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Chery aims to grow overseas but not through acquisitions
2017/8/25
source: Reuters
Chery Automobile Co. wants to boost overseas sales to a third of total global volume -- up from 25 percent currently -- but plans to do so organically and not through acquisitions, company CEO Chen Anning said.
 
 
Chery would consider a joint venture but is not actively looking for mergers in its bid to crack markets such as Western Europe, Chen told Reuters in an interview on Wednesday.

"Today our rough ratio (for overseas sales as a percentage of total sales) is one-quarter and I'd like to increase that to one-third," he said.

Chen declined to offer a timetable for Chery¡¯s overseas expansion.

"Today we are not active in the merger and acquisitions market -- in the big deals, so to speak,¡± he said. ¡°We are open for cooperation as always, but we have consistently grown our markets organically by our own capability and sometimes with cooperation.¡±

"Down the road, if there's a feasible opportunity that exists, we may look into it, but that's not the fundamental motivation of us going to the international market," Chen added.

Chery's global ambitions come as local rival Great Wall Motor said it was interested in acquiring all or part of Fiat Chrysler Automobiles, owner of the Jeep and Ram vehicle brands. Great Wall later cooled talk of a deal.

China's Geely bought Swedish automaker Volvo Car Corp. in 2010 and is reaping the gains of that deal. In the first half of 2017, Geely Holdings enjoy its fastest earnings growth in eight years.

Chen said that Chery's aim was to enter "more stable, more important" markets such as Western Europe where he said customers were open to new brands and demand was high for clean energy products.

At next month's Frankfurt auto show, Chery plans to unveil vehicles for a new brand that will target European markets. The models will be higher priced than Chery's current product portfolio, but will remain affordable and contain connectivity features, Chen said.

Chery sells electric and gasoline vehicles and also operates joint ventures with Jaguar Land Rover and Kenon Holdings.

It has dealerships in countries such as Turkey, Morocco, Brazil and Argentina, and also operates 14 assembly plants in overseas markets such as Brazil, Iran and Venezuela.

Cautious on U.S.
Chen said that the company was cautious about North America, citing the country¡¯s uncertain politics.

"We will have to wait a few years to see stabilization in the economic policies and political strategies,¡± Chen said. ¡°And we may decide to start in North America but today is too early and we're cautious."

Yale Zhang, head of the Shanghai-based consultancy Automotive Foresight, said organic growth is less risky than acquisitions. But that strategy is slower and could make it harder for Chery to enter developed markets, he cautioned.

With respect to Chery's stance on mergers and acquisitions, "risk is possibly one consideration for them but they are a midsized state-owned enterprise, so I feel that they may not have sufficient funds," he said.