Ateco to cherry-pick Chery models
BY JOHN MELLOR | 21st Apr 2010
The strategy is to import the highest specification of the three specification levels available in Chery vehicles sold in China to create a strong value proposition while pitching prices against the lowest-price entries of competitors Down Under.
The companies also want to keep the model line-up simple for both customer understanding of the value of the brand and for simplicity in dealer operations.
The Australian line-up will start will three cars from Chery’s range of 28 different cars and commercials which are being churned out from factories soon to be capable of making one million vehicles a year – a 100 per cent increase on 2009 Chery production.
The general manager for new ventures at Ateco Automotive, Dinesh Chinnappa, told journalists at Chery headquarters at Wuhu, near Shanghai, the challenge for Chery in Australia would not be picking the most suitable cars and commercials for Australia from Chery’s smorgasbord of 28 model lines of cars, vans, people-movers, light trucks and pick-ups.
Priorities in selecting these models will be customer value and safety and, from a dealer’s point of view, making a dollar and being viable.
Ateco’s business priority will be the volume potential of each model.
Mr Chinnappa said Ateco had already rejected certain vehicles in the Chery range because they were not seen as suitable for Australia.
He said Chery “over a very short period of time will expand rapidly in Australia offering a full breadth of product including vans, pick-ups, SUVs and compact SUVs”.
“Product will not be a problem,” he said. “Selecting the right product will be the issue.” Mr Chinnappa said he expected Chery to be bigger than Great Wall in Australia because of the breadth of the Chery product range.
The first of the cars to go on sale in Australia in the third quarter will be the Chery J1 – a small five-door hatch with a 1.3-litre four-cylinder engine and five-speed manual gearbox. No automatic is available, which will limit the sales appeal of the J1.
Automatic transmissions represent about 52 per cent of the light segment, but Chery does not build automatic J1s for its home market.
Among the standard features of this Getz-like Chinese challenger are ABS, two airbags, power windows front and back, alloy wheels, central locking, adjustable steering and USB port.
The J11 SUV spec, which has been locked in during the past few days by Ateco people visiting the Wuhu head office, will have a 2.0-litre engine with both a five-speed manual and four-speed automatic transmission.
It is front-wheel drive and two-wheel drive only. It will have twin airbags, ABS, electronic brake distribution, air conditioning, remote locking and alloy wheels. Electronic stability control for the J11 is under development.
Mr Chinnappa said that initially the partners thought the J11 would target the Kia Sportage and the Hyundai Tucson in the compact SUV segment but those two models “have moved away” from where the J11 will be positioned.
“Tuscon has moved upstream and gone to the ix35 and Sportage will soon follow. So there is no mass market product that I am familiar with that occupies that space,” he said.
“It is a big segment and, of the two vehicles J1 and J11, we really see a decent volume opportunity with J11 because of the healthy size of the segment. So the J11 will be the biggest volume opportunity of the two because, of the two, it will enjoy the strongest volume proposition.” The J3, a Corolla-like Chinese car, is a recent iteration for Chery and was designed with the European market in mind, which means getting it past the Australian Design Rule (ADR) homologations process will be much faster and a simpler process for Ateco.
Mr Chinnappa said: “Chery has done all their development work and all their testing on the J3 to ECE standards so 85 per cent of the work is done to migrate from ECE to ADR.” A manual J3 will be launched into the small-car segment three to four months after the J1 and J11.
The J3 initially will have a five-speed manual, although continuously variable automatic transmission developed in-house by Chery will appear about two to three months into the program. The engine will be Chery’s 1.6 litre petrol unit.
Chery started life as an engine manufacturer rather than a car-maker, and all engines are built to Chery designs and made in Wuhu.
The J3 will come with four airbags as standard – two front and two side bags in the seats (not curtain). Electronic stability control will be standard from day one.
It will be fully specced with power windows, power mirrors, remote locking, ABS and alloy wheels. Final spec will be decided closer to launch.
Mr Chinnappa reiterated that, as far as possible, would be no cross-over with Great Wall dealers having the Chery franchise as well.
“There will be 40-50 dealers from launch with a metropolitan bias because the Chery models are passenger vehicles.” Great Wall has a rural bias because of the focus on the pick-up.
“The going-in position is that if you are a Great Wall dealer you cannot have Chery on the same site. In some small rural markets that will be impossible because there will simply not be enough dealers to represent the franchises,” he said.
“We are doing that for all the obvious reasons: maximize penetration, minimalise cannibalisation and create the greatest degree of separation within the brand,” Mr Chinnappa said.
Much of the selection process for Chery dealers was done at the time Ateco was selecting dealers for Great Wall.
Equally, Ateco is running two separate distribution and marketing management teams and organisations for Chery and Great Wall.
