Chery, perhaps one of the best-known domestic Chinese car brands (and the best seller for the last 11 years) has just announced a re-branding exercise and a culling of its rather bizarre domestic sub-brands, Riich and Rely, both of which are only four years old.
The new badge and the tidying up of a confused range of vehicles comes as Chery unveils an all-new ‘iAuto’ platform and the saloon and SUV that are based on it.
With an eye on the way Western car makers are now ‘sub-branding’ platforms (think VW’s MQB or PSA’s EMP2) the iAuto is said to consist of three parts. ACTECO ‘green and efficient’ powertrains, Cherysma ‘high quality standards’ and ‘Cloudrive’ infotainment systems that extract data via the internet, rather than storing them in the car.
Which is all very well, but just how far has Chery’s engineering advanced over the somewhat cheap and cheerful models it's been known for until today?
This is not a minor point about an obscure - to us - Chinese car maker. The Chinese government wants domestic brands to start exporting to the rest of the world. According to a landmark analysis, published in February by Bernstein Research, the home-grown Chinese industry is a long way behind developing world-class technology of its own.
This underperformance has not just prevented exports, it has also proved disastrous on the home market. According to the huge Bernstein report ‘Chinese Autos – the quest for global competitiveness’, Chinese domestic manufacturers only have 25 per cent of the home market between them.
Indeed, VW has an 18 per cent share on its own, followed by GM and Hyundai-Kia on 10 per cent. Worse still, the Chinese makers’ sales only account for 12 per cent of overall revenues, because most of the cars they sell are ultra-budget models such as the popular – if reputedly unreliable – Chery QQ city car.
The only Chinese car brand in the Chinese top 15 auto brands is Great Wall, which is eighth behind various European, Japanese and South Korean makers. Chery is the 14th-largest brand, only just ahead of BMW.
According to the Bernstein research, the Chinese government set out plans for a global Chinese car industry as far back as 1994. In a document titled ‘Formal Policy on Development of Automotive Industry’ the government expected ‘three or four’ domestic Chinese car makers to be ‘competitive on a global level’ by 2010.
Well, that just hasn’t happened. For a start, as Berstein notes, 75 per cent of passenger cars sold in China emerge from joint-venture factories, with FAW-VW, Shanghai-GM and Shanghai-VW accounting for 30 per cent between them.
By contrast, Chinese car exports to the rest of the world remain tiny. Chery has a foothold in wider Africa, reportedly exporting 30,000 vehicles in 2012, trading on low prices, offering a new car for the price of a used European or Japanese car.
Chery spokesman Huang Huaqiong recently told the China Daily Times that the company’s future ‘lies in quality and brand building’. That’s easier said than done when the Chinese domestic makers are so far behind the rest of the developed world on basic automotive engineering.
Bernstein’s report on the Chinese industry went as far as testing and stripping down a Geely saloon and a Great Wall SUV to really understand Chinese engineering competence.
It’s a remarkable document, which I’ll come back to, but while interviews with Western engineers working for the Chinese makers revealed a lot of progress in a short time, it also revealed some serious cultural gaps, with claims of corner-cutting and an unwillingness to invest enough.
Relying heavily on joint ventures, and building cars based on imported technology, might help the Chinese industry succeed at home, but it will never be able to become a force in global exports.
Considering the number of domestic makers and the fact that government has significant influence over the industry, maybe it is time for the domestic brands to pool their resources and commission a couple of high-quality platforms and production systems that they can all use. Competitive auto technology that belongs to China.
I can’t really think of another way of out of the current low-price, low-quality, low-image trap that most Chinese brands are now trapped within.