Private, not fleet buyers the focus for Chery
BY MATT CAMPBELL | 16th May 2024
CHERY will not chase fleet sales volumes to boost its VFACTS numbers, the Chinese brand saying it intends to keep private buyers the focus for the future while eyeing gaps at both ends of the market where it can offer new budget-friendly small models and value-packed big cars for families.
While Chery Motor Australia chief operating officer Lucas Harris said some fleet business would be welcome, it is not the name of the game for the brand, which sees its primary obligation as private buyers looking for value and style.
“I mean fleets are an important part of the business and we certainly are not ignoring that, and we would like to get some fleet volume going,” he said.
“Things like hire cars are a great opportunity to get customers exposed to the brand; they're like unsolicited test drives, right? So we would welcome opportunities to be able to put more cars into hire companies, absolutely.
“But we don't want to make that a core part of our business because there are obviously nuances around how much volume goes into hire car companies, or into any big fleet, not just hire car companies,” Mr Harris said.
“And then what does that do to the residual values?” he queried. “Because that obviously has an impact on company purchases but also on consumer purchases and so, I think there's been some evidence in the not so distant past where some brands have gone quite heavy in that space and then residuals seem to be suffering.
“So we're trying to look at that a bit more long-term and big-picture as well; how can customers trust us if we're taking actions to tank their residual values? We're very mindful of that as well.”
At the same time, Chery can see gaps opening up in the affordable end of the market, and there are plans afoot to offer options for customers who are working with a tight budget.
Mr Harris confirmed at the recent Tiggo 8 Pro Max large SUV launch that the Tiggo 4 compact crossover will get a start in the sub-$30K segment by the end of 2024.
During the launch of the brand’s largest and most expensive model to date, Mr Harris made it clear that the business wants to meet the market where there is demand, and that he sees a big opportunity against the likes of the GWM Haval Jolion, MG ZS/ZST, and Kia Stonic.
“I can't think of a really good reason why that wouldn't happen,” said Mr Harris.
“Tiggo 4 is fairly well progressed in its discussions and we're just working through the finer nuts and bolts of that at the moment but hopefully we will be able to share some information with you sooner rather than later.”
At 4318mm long, the Tiggo 4 is of similar size to the MG ZS and smaller than the 4400mm Omoda 5. It is expected to share a powertrain with the latter, a 1.5-litre turbo four-cylinder with 108kW/210Nm.
“The Tiggo 4 is a bit smaller than Omoda 5; particularly the boot space – it's a bit smaller – and I think the price point position of that car is also likely to be a bit different to where Omoda 5 is,” Mr Harris said.
“That's me speculating a little bit at this stage, and so general logic is the smaller the car, the more affordable it becomes.”
Of note is that the Omoda 5 has been discounted in recent months. The official price starts at $34,490 drive-away for the base model BX, but a current offer for MY23 models lists it at $32,990 drive-away with a further $3000 ‘factory bonus’.
This means Chery is already playing in the sub-$30K segment with its Omoda 5, which means the Tiggo 4 could be even more assertively priced than just a $29,990 drive-away starting point.
Another small crossover SUV-style model, the Tiggo 2 – also known as Tiggo 3x – could be on the cards, but the current-generation version was facelifted in 2023, and its not planned for Australia in this generation.
However, Mr Harris all but confirmed that a new-generation model would be part of the Tiggo line-up in due course.
“It's actually quite a small car; that model has been around for quite a while, so it's highly unlikely that we would take that version of the Tiggo 2,” he said.
“But for inner-city driving and as people are looking for more and more affordable options, we certainly wouldn't say no if an option became available in right-hand drive, to look at a car like that. But it's currently not in the product plan.”
It is not only smaller and more affordable models on the hit list for Chery, with the business outlining its plans to offer the new, larger Tiggo 9 family SUV in Australia next year.
That three-row SUV is expected to take on the likes of the Kia Sorento and Toyota Kluger, and while finer details are still being held close to the chests of Chery executives, the new-look global model debuted at the Beijing Auto Show in April 2024 with a plug-in hybrid powertrain that has the potential to deliver a driving range of more than 1400km.
Until the the Tiggo 9 arrives in 2025, the Tiggo 8 Pro will remain Chery’s flagship model in Australia while the Chery Omoda 5 will continue to open proceedings for the brand ahead of the launch of the Tiggo 4 by the end of 2024.
Chery has a local dealership network of 70 touchpoints across Australia, which it says it is taking a measured approach towards, Mr Harris suggesting that it is about getting the business singing in preparation of the onslaught of new value-focused Chinese brands coming in the next 12-18 months.
