Chery Auto's Success Story
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Case Code: BSTR377 Case Length: 13 Pages Period: 2003-2010 Pub Date: 2010 Teaching Note: Not Available |
Price: Rs.400 Organization: Chery Auto Industry: Automobile Countries: China Themes: Growth and Expansion Strategies |
Abstract Case Intro 1 Case Intro 2 Excerpts
"They (Chery Auto) are so head-and-shoulders above anybody who ever broke into the car business. They know what they're doing, they're sophisticated, they're intelligent, they're hard-working and ambitious - every good quality you'd ever want to have."
- Malcolm Bricklin, CEO and Founder, Visionary Vehicles LLC, in February 2006.
Introduction
On October 30, 2009, JD Power Asia Pacific released its 'Report of 2009 China Initial Quality Study' in which Chery Automobile Company Limited (Chery) topped the compact and premium car segments with its QQ3 and QQ6 models respectively. This was the first time that a Chinese brand had won the top spot in two market segments. The report showed that the initial car quality in China had improved by 14% indicating that the quality gap between the Chinese and global automobile brands were narrowing. Jin Yibo (Yibo), Spokesman of Chery, said, "This prize is another confirmation of Chery's commitment to independent innovation and the establishment of an international brand.
Sales volume will no longer be thought to be the only target. Now, Chery is in pursuit of core competitiveness and operational quality of the enterprise as a whole."
Chery had emerged as the seventh largest car producer in China within a decade of its inception in 1997. In contrast with other Chinese automotive companies, the company focused on developing its own car models and technology without collaborating with any foreign joint venture partner.
Chery started exporting its cars in 2001, becoming the first Chinese automotive company to do so. Thereafter, Chery consistently increased its domestic market share as well as exports to become the largest Chinese automobile exporter by the mid-2000s. The company launched cars which were priced lower than their comparable rival models.
That made them popular among the price-conscious Chinese customers (Refer to Exhibit I for a Note on The Chinese Automobile Industry). Since the mid-2000s, Chery had been one of the leading players in the Chinese auto industry with its record-breaking sales and export volumes. For the fiscal year 2009, Chery registered record sales of 500,000 cars.
In December 2009, Chery's total sales volumes touched a monthly record of 63,967 units. The company also held the record of being the #1 exporter of passenger cars from China for nine consecutive years till 2009.
In early 2010, Chery made plans to export its cars to highly competitive developed markets like the US and Europe which were the world's largest automobile markets...
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