Chery to put an end to its multi-brand strategy

Gasgoo.com (Shanghai August 27) - Chery will be putting an end to its multi-brand strategy, Caijing reported today, citing a statement made by manufacturer officials. According to the statement, Chery will return to a single-brand format after eliminating the Rely and Karry brands. This is the largest strategy shift Chery has made this month, and marks the end of their two year foray in selling under multiple brands.

The earliest rumors of a strategic shift for Chery appeared on the Weibo account of an unidentified automobile industry analyst, the report said. Chery officials later confirmed the authenticity of the statement. "Establishing the mid- to luxury class Riich brand in 2009 did not help us improve sales of [those] vehicles, which is a fact we have to come to terms with," an official, wishing to remain anonymous, said. The official added that if Chery maintains good performance for some time, it would consider reestablishing multiple brands.

Chery first established its multi-brand network with the intent of helping improve sales for its individual products. In addition to its original Chery brand, the manufacturer sold vehicles under the Karry, Riich and Rely names. However, the multi-brand strategy failed to live up to expectations. In particular, marketing for the Riich and Rely brands was subpar, leading Chery to eventually close down the subsidiary companies responsible for their operation. After that setback, Chery began directly overseeing sales for the two brands.

In its analysis report on Chery, strategy consulting firm Roland Berger determined that the multi-brand strategy had not only not helped the manufacturer improve its brand image, but also held back its overall development.

Chery Board Chairman Yin Tongyue sheds further light on the manufacturer's original intent: "Since China is a very segregated market in terms of consumer levels, with each region's market having a different consumer base, we hoped to have individual brands aimed at individual markets. In 2009, we released the multi-brand project. However, at the time our understanding [on the topic] was very limited. In reality, multiple brands require [a lot of] individual work and financing. As our resources were limited and had to be used efficiently, it was impossible to create too many individual brands." Zeng Zhiling, director of consulting firm LMC Automotive Asia Pacific, commented that successful automobile enterprises with multiple brands are very rare even overseas.

Earlier this year, Chery announced that it would be streamlining their overall strategy by decreasing the number of total automobile projects. According to a statement made by Mr. Yin in April, the manufacturer plans to cut their overall projects by 90 percent.