even with such a complex and competitive structure, China is an extremely desirable market to enter. The majority of it's 1.3 billion large market is largely untapped. Although many of the centrally located Chinese do not have the disposable income to purchase a car yet, a dynamic increase in the PPP per-capita GDP is a likely occurrence. This will open the door for many Chinese to buy their first inexpensive car.

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Western Standards and Knowledge Gathering:

The central government of China realized that the Chinese market looked appealing to the eyes of technology laden foreign firms and developed strategies to benefit their own newly minted auto manufacturers. In order to gain access to the growing Chinese Auto Industry, foreign firms were required to form joint ventures with these Chinese firms. These alliances allowed the more reputable foreign firm to market and sell their products in the Chinese market, but allowed the small but growing Chinese firms to gain technological knowledge in the form of, design, engineering, testing capabilities, lean manufacturing processes, and other business processes related to the auto industry. Essentially, the shift between Original Equipment Manufacturer (OEM), Original Design Manufacturer (ODM), and Original Brand Manufactuer (OBM) is now underway and going to shape the market drastically.

A Double Edged Sword:

Although foreign firms had entered the Chinese market through their respective JV, the knowledge afforded to the Chinese firm gave them an opportunity to increase their position in the value firm and often increase market share using the new found technology for the company's non JV subsidiary.

Chery's Role in the Industry:

Unlike the JV's that some Chinese auto manufacturers have established with foreign auto makers, Chery is uniquely independent. It is the product of a consolidation between different automotive parts manufacturers and has such and has subsequently and has taken on the challenge of designing its own components and technology without entering into a JV with a larger more innovative foreign firm.

Future Prospects:

The future of the Chinese Auto Industry appears bright. As highlighted in the table below, growth rates have increased strongly in recent years. Additionally, a large jump in the growth rate after the year 2001 is a product of China's accession into the WTO.

Chery has the distinction of being the first independent Chinese auto firm to export its products. While its primary market is mainland China, the company manufacturing facilities in countries such as Russia, Iran, Egypt, Indonesia. This positioning will allow them to gain a firm grip on some foreign markets.

Chery Entering in the United States

While Chery has distributed its products to many countries that are sometimes avoided by the most dominant firms in the automotive industry (countries in the Middle East) , it has thus far it has shied away from the world's largest market: the United States. Fortunately for Chery, it has prepared itself to enter such a market in the near future because it plows roughly 10% of revenues back into R&D and designs its car to emit polution based on the strict standards of the European market and the state of California.

Comparative Financial Data:

Although it is known that Chery was started with 3.2 billion RNB investment, current and accurate financial data on Chinese state owned enterprises is often difficult to obtain because there is a lack of transparency. Because of this, the distribution of a firm's financial statements to the general public is not a top priority and likely only shared between company management. Sales data however, provides a reasonably accurate look into the firms operations because it exemplifies the increase in capacity and profit potential that it has gained over time.

Quantity of Units Delivered by Model (Chery Automotive)

Allocation of Chery Sales Foreign/Domestic

References:

2.Li, Wei (May 19, 2008), "Yin Tongyue: There's no myth to cars (qiche meiyou shenhua)" (in Chinese), Sanlian Lifeweek (sanlian shenghuo): pp. 56-61

3. George Ajjan, the Aleppine Elephant: Taxi, Sister!

4.World motor vehicle production by manufacturer: World ranking 2006 - OICA

5.Chery Auto to launch premium brand 'Xuan Yuan'-Gasgoo Automotive News

6. http://www.chinacarfans.com/wp-content/gallery/cache/167__225x171_chery_logo_5.jpg

7. http://www.chinachineseinfo.com/images/anhiu-map.jpg

8. Lairson Thomas D., Chery automobile company

9. http://web.rollins.edu/~tlairson/asiabus/chiautoafter.pdf

10. http://web.rollins.edu/~tlairson/asiabus/cherychina.pdf

11. http://web.rollins.edu/~tlairson/asiabus/chinaauto.pdf