SHANGHAI (Reuters) – Chinese state-owned Chery Automobile Co [CHERY.UL] aims to rely only on organic means to grow its international sales, its CEO said, underlining a strategy that is different from its private sector rivals who have either made or are considering acquisitions.
CEO Chen Anning told Reuters in an interview on Wednesday that Chery, best known at home for its Arrizo sedans, plans to raise the share of overseas sales to a third of total sales from a quarter now.
And while the company was open to forms of cooperation such as joint ventures, it was not actively looking for mergers and acquisitions in its bid to crack markets such as Western Europe, Chen said.
“We’re today not active in the merger and acquisitions market, in the big deals so to speak. We are open for cooperation as always, but fundamentally, we have consistently organically grown our markets by our own capability and sometimes with cooperation,” he said.
Chen’s comments come as the industry has been riveted by a direct overture made this week by Chery’s local rival Great Wall Motor Co to Fiat Chrysler Automobiles NV (FCA) this week, with an official saying the company was interested in all or part of FCA, owner of the Jeep and Ram vehicle brands.
Automaker Geely group bought Swedish car maker Volvo in 2010, and is reaping the gains of that deal, with Geely Automobile Holdings scoring its fastest earnings growth in eight years in the first half of 2017.
“Down the road, if there’s a feasible and valuable opportunity that exists, we may look into it, but that’s not the fundamental motivation of us going to the international market, we’ve been doing this through dealers in over 16-18 markets,” Chen said.
He did not give a time-frame or the investments needed to attain his overseas growth target.
Yale Zhang, head of Shanghai-based consultancy Automotive Foresight, said growing through organic means was less risky than acquisitions but slower and could make it harder for Chery to enter developed markets.
With respect to Chery’s stance on mergers or acquisitions, “risk is possibly one consideration for them but they are a mid-sized state-owned enterprise, so I feel that they may not have sufficient funds,” he said.
EYE ON WESTERN EUROPE
Chery sells electric and gasoline vehicles and also has joint ventures with Jaguar Land Rover Ltd [TAMOJL.UL] and Kenon Holdings.
It says on its website (www.cheryinternational.com/) that it is the most popular Chinese automobile brand overseas, having exported 88,081 units in 2016.
Chen said that its 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, the company plans to launch a line-up of vehicles with a new name plate that will be more premium and priced higher than its current product portfolio but will remain affordable and contain connectivity features, he said.
Chery currently has a global distribution network of over 1,100 outlets with showrooms in countries such as Turkey, Morocco, Brazil and Argentina. It also has 14 manufacturing bases abroad, including in Brazil, Iran and Venezuela.
Chen said that the company was cautious on North America, citing uncertain political and economic policy winds.
“I think we will have to wait a few years to see stabilization in the economic policies and political strategies. And we may decide to start in North America but today is too early and we’re cautious.”
Reporting by Brenda Goh and David Lin; Editing by Muralikumar Anantharaman