By on November 19, 2012

A year ago, we wrote about China’s suicidal brand binge:

“If Chinese carmakers will do what they say – and they appear to be utterly committed – then China will soon wallow in a sea of car brands nobody has ever heard of, and nobody will ever be able to remember. Sometimes, it feels as if it is the long-term goal to give each and every of the 1.3 billion Chinese his or her individual car brand.”

A year later, the brand disease claims its first victim, and it is Chery.

A report by Reuters says that Chery barely made money during the heydays of 2009 and 2010, and “would have been deep in the red if it were not for the 633 million yuan and 1.12 billion yuan in subsidies it received in those two years.” Chery is not dead yet, but it would be without government life support.

Chery’s problem: Instead of building on the success.of its hit QQ, says Reuters, Chery “rolled out dozens of new models with little differentiation and even created two additional brands, Riich and Rely, which never caught on.” In the meantime, domestic rivals like Great Wall and Geely, which focus on fewer models and did not get infected by brand mania, thrive.

In September, the CEO of Dongfeng, one of China’s largest automakers, said that last year’s brand binge was misguided, “irrational, incompetent, and immature.” He also recommended that China’s planners should “withhold resources,” and starve the afflicted companies to death. Chery would be one of the first to be euthanized.

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23 Comments on “Chinese Brand Binge Claims First Victim...”

  • avatar

    Oooooppppssss! Is it gone? That explains why the dealership in my town (and others all over the country) closed suddenly. They left around 25-50k orphans in Brazil whose cars are now worth next to nothing. I bet the other Chinese in Brazil will suffer mightily (and their cars will also drop in value). Sad for the owners, but it’ll surely be interesting to watch.

    • 0 avatar

      There’s a dealership in Niteroi, a couple of blocks away from my place, and it’s still going strong. They even have new cars on display.

      JAC Motors and Effa also have been suffering from dealerships going out of business in Brazil. As far as I could see, the chinese attracted a number of newcomers to the business, that were not quite ready for prime time.

      Most of the newcomers are facing a hard time. The Niteroi’s dealership is owned by the Dinisa group, which has been around for over 30 years and owns several dealerships under a variety of brands such as Nissan, Renault and Chrysler.

    • 0 avatar

      Chery Automobile isn’t closing down, just their Riich and Rely brand names (which were never sold outside China). The Chery brand itself is very much intact and will probably see greater investment now that they have less other names to worry about. Their struggles in Brazil are probably related to the general mismanagement of the company, but the firm itself isn’t going anywhere for now.

  • avatar
    el scotto

    On 19 NOV BBC World News was announcing a joint venture between Chery and Jaguar Land Rover with a new plant to be built in China. I’m so confused; Reuters or BBC?

  • avatar

    Another point: Isn’t Chery the largest private car maker from China? If it can happen to them, what will be of other smaller players present in Brazil like Lifan, JAC and others?

  • avatar

    Are you sure Geely didn’t go on a new brands binge as well? Matt reported yesterday that the best selling Chinese nameplate car is Emgrand xx and looking at the wikipedia it seems to be Geely’s upscale brand created in 2009.

    • 0 avatar

      This is true, Geely is every bit as guilty. They have a total of 5, yes 5, different nameplates.

      Gleagle – entry level economy cars
      Geely – mainstream/midlevel cars
      Englon – upscale/near-luxury
      Volvo – upscale/near-luxury
      Emgrand – luxury

      They also own a plurality stake in Manganese Bronze Holdings, the parent company of London Taxi (which would be the 6th brand in the extended group), currently operating under bankruptcy administration.

      Geely and SAIC are the only two Chinese companies to have acquired foreign automakers so far, with mixed success.

  • avatar
    Dr. Kenneth Noisewater

    I’m Riich beyatch!!

  • avatar

    If only they had let Malcolm Bricklin sell their cars in 2006…

  • avatar

    My understanding is that JLR will form a new sub brand in assocation with JLR (in which JLR will hold 50%). Now who owns Rover?

    • 0 avatar

      JLR, but it’s a bit more complicated than that. SAIC own the rights to the the pre-2003 and 2003-2005 versions of the Viking Longship badge, albeit with the “Rover” name blanked out, while Jaguar Land Rover also has the rights to the pre-2003 version but with the “Rover” name included, as well as ownership of the brand itself of course.

  • avatar

    The Chinese aren’t great at naming. Their most popular cigarette brand in the mid-90s was Death to the Four Cockroaches 100s

  • avatar

    In addition to Chery’s existing brands, their Qoros joint venture with the Israel Corp, will be marketing cars in China as well as Europe.

    I’m interested to see what happens with Geely. It’s the biggest car company in China that isn’t state owned. Also, over the years Geely has gone from multiple brands that had a lot of overlap with a brand structure that more closely resembles Alfred Sloan’s model for GM. Still, the company has a preference for names that westerners find odd and difficult to pronounce like Englon and Emgrand, not to mention the rather KKK sounding Gleagle.

  • avatar

    -insert Super Mario FAIL sounder here-

  • avatar

    When I was younger I had a 3-5-year spell of drawing my own cars and formulated plans for multiple brands under one roof. Yes I had the silly names. I think one of my brands was called Rainclub. And I had a luxury division called Amundsen. Not as bad as Gleagle (did you say Glee-agle?) but close. :P

    The fact that they’re all doing this child’s play – does it make me a prophet, or does it just confirm my chinese heritage? lol.

  • avatar

    Thank god they are killing those stupid brands. Who on their right mind would buy a “Riich” car?

    • 0 avatar

      Same people who buy Loois Vuitton or Adidis or Nicke shoes etc etc.

      Chery is definitely being mismanaged as far as the whole branding etc. It’s a shame though because it’s really the only manufacturer that doesn’t seem to have deep ties to the Chinese government and doesn’t seem to be stealing all their technology from everyone else.

      They seem to be doing their own in house engineering so I find this kinda sad. I’d much rather see some of the state owned companies fail.

      The Riich brand though definitely needs to go.

  • avatar

    Chery is indeed an SOE. That’s a big part of its problem. All the other notable SOEs have partnered with foreign makers, mostly sitting back on their haunches while the money rolls in.
    Yin Tongyao may be a good engineer, and a pioneer in his own rite, but he’s not the man to be at the helm of a promising company like Chery.
    How could he have launched such an unmarketable and ludicrous naming spree leading to Riich and Rely, if he wasn’t a bull-headed xenophobe?
    Chery, now that you’ve got some designer heavies on the payroll, why not bring in some people with management and marketing talent. A shake-up at the top is overdue…..survival depends on it.

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