Chery targets volume segments

CHERY, China’s biggest domestic car brand and its most successful exporter, will target the three largest Australian volume market segments when sales of its cars commence Down Under later this year.

Together with importer Ateco Automotive, Chery has chosen the light car segment and the compact SUV segment for initial attention from the third quarter of this year, with an entrant being rolled out into the booming small car segment in the final quarter.

These three segments are the largest in the local car market.

So far this year the small car segment has attracted buyers at an annualised rate of about 236,000 units, the light segment is running at a rate of about 136,000 sales a year, and the compact SUV segment has attracted sales at an annualised rate of about 104,000 units.

The first Chery entrants will be the Chery J1 and the Chery J11 (known as the A1 and A11/Tiggo in China) to be launched in the third quarter. These are current-generation cars that have been in production for some time in China.

The J1 is a small 1.3-litre hatchback that will go up against light segment leaders Toyota Yaris and Hyundai Getz – which have had annualised sales rates of more than 20,000 units each this year – as well as 17 others.

The J11 is a 2.0-litre compact SUV (offered with manual or automatic transmission) that will take on segment leaders Subaru Forester and Toyota RAV4 – both of which look set to sell more than 12,000 units this year – although the true rivals are more likely to be the Kia Sportage and Hyundai’s ix35.

From top: Chery A1 (J1), Chery A3 (J3), Chery Tiggo (J11).

The J3, a newer-generation vehicle than the J1 and J11, will be launched two to three months later into the small market. It is the size of a Toyota Corolla and will most likely have a 1.6-litre engine although the exact mix of engines and transmissions is not yet finalised.

Ateco managing director Ric Hull told GoAuto: “We have not committed to engine and transmission options for the J3 yet.” Mr Hull said Ateco and its Chery dealer network in Australia had high hopes for the J3. “It is one of their more recent vehicles and is really quite attractive,” he said.

While prices have not yet been decided, Ateco is intending to use the same pricing approach against the competition as the group used with Great Wall Motors – sharp prices as well as generous features and specifications.

Mr Hull said: “Price discussions are continuing with Chery. There are still all sorts of variables in there, such as currency.” He said although Ateco bought in US dollars, the expected revaluation by China might not be large and that the Australian dollar was strong against the US dollar.

Mr Hull said Ateco was planning for about 7000 Chery sales in the first full year, with infrastructure and systems planning built around coping with 50,000 sales in five years.

But he conceded that number was an internal management benchmark and that actual sales were unlikely to be that high within five years.

Even though the Chery starting point will be built on passenger vehicles, he said pick-ups were also on the agenda for Chery.

“Chery has utes in China and they are in the pipeline for Australia, but the issue is getting them into right-hand drive to Australian standards,” he said.

ADRs slow Chery’s arrival THE slow entry to Chery into the Australian market, now nine months behind initial expectations, was largely be a factor of Chery engineers being weighed down by demands at home and delays in getting Australian Design Rule compliance data from China.

But, Ric Hull, the managing director of Ateco Automotive, the importer of the Chery brand, says the arrival of the vital data is “imminent”.

“We have almost all the documentation. We are just cleaning up some of the little bits and pieces.

“One of the reasons we have been delayed in getting Chery into our market has been the ability of Chery to cope with the expansion they are enjoying domestically – especially in engineering resources.

“We also suffered a little bit by being the first mature western market of our level of sophistication that they have tackled.

“With Hyundai, Daewoo and Kia, they had been to Western Europe and North America before coming to Australia and they were more familiar with meeting ECE-type regulations.

“So it has been a journey for Chery to understand the disciplines of meeting things like ADRs. We have so many unique requirements that I am certain that have been a factor in the slow start we have had with Chery. The paperwork is very demanding as it should be.”