Chery cracks the top 3 in auto sales

BEIJING, March. 4 -- Chery Automobile Corp moved up three notches in China's car sales ranking last month - the first time a domestic automaker has unseated a foreign joint venture to break into the top three.

Chery sold 21,000 vehicles in February, a 130-percent jump from the same period a year ago, following Shanghai Volkswagen with 23,600 units and Shanghai General Motors Corp with 22,800.

In January, the top three sales leaders were Shanghai GM, Shanghai VW and First Automobile Works' joint venture with VW.

Chery's sales boom - prompted by its highly popular QQ and three new models that hit the streets in January - moved the company up from No. 6 in January, when it sold 17,000 vehicles.

"The central government's efforts to encourage the sale of small cars to help energy conservation was important for Chery," said Sun Muzi, an auto analyst at Sinotrust Marketing Research and Consulting Ltd.

"This private company is good at offering inexpensive self-designed cars at a very attractive price to China's cost-sensitive consumers," he said.

In January, China's central authorities ordered local governments to lift roadway restrictions on small cars by the end of March in an effort to ease tight energy supplies, protect the environment and nurture China's independent auto brands. In the past, cars with small engines were banned from some highways.

The new policy primarily benefited domestic manufacturers of economy cars, including Geely Group and Changan Automobile Co.

"But Chery also needs to improve in developing models to extend its presence into the middle and high-end markets, not only to be a successful car producer but also for profitability," Sun told Shanghai Daily.

Chery's most popular small car, the QQ, priced around 40,000 yuan (US$4,950), generates only a 500 yuan profit, while cars in the mid and upper ranges can be marked up 20,000 yuan or more.

Last year, the company's profit fell to 95 million yuan from 188 million yuan in 2004 despite a 118 percent sales surge to 185,000 units.

In comparison, sales in China's auto market grew 26 percent overall last year.

Chery aims at West from Russia

Chinese automaker Chery is still settling details to have its cars made for the Russian market at a Baltic factory. But it already is thinking about shipping its models to western Europe from there.

Contract manufacturing of Chery models from kits is set to start in April at Avtotor’s plant in Kaliningrad.

Chery also expects to produce up to 80,000 vehicles a year for the Russian market starting in mid-2007 when a new assembly line opens at the plant, Zhao Yi, head of Chery’s eastern Europe department, told Automotive News Europe.

“We would eventually like to export to western Europe from Russia – it is very convenient from a logistics standpoint,” said Yi from his office in China. He added: “We have a lot of preparation to do before our cars are ready for the market in western Europe.”

Yi declined to specify which models Chery intends to build in Russia. The contract work will be done at Avtotor’s plant in Kaliningrad, an enclave portion of Russia between Poland and Lithuania.



Booming business
Avtotor has assembled kits for several foreign clients, including General Motors, BMW and Kia, gradually expanding to a current estimated 20,000-unit capacity. It built 16,303 units last year, according to data from market researcher ASM Holding.

Owned by former Russian Deputy Prime Minister Vladimir Scherbakov, Avtotor has ambitions for rapid growth.

Avtotor declined to comment.
Avtotor plans to triple total contract-assembly output to 45,000 units this year for all clients, say Russian press reports citing Avtotor Director Valerie Sokolov.
General Motors will add Korean-sourced kits and boost volume at Avtotor this year. “If you assume that we will be adding to their volume upwards of 15,000 units, you would not be far off,” said a well-placed GM source.
Avtotor also is building a new assembly line with 60,000-unit capacity to open in the first quarter of 2007.
Avtotor plans to start assembly of Admiral pickups for Chinese automaker Zhongxing this year.
Avtotor assembled a trial batch of Nanjing Yuejin pickups last year, although it does not yet have a contract to produce the trucks for sales in Russia.

Chery to set up assembly factory in Russia

HEFEI, Feb. 9 (Xinhuanet) -- Having established a production base in Iran, Chinese automobile manufacturer Chery is considering to build an assembly plant in Russia, a manager of the company said.

The manager, who declined to give his name, told Xinhua that Chery has reached an agreement with Avtotor of Russia to assemble auto parts there and cooperation details are in discussion.

According to Russia media reports, Chery will use the standby production capability of Avtotor to assemble automobiles. Chery and Avtotor are also considering to set up a new plant, with a total investment of 200 million U.S. dollars, if auto sales are successful.

The manager disclosed that Chery has been seeking overseas cooperation partners, and plans to build production bases in Russia, Romania, Poland and other countries in East Europe.

He said Chery has already singed agreements with importers in the United States and Europe, and plans to sell automobiles to U.S. and European markets.

Chery has sold automobiles to more than 30 countries, with 18,000 units exported in 2005, which accounted for 10 percent of its total sales