Chery Denied Localization of Land Rover

　　Editor's Note: On September 16, 2010, the curtain of Global Automotive Forum rises in the city of Chengdu. The theme of the meeting is "Shaping the future of an industry in transition". This year's discussions at the Forum will cover the key issues and challenges shaping the future of the auto industry as it goes through a critical era of transition - including the impact of China's auto industry emergence and the center of world auto industry shifting.

　　During the meeting, Yin TongYue, general manager and Chairman of Chery automobiles ,received Sohu Auto's exclusive interview.

　　Sohu Auto: You just mentioned that we should bulid China from a large auto market to a strong powerhouse..what’s the core part of Chery’s plan, including the mastering of key technology and the improvement of the brand?

　　Yin: Now we have realized it far more than before. In the past, we always said there was no hope for China’s auto industry while the western had been so advanced and we were so poor in the technologies, for instance they used EFI early but we still used the carburetor. However, once we had start to proceed, seems it was not so hard. Now we have our own engine, transmission, chassis, and body, and a good car can be produced if we compose all of them .

　　Currently, it is not very complex to improve the quality of own cars since there are lots of ways and the electronic components have been used more in the car. But why cannot our own be accepted by the market? Why do Chinese consumers only believe foreign brands? Maybe it’s due to western automakers invest much on branding while we invest little. This is why we spend a lot to display ourselves. I hope the whole Chinese auto industry could be more modest. All the globe people are flattering us but possibly their real aim is to strangle us. Now some of our people go with them, not aware of danger. We should better low down.

　　Sohu Auto: when it comes to the problem of excess capacity, how do you think of it?

　　Yin: the market economy will definitely bring about overcapacity. Without overcapacity, there would be no competition and the low-quality production would no way be pushed out of market by high-quality production. This kind of excess capacity is good for the industry, which can bring about technology advances and management improvement.

　　Sohu Auto: we have seen that Chery had done a lot of real things on the R&D of new energy vehicles, such as the corporation with BenQ Materials. Dose Chery tend to grasp the core technology of new energy vehicles, like the diaphragm?

　　Yin: now many domestic car companies, including electronics companies seem quite crazy about the new energy. Actually their way is so superficial. They use their own materials and simply bring in some other materials to engage in small production line assembly and then flaunt those are all new energy. However, it is not the truth. To develop new energy is not an easy thing. The more difficult part is what kind of material can provide better performance and can keep continuous development as well as reduce cost constantly. If not so, for example, one company just assembly engine with bought material, it can not be called engine plant. Only that we can make steel ourselves and our own engine, then it can be said that we grasp the complete engine technology. As new energy is a new concept, it is not quite understandable. The development can easily go superficial, which will scatter investment, waste a lot of energy while get poor effect.

　　Sohu Auto: in this regard, what will be the key investment projects of your Chery?

　　Yin: We want things to be a little more solid. For example, now the development of electric vehicles is not high enough to replace traditional cars largely. We need to move forward. Only with a significant reduction in costs, the electric vehicles can grab a part of market share of the conventional vehicles. We can not always rely on the state subsidies. Now the scale of the auto market is several million a year, the government singly can not afford the huge subsidies. We need to depend on the development of the electric vehicle itself. Once its performance can be accepted by the society and the wide consumers, it will become successful.

　　Sohu Auto: Does Chery have any plan about the amount of new energy vehicles?

　　Yin: right now the state has published some policies, which make us begin the first steps. Actually, this is a virtuous cycle. As the sales become good, the manufacturing costs can be reduced down, which will increase the production nationally, and then we can just get rid of the state support.

　　Sohu Auto: so you mean your ultimate goal is to achieve a relatively large amount without state support?

　　Yin: to compete with traditional vehicles, we have to substantially increase energy efficiency since China will need huge mount of oil with the rapid development in the next ten years. The oil now can only support one car can supply three or five cars. In this way, electric vehicles need not sacrifice the basic functions and some additional features, such as driving pleasure.

　　Sohu Auto: can you introduce the divisional operation system you are trying presently?

　　Yin: since the China is a relatively large but fragmented market, with well developed central and less developed western. Besides, the ages of consumers in different regions are also varied. Foreign companies such as Volkswagen and Toyota have accurate brand and product positioning. They also adopt an independent business unit. We are learning from these international brands. In fact, in this way, the process can be shortened while brand characteristics solidified.

　　Sohu Auto: RELY and Chery have not become totally independent Division?

　　Yin: well, we called a bit independent. However, they still share a lot of procurement and technology platform.

　　AUTO SOHU: now more and more joint ventures have develop on their own brands and expand both in the high-end and low-end cars. Today Chinese automakers are in face of such situation that they have survived in a more severe competition since many multinational giants have come into china. The pressure will be more greater in the future. What has Chery done to prepare for it?

　　Yin: While they come in, we should go out.

　　AUTO SOHU: you mean export?

　　Yin: as they have come into Chinese market, we should fight back and go abroad.

　　AUTO SOHU: GM is currently laying out in Four or five tier cities?

　　Yin: We will gradually enter the high-end car market. Toyota used to produce high-end cars and Volkswagen relied on low-end Beetles to succeed and have 12 brands now. Since foreigners can make it, we can too.

　　AUTO SOHU: If we learn from Japanese on the car export, which of their experience is worth learning when we encounter problems.

　　Yin: we root into the foreign market and bring Chinese brand and technology therein the way they can receive.

　　SOHU AUTO: what do you think of the Toyota recall?

　　Yin: actually, recalls are very normal in auto industry. We also have ever recalled, so have other companies. One company carry out recall is just due to its social responsibility. It also proves that the previous process is defective. Without successful solution, the problems cause very serious results. However, recalls will optimize the manufacturing process.

　　SOHU AUTO: do you have any timetable about entering the European and American markets?

　　Yin: We are now already in Europe.

　　SOHU AUTO: is Chery discussing the local production with Land Rover, and Jaguar?

　　Yin: not yet. The exchange between enterprises is quite normal. We may also go to Toyota and VW to communicate business, just like with Land Rover.(Translator:Yalong/Jessie)