Chery sets its sights on Europe

Brand strategy
Chery sets its sights on Europe

04.01.2024

Those: sp-x

4 minutes Reading time

Until now, Chery has flown under the radar for many. But the Chinese are already the export champions and now they are coming to Europe. Here they want to make life difficult for capitalist brands and combustion engines.

The first minute has something scary. Anyone who walks into the so-called giant factory of Chinese carmaker Chery at its headquarters in Wuhu is unlikely to see a soul other than the gatekeeper. Outside you are free to look for parking spaces for employees and the residential buildings for older workers that are common in China.

Inside there are only hallways, through which one employee passes almost every fifteen minutes. This is not at all because there is nothing to do. After all, a new car rolls off the assembly line here every minute. Chery puts its annual capacity at 300,000 assembled vehicles and another 200,000 produced at other plants.

High level of automation

This is due to an unprecedented high level of automation: “98 percent of all work here is done by robots and machines,” says Zhang Guibing, as industrial trucks move freely along the route as if controlled by magic, ensuring material flow for assembly robots.

Zhang Guibing is the boss of Chery International and he wants to make sure that only 662 robots and 2,000 workers, mainly employed in final assembly and quality assurance, will soon have more work to do.

Three brands for Europe

To maintain Chery’s double-digit growth rates, the company is now pushing towards Europe: It wants to start in the old world with three brands and, in the medium term, around a dozen models.

This ship is fundamentally different from that of many other foreigners from China. Because unlike BYD, Ora or XiPeng, Chery does not allow itself to be carried away by electric joy, but remains faithful to the combustion engine.

The future may be electric motors, admits chief strategist Zhu Shaodong. But this future has not yet begun everywhere. And because most people don’t want to use a phone tomorrow but want to drive a car today, he continues to rely on combustion engines. “The first cars in Europe will be conventional gasoline engines,” says Zhu, even if they are quickly followed by plug-in hybrids and pure electric models.

Going abroad is nothing new for the Chinese. The company, founded in 1997 in Wuhan, a five-hour drive northwest of Shanghai, exported its first car to Syria in 2001 and is now present in 80 countries, mainly in Asia, South America, Africa and the Arab region.

A market with new challenges

Chery exports more cars than any other manufacturer in China: in the first half of 2023, the share of exports was more than 50 percent for the first time. With a total of 1.2 million vehicles last year and a forecast of two million this year, there is a lot coming along.

Until now, these have almost exclusively gone to emerging markets, but Chery is now tackling Europe, the first fully developed and saturated market. This means that you have to face strong competitors and seek salvation in migration. “We feel like elementary school students and we are starting from scratch,” says Zhang Guibing humbly.

Faster and more common than the Asian competition

The Chinese want to learn more from other Asians and set big goals for themselves: “It took the Japanese 20 years, the Koreans ten. “We want to be faster and soon reach the sales level of Hyundai and Kia,” says strategy boss Zhu as a goal.

And unlike Nio and Co., they don’t want to turn the system on its head, but instead stick to the usual rules, says Zhu. This applies especially to sales. A website instead of a showroom? Flat rate instead of purchase price? Others should try something like this: “We rely on a common network of suppliers and the knowledge of local partners.”

In and around their main factory at their headquarters, the Chinese have integrated everything they need for car manufacturing: not only are there presses and stamping, assembly and painting, but engines and transmissions are also built on site. And most of the development is just a stone’s throw away, making it one of the largest test centers in the entire Asia region.

Indeed, there are climate chambers and EMC test benches everywhere, as well as shakers for NVH (noise, vibration, harshness) protection. But no one has a crash hall like Chery, says owner Wuhai Zhong of the security center that opened in 2010.

International growth plans

1,000 engineers work there alone, driving 300 to 400 cars against the wall or each other on the 260-meter-long crash course and radial collision paths – not counting the many tests of sleds and components. The international aspirations of the Chinese are also reflected in the hall, and not only because the flags of all countries hang from the ceiling. “We can do any crash test needed anywhere in the world,” says Wuhai proudly.

Chery is currently building one big factory after another in China and opened the next one in Qingdao a few weeks ago – at that port, which is of course especially smart for an export dealer. But that does not mean that Chery would not also look abroad.

There are already ten assembly plants in Africa, Asia and Latin America. And in Europe they have been looking for a long time, says Zhang Guibing from Chery International: “Because if we are very focused on our European mission and our growth plans are working, then there should be no lack of capacity.”

(ID: 49859562)