China’s Chery JV takes aim at Europe’s high-end car market

Wednesday, 30 November 2011 01:23 - - {{hitsCtrl.values.hits}}

SHANGHAI (Reuters): Chery Quantum Auto Co., a joint venture between Chery Automobile and investment firm Israel Corp, on Monday unveiled the design of its first car, which it hopes will allow it to reverse a trend and export made-in-China cars to Western Europe.

The 50-50 joint venture between Israel Corp and Chery Automobile was set up in 2007. The new brand, called Qoros, is targeting sales in 2013.

Guo Qian, Chairman and CEO of Chery Quantum Auto Co, speaks during the presentation of the Qoros car in Shanghai November 28, 2011. Chery Quantum Auto Co., a joint venture between Chery Automobile and investment firm Israel Corp, on Monday unveiled the design of its first car, which it hopes will allow it to reverse a trend and export made-in-China cars to Western Europe. The 50-50 joint venture between Israel Corp and Chery Automobile was set up in 2007. The new brand, called Qoros, is targeting sales in 2013 – Reuters

Chinese carmakers have been shaking up the global auto scene with their deep pockets, with Geely buying Swedish brand Volvo Car, but so far they have failed to break into the Western market with their local brands.

China has been a key market for European carmakers for some time, but Chinese carmakers have not so far managed to sell their cars in Europe.

State-owned Chery, China’s biggest auto exporter, has made inroads into South America, but failed to make its mark in U.S. or Western European markets with its own branded cars.

Chery faces huge challenges – not only does Qoros need to set up a new factory, it also needs to build up a new brand from scratch, and overcome the image of made-in-China.

“Qoros is committed to achieving international recognition, bringing enjoyment to drivers through quality products, elegant design solutions and personalized services,” Chairman and Chief Executive Officer Guo Qian said.

In its favour, Qoros has a top team of experienced auto experts and executives from the West.

The biggest star, several analysts have pointed out, is former Mini chief designer Gert Hildebrand. Qoros’s vice chairman is Volker Steinwascher, former executive vice president of Volkswagen of America and top manager at Volkswagen AG . “Chery-Quantum company represents an intriguing experiment,” said Michael Dunne, auto consultant and author of “American Wheels, Chinese Roads”. “Clearly, the innate capabilities are there. The test is whether this new firm manages to execute the plan. Will they be able, for example, to create culture that insists on consistent, world-class quality while still keeping costs in line?”

Automotive industry veteran and Vice Chairman Volker Steinwascher said: “As a new company, Qoros has been able to attract a wealth of international talent who are leveraging their global auto industry experience to create an entirely new brand that offers an original product to consumers.”

Klaus Paur, Greater China Managing Director for Synovate Motoresearch, who has done some market research for Chery Quamtum, said Qoros has a chance of following the success of Korean carmakers Hyundai Motor Co and Kia Motors Co and Eastern European car brands including Skoda owned by Volkswagen and Renault’s Dacia in Western Europe.

“All these brands have succeeded in offering value for money and this is why people are buying this.”

“Nowadays ‘Made in China’ has a negative connotation, a quality connotation, but overall speaking made in China does not have to necessarily be bad as long as the quality is on a certain level that the consumers are expecting,” said Paur.