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Chery made a breathtaking leap after five years of 100 billion gambling

Publish Date: 2022.09.29

On September 16, Chery officially launched the "Yaoguang 2025" strategy.

"Yaoguang 2025" covers the current hot track of new energy vehicles, including Mars architecture, Kunpeng power, Xiongshi technology and Galaxy ecology.

Chery will take this as the basis to build 13 core technologies including platform architecture, three electrics, intelligent driving, smart cloud platform and ecological partners.

In order to achieve the goal, Chery plans to invest more than 100 billion in R&D in the next five years, cultivate more than 20000 R&D talents, and establish 300 Yaoguang laboratories to support cross scientific and cross-border technology research.

At the event, Yin Tongyue, Chairman of Chery, said that Chery Holding is expected to complete its IPO before 2025.

As the only unlisted player in the domestic traditional vehicle manufacturing group, Chery is really anxious this time because every transition is not satisfactory.

Independent Brother

Looking at the domestic independent automobile market in the past decade, Great Wall, Chang'an, Geely, BYD and other independent brands are famous. But at the early stage of the development of its own brand, Chery also had a good view of many small mountains.

From 2003 to 2010, Chery has won the title of No. 1 in sales volume of independent car enterprises for eight consecutive years.

Chery, founded in 1997, grew out of a village factory in Wuhu. It built cars in several dilapidated houses.

In 1999, Chery's first car officially went offline. Due to the lack of car manufacturing qualification, Chery had to sell 20% of its shares and attach its brand to SAIC.

In 2001, SAIC Chery was born. With its low price, Fengyun quickly seizes the market. In 2003, Chery left SAIC and started its own road of independent car building.

In the same year, the first generation engine of Chery ACTECO series was officially launched, and the first Chery engine with completely independent intellectual property rights was born, which also established the image of Chery as a "science man" independently developed.

At the same time, Chery has launched three cars, namely Chery QQ, Oriental Son and Qiyun.

As an early "National Magic Car", Chery QQ has become the third car company with an annual sales volume of more than 300000 cars after Volkswagen and General Motors. In 2007, Chery even surpassed a series of auto brands such as Volkswagen and General Motors and won the sales champion in the domestic auto market.

In 2009, Chery began to take the multi brand route, and launched sub brands such as Kairui, Ruiqi, Weilin, etc. The product line covers from low-end to high-end, from van to SUV, etc.

With limited resources and energy, too many brands have dispersed Chery's limited resources. Chery's brand failed to find an accurate positioning, which, to a certain extent, caused confusion of its own models.

Having more children is easy to fight, which makes Chery fall into self competition. The positioning of different brands of Chery's products is not well separated, so it has to fight internally.

Chery's sales also began to decline. The sales volume of Chery in 2020 will be 730000, which is almost the same as 680000 ten years ago.

5年千亿豪赌,奇瑞惊险一跃

With the upgrading of consumption, the market share of A00 class fuel vehicles has been shrinking, and the QQ of the fuel version has become a masterpiece.

After Chery QQ, it is hard for Chery to have a representative work with market dominance, and neither Ruihu nor Eryzer can show the brilliance of QQ.

Compared with its rivals, Great Wall's Haval H6, Geely Emgrand and other models have become popular models. As a result, Chery has gradually "lost".

"Chery just squatted down and tied a shoelace on the way to high-speed forward." Yin Tongyue said when Chery's sales volume was surpassed by Geely, Great Wall and other independent car companies.

In 2021, Chery's sales volume will increase significantly to 960000 vehicles. From June to August 2022, Chery Group's monthly sales exceeded 100000 vehicles for three consecutive months. In August this year, Chery sold 142000 cars, up 111% year on year.

In the new energy sector, Chery sold 28000 new energy vehicles in August 2022, with a cumulative sales volume of 166000 vehicles from January to August, up 200% year on year. Among them, the new energy passenger vehicles represented by Chery Ants and QQ Ice Cream achieved a cumulative sales of 158000 vehicles in the year, an increase of 238% year on year.

In 2022, Chery's sales will soar. It seems that Chery has "tied its shoelaces" and is ready to regain its former glory.

"Tie your shoelaces"

Although Chery's sales volume soared, from the perspective of sales volume structure, its weakness is also obvious.

As far as the performance of new energy vehicles is concerned, the sales of Chery's new energy vehicles are supported by QQ ice-cream, which sells for 39900 to 57500 yuan, and the small ant, which sells for 73900 to 94000 yuan. Some of them are congenitally deficient and cannot bring Chery enough revenue.

Chery QQ was once Chery's business card. Today, many years later, Chery is not easy to dominate the new energy mini car market with QQ ice cream.

What's more, there are also popular models such as Hongguang MINI EV in this market segment, and Chery's sales of new energy minicars are insufficient.

In order to further develop the new energy market, Chery will build three platforms in the vehicle platform planning: pure level platform E0X, pure electric platform C0X for light commercial vehicles, and hybrid platform T2X.

After the vehicle platform planning is finalized, Chery plans to launch 33 new energy products in the next five years, including up to 19 pure electric products.

According to Chery's plan, 1 million electric vehicles (including hybrid vehicles) will be sold in 2023.

On the other hand, Chery's performance in the high-end market in the past was poor.

Chery's attempt at high-end has never stopped. In 2009, in order to achieve brand upgrading, Chery opened up the high-end brand of Ruiqi, and then spent a lot of money to build the brand of Guanzhi, but two high-end attempts ended in failure.

In 2007, Qoros, jointly established by Chery and Israel Quantum Fund, had accumulated a loss of 6.6 billion yuan from 2014 to 2016. In 2017, Baoneng Group acquired 51% of its shares at a price of 6.63 billion yuan, and the Qoros brand has changed ownership since then.

Ricci launched in 2009 was discontinued in just three years because of its weak sales.

Established in 2018, Xingtu Automobile is Chery's third attempt to hit the high-end market.

Yin Tongyue, chairman of Chery Automobile, once said: "Jetway is Chery's Skoda, Chery is the public, and Xingtu is Chery's Audi."

According to the data released by the Passenger Transport Association, the sales volume of Xingtu in August was 5543, with a year-on-year growth of 214.4%; The sales volume from January to August was 29000, up 57.8% year on year.

Looking at the data alone, the sales volume of 5543 vehicles is not in the forefront of the current Chinese market, but has shown a certain growth trend.

The first high-end pure electric medium-sized car E03 of Xingtu will be launched in the fourth quarter of 2023. The new car will be built based on BEV platform and equipped with Huawei intelligent cockpit.

At the theme activity of "Yao Guang 2025 Chery Technology DAY", Chery also announced the brand plan of intelligent electric vehicles jointly developed by Huawei Smart Select and Chery. The brand will be built based on the platform code named EOX. At present, five high-end intelligent electric vehicles have been planned.

The two parties will launch two models in 2023, and the price of one model is expected to exceed 300000 yuan. This will be another attempt of Chery to the high-end market.

In the domestic market, Chery is under pressure, but the good thing is that Chery's overseas business is strong.

In 2021, Chery Automobile's export sales reached 269000 vehicles, a year-on-year increase of 136.3%, and it has become China's highest export car company for 19 consecutive years.

5年千亿豪赌,奇瑞惊险一跃

Up to now, Chery has sold auto products in more than 80 countries and regions around the world. It has established six R&D bases, 10 overseas factories, more than 1500 overseas dealers and service outlets around the world, with a total overseas production capacity of 200000 units/year.

Both domestic and foreign markets make a two-way effort, giving Chery more possibilities. When Geely, Great Wall and other auto companies have launched overseas strategies, Chery has taken the lead. However, the development of overseas markets cannot be achieved overnight, and the domestic market is still the top priority.

In terms of consumer recognition, Chery has not achieved much breakthrough compared with the trough in the past 10 years, which is one of the incentives for Chery to release the "Yaoguang 2025" strategy.

In the domestic market, Chery has many competitors, such as SAIC, Geely, Great Wall and other established giants, who have made certain achievements on the road of new energy transformation. Chery now wants to climb the peak again. Compared with the fierce market competition 20 years ago, it is even more difficult. Both courage and strength are indispensable.

Strategic "B" side

Chery's progress in intelligence and electrification is not smooth.

When leading players in the industry show their muscles in smart cockpit, autopilot, power battery and other core technology sectors, Chery is often "silent".

This five-year R&D investment plan of 100 billion yuan is also a necessary cost for Chery to make up for its weaknesses.

Chery is not an exception.

The major automobile enterprises keep adding, trying to grasp the initiative of the intelligent electric era and seize the first opportunity of the next automobile consumption outbreak through large R&D investment.

On June 28, 2021, Great Wall Motors released its 2025 strategy, aiming to achieve an annual sales of 4 million vehicles by 2025, 80% of which will be new energy vehicles, and the operating revenue will exceed 600 billion yuan.

In order to achieve this goal, Great Wall Motors will invest 100 billion yuan in R&D in the next five years, focusing on new energy and intelligent fields, generating pure electric power, hydrogen energy, hybrid power and other fields, as well as in the key core technologies of the third generation semiconductor, such as low-power and powerful chips, silicon carbide, and information fusion, artificial intelligence and other industries.

At the end of October last year, Geely Automobile's "Intelligent Geely 2025" strategy proposed to commercialize L4 level automatic driving in 2025 and fully master L5 level automatic driving. Its total sales target in 2025 is 3.65 million vehicles, and that of Geekrypton and Geely Automobile Group is 650000 and 3 million respectively. The sales target of new energy vehicles is 900000, accounting for 30%.

To this end, Geely expects to invest 150 billion yuan in R&D within five years, with five R&D centers, five modeling centers, and ten world-class key laboratories.

For China's automobile industry, 2025 is undoubtedly a key year.

As the closing year of the "Fourteenth Five Year Plan" strategy, 2025 is a very important milestone in the development schedule of new energy and intelligent connected vehicles.

Chery's money burning road has started.

On September 26, Horizon announced that it had obtained Chery's investment, which would be mainly used for the R&D iteration and mass production application of car smart chips.

At the same time, the officials of both sides announced that, on the basis of the current cooperation in the field of vehicle intelligent interaction, they formally started new cooperation in the field of high-level assisted driving.

Since the cooperation between the two sides was reached in 2021, Chery has been carrying out electrification transformation, and several models of Chery are also gradually on the horizon chip.

This year's Chery Ruihu 8 PRO and other new models have started to carry the March 3 chip. Horizon will also be the core service provider of the E0X platform in Chery's strategy, and cooperate with Chery in many aspects of "chip+algorithm+tool chain".

The industrial pattern is constantly changing. Every car company is at the key node of the transition between the old and the new track, and all the heroes are competing for 2025. It is not easy for Chery to withstand the pressure.

It is inevitable that there is a gap between the goal and the reality. These R&D plans may not be implemented as scheduled, but the huge amount of funds required for R&D is inevitable.

The unlisted Chery has certain disadvantages in financing.

In 2021, Chery Group will achieve an annual operating revenue of 105.6 billion yuan, with a year-on-year growth of 1.2%, which is the fourth consecutive year that Chery Group's revenue exceeds 100 billion yuan.

According to the plan, Chery will invest an average of 20 billion yuan in R&D every year in the next five years. With Chery's own hematopoietic capacity, the pressure is unprecedented. If Chery can successfully complete its IPO and listing before 2025, it will greatly ease its own financial pressure.

Years of technical accumulation, as well as many attempts to gain rich experience, are Chery's biggest endorsement. Chery has also shown enough courage, which is imperative under the situation.

epilogue

At the event of "Yaoguang 2025 Chery Technology Day", Yin Tongyue said that the "Yaoguang 2025" strategy is the "Charge" and "Declaration" for Chery to accelerate its transformation into a global technology company.

The latter waves follow the former waves. Although Chery met with "Waterloo", it entered the center of the competition vortex with a new attitude and never failed to become the leading role of the times again.

The main road is like a whetstone. Chery has gone through the hard years of trying to build a car, to the wild growth of rampage, and to seek upgrading, finally returning to the rational and starting again.

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