Market Insight: Chery ‘could have done better’
BY PETER BARNWELL | 2nd Apr 2024
AT THE recent media preview to Chery’s new Omoda 5 GT and Omoda E5 variants, the Chinese brand’s Australian managing director pulled no punches when asked about his satisfaction with the circa 7000 units sold here since relaunching in late March 2023.
After a pause for thought, Chery Australia MD Lucas Harris said: “Could have done better.”
It may have been a stock answer from any car company boss but Chery has a stated aim of reaching Australia’s top five best-selling car brands by 2027.
A string of new models to help achieve that target includes the imminent Tiggo 8 Pro Max seven-seat SUV, along with more powerful GT variants of the Omoda 5 small SUV that just went on sale and battery electric Omoda E5 derivatives slated to land mid-year alongside the introduction of Chery's upmarket Jaecoo brand with the J7 medium SUV.
These models join the regular Omoda 5 with which Chery re-entered the Australian market a year ago and the Tiggo 7 Pro medium SUV that arrived in December.
“We had only one model (Omoda 5) in two grades so it was going to be challenging in the first 12 months as we were also in the process of establishing a dealer network that now numbers around 70, better spare parts channels and setting up sponsorships to align more with the community,” explained Mr Harris.
“We have a presence in all major cities but won’t stop there as enquiries from prospective ‘partners’ (dealers) is strong, we are spoilt for choice.
“We are now working towards being able to supply 98 per cent parts coverage within three days; currently that is running at 90 per cent and have $15 million in local parts inventory available.”
On the promotional side, Chery Australia has signed a sponsorship deal with the St Kilda AFL club and is looking to become more involved in the community as opportunities arise including sponsorship of the Gold Coast Marathon and promoting mental health programs nationally.
Chery’s sales tally was achieved in a competitive environment with some players resorting to discounting and drive-away pricing whie others – including Chery – held on to a manufacturer-recommended retail pricing policy after first announcing it would run with drive-away pricing.
The Chinese manufacturer relaunched in March 2023 with a starting point of $29,900 excluding on-road costs for the base model Omoda 5 BX, rising to Omoda 5 EX at $32,900 + ORC.
It has since moved to drive-away pricing from $34,490 and $36,990 respectively.
Though Mr Harris may not have been pleased with the annualised Chery sales rate with just the Omoda 5 available, the model was up against serious competition from the likes of the Haval Jolion, Kia Seltos, Mazda CX-30, MG ZS, Mitsubishi ASX, Mitsubishi Eclipse Cross, Subaru Crosstrek, Nissan Qashqai, Suzuki Vitara, and Toyota’s C-HR and Corolla Cross duo.
Sales targets were not forthcoming at the recent media briefing but Mr Harris pointed to the brand’s busy new model launch year and promotional commitments with St Kilda football club and others.
“We expect to continue our positive sales momentum with the launch of these new models and as an incentive, we are currently running a $2000 factory bonus across selected Omoda 5 and Tiggo 7 models,” he told GoAuto.
GoAuto broached the subject of Chery Australia’s reboot Down Under being adversely affected by reputational damage under what some refer to as “gung-ho” distributorship with a private importer from 2011-15.
It is thought Chery failed on its first attempt at the Australian market due to a number of factors including an inability to deal with strict regulation, fierce competition, inadequate established sales channels and mature customer expectations.
A scandal over vehicles containing asbestos in some components also clouded the brand’s reputation early on, as did some poor results in ANCAP crash testing.
But Mr Harris told GoAuto he thought the brand had moved on since then.
“We have a large range of models available including more from Chery and the premium Jaecoo brand coming through soon that will give us the scale to become a force to be reckoned with in Australia,” he said.
“Our focus is on EVs going forward with an emphasis on lowering our carbon footprint in ways such as replacing steel frames with aluminium that is more recyclable.
“R&D is also forming an important part of our efforts as Chery expand into different markets and to that end we have established a localisation program with engineers on the ground in Australia tailoring our cars for local conditions,” Mr Harris explained.
“Our local validation program is rigorous, covering everything from dynamics to dust sealing to ADAS calibration,” he said.
“It’s all part of garnering ‘brand trust’ so we will continue pushing background support for Chery in Australia. That means support for customers during ownership, helping our dealer partners solve problems quickly, ensuring any warranty decisions are made locally and of course facilitating parts supply and speeding up back orders.
“As a fully owned sales subsidiary, Chery Australia is in a strong position to fulfil these aims on the way to selling lots of cars ,” added Mr Harris.