Chery Raids 1.73 Million to Start Microcar Project in Henan

Continuing launch of stimulus policies such as "cars going to the countryside", this year's domestic mini-vehicle market conservative estimates will also achieve nearly 50% growth. The rapid expansion of mini-vehicle market cakes, which benefit the most, is undoubtedly the mainstream manufacturers such as SAIC-GM-Wuling and Changan Automobile. The huge potential of the market space has also attracted many manufacturers such as Dongfeng Junan, Zhejiang Geao, and young cars and other manufacturers to “test water” the domestic mini-vehicle market. Chery Automobile is undoubtedly a radical "later".

Micro-vehicle project surfaced

Last Friday, Chery officials confirmed to the newspaper that Chery will select Kaifeng, Henan Province, as its strategic location to build a base with an annual output of 200,000 mini-vehicles and 80,000 light trucks and agricultural machinery. The base will only invest in fixed assets. It will reach 1.773 billion yuan.

Henan Province highly welcomed Chery’s establishment of factories in Kaifeng. It is reported that Henan Provincial Party Committee Secretary Xu Guangchun said that although the development of the Henan automobile industry is not considered advanced from the whole country, Henan has made the automobile as a key development industry in the preparation of the province's industrial development plan. Moreover, Henan has three major advantages in the development of the automobile industry. First, it has advantages in raw materials. Henan is an important energy raw material base and equipment manufacturing base in the country, and its energy and raw material production and processing capabilities are relatively strong. The second is the advantage of location. Henan is located in the central part of the city, with convenient transportation and advanced logistics. The third is the market advantage. Henan has a population of nearly 100 million. The Central Plains people who have gradually become rich have greatly increased their demand for high-end consumer goods such as automobiles. The market has great potential.

Difficult microcar "cake"

From this year, Chery officially launched a multi-brand strategy. At the beginning of the year, Kairui, Ruiqi and Weilin were successively released. Together with Chery, Chery’s parent brands had as many as four parent brands, of which, Kairui specializes in microcars, Ruiqi mainly locates in high-end products, and Weilin mainly locates in mid-to-high-end commercial departments. The original Chery brand is mainly targeted at the mid-level Volkswagen car market. Currently, Chery has an annual production capacity of 650,000 vehicles, 650,000 engines, and 400,000 sets of transmissions. One vehicle plant, two plants, three plants, and four plants have been put into production in Wuhu.

According to Chery's plan, Wuhu No. 1 Plant, No. 2 Plant and No. 3 Plant are mainly used to produce products under the Chery, Realtek and Weilin brands. At present, although Kairui Microcars are also produced at the Wuhu No. 4 Plant, due to the succession of elegant, excellent-wing, ViewSonic, and excellent-quality, there are dozens of models that are stocked by the Cayenne Mini Vehicle, so it is imperative to expand the production capacity of mini-vehicles.

Chery has locked 200,000 mini-vehicles into Kaifeng, which is obviously closely related to the current sales of Chery products in various regional markets across the country. It is understood that since 2004, Chery Automobile has not only ranked first in the automotive market in Henan for five consecutive years, but also in its overall national sales, Henan's share is second only to Shandong in the country. This year, Chery’s sales in Henan increased by more than 50% year-on-year, accounting for more than 6% of national sales. And if you look at the region, Henan accounted for 54% of the sales of Chery's Central China Region.

Statistics from the China Association of Automobile Manufacturers show that in the first half of this year, the sales volume of mini-vehicles was as high as 935,500 vehicles, an increase of 54.46% year-on-year, far higher than the growth rate of 25.62% in the sales of passenger cars during the same period, becoming the rapid increase in sales of passenger vehicles throughout the country in the first half of the year. The biggest "hero."

Chery officials said, "Because of the implementation of measures such as automobile transportation to the countryside and the fact that the rural economy has indeed improved significantly in recent years, the micro-vehicle market has a very promising outlook, and the micro-vehicle market is basically an independent brand. Chery owns the leading brand, of course, Chery also want to get a corresponding market position in this segment of the market!” And at the beginning of the launch of the Swiss brand at the beginning of this year, Chery Lu Jianhui, deputy general manager of micro-car business, said in an interview with this newspaper, “ Kai Rui is not afraid of Wuling and Changan, which has formed a monopoly position in the mini-vehicle market, and Chery's goal is to make the Kai Rui brand China's first micro-car brand!"

Join Shaolin to bypass the policy

However, Chery's establishment of Kaifeng was obviously constrained by the national industrial policy.

The relevant contents of the automobile industry readjustment and revitalization plan announced at the beginning of the year show that if a car manufacturer builds new plants or builds factories in different places, it must be based on mergers with other manufacturers.

Chery Kaifeng’s construction of a mini-car base belongs to the “off-site construction” and is not allowed by the policy. On Friday, Chery always expressed “inconvenience to disclose” on the form of Kaifeng’s construction. According to sources, Chery built a mini-vehicle manufacturer in Kaifeng, which was actually a merger and reorganization. However, as for which merger and reorganization, it is still a suspense.

The reporter learned from Henan Province last week that currently, Henan's auto vehicle manufacturers mainly include Yutong Bus, Zhengzhou Nissan, Shaolin Coaches and Zhengzhou Light Automobile, among which Zhengzhou Light Automobile has cooperated with seahorses. Last Thursday, sources revealed that Chery's relocation of the factory in Kaifeng, Henan Province, is likely to be Henan Shaolin Automobile Co., Ltd., located in Xiangyang City, Henan Province. It is understood that Shaolin Motors is a complete vehicle production enterprise in the catalogue of domestic automotive product announcements. It is 15 kilometers away from Zhengzhou. The company's products are now forming large, medium and light passenger vehicles and other products.

Relevant sources said that "Chery Microcar has formed dozens of product reserves, and there are no obstacles in terms of technology and production. Cooperation with Shaolin Motor Co., Ltd. is mainly focused on the latter's production base and local market space in Henan!" Our reporter Zhu Zhongqi

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Experts assert that China's mini-vehicle market will not always "run wild"

Zhang Baolin, general manager of Changan Automobile: optimistic about the micro-car market in the next 5-10 years, but the market growth will tend to be stable, it is difficult to appear in the first half of this increase of more than 50%.

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