Chery to fade away

Chinese brand Chery will run out of existing stock in Australia this year and with no new product in the pipeline that's likely to be the end of the brand that once offered the nation's cheapest new car, the $9990 Chery J1.

Unlike the formal, high-profile withdrawal from the Australian market of German brand Opel in 2013, it appears that Chery will be left to whither on the vine.

According to the spokesman for local Chery importer Ateco Automotive, Daniel Cotterill, “Chery has rationalised its brands and models, and has begun to concentrate on its core market -- China.”

Cotterill cited a key issue Ateco faced was communication problems with Chery’s headquarters in China, saying that, “Getting clear information is not as easy as you might think”.

This lack of communication has fuelled the uncertainty about future Chery export products at a time when many Australian vehicle distributors are increasingly invited to participate in future product decisions and even global and local chassis development programs.

“We are not sure about Chery’s right-hand drive program. At the moment, there is not anything to replace [existing models] — not for us, in right-hand drive form.” Cotterill said.

Meanwhile, remaining stock of the small J3 hatch and small J11 crossover will run out within six to eight months.

“Temporarily, we might not be importing cars. We still have stock, but we’ll reach a point where we will reach a hiatus.” said Cotterill.

The J1 light-car was introduced in 2011 at $11,990 including on-road costs. By early 2013 the price had been slashed to $9990 drive-away. The J1 then was pulled from the market as it did not meet the national new-car requirement for electronic stability control from November 2013.

The J11 SUV also did not meet the ESC requirement, until an updated model arrived in 2013, joining the J3 hatch, which was equipped with ESC.

Chery sold just 592 cars last year according to VFACTS figures — a drop of 34 per cent on 2013. This compares with 1822 vehicles in 2011, its first year on the market.

The fact that Chery J1 vehicles built before November 2013 still appeared in VFACTS sales figures well into 2014 (74 units were sold to December), and that the pre-2013 J11 vehicles are still being sold alongside the updated 2013 model with healthy discounts, is a sign of just how much the brand is in decline.

Meanwhile, Cotterill says Ateco wants future Chery products — assuming it can get any — to come with modern designs, five-star safety and low prices.

High safety scores have eluded Chery so far, with the J1 given a ‘marginal’ three-star ANCAP crash test score and the latest J11 test, in 2011, yielding just two stars.

The last time Ateco spoke about future Chery product, in October 2013, it said that a replacement for J1 – thought then to be based on the Chery QQ city-car sold in China – was not under consideration due to price and safety hurdles.

Ateco says it still faces problems with price. Ateco buys from Chery in US dollars, and since 2011 when it began selling Chery in Australia the Australian dollar has fallen in value from parity with the US dollar to less than 80 cents.

“It makes it much more difficult to create a business case for any new models,” said Cotterill, who also noted that the decreased value of the Japanese Yen and the Australia-Japan free-trade agreement had allowed Japanese competitors to reduce prices.

“You get squeezed both ways - the numbers get ugly very quickly,” he said.

Similar problems face Great Wall, which is also represented by Ateco here.

Australia's pioneering Chinese brand remains a ute and SUV-only concern Down Under, where sales were down 57 per cent last year and where the launch of its first passenger car, the VX10 micro-car, has been indefinitely postponed.