Summary of Key Points
Chery Group's global cumulative sales have exceeded 20 million units, with the Fengyun A9 being the 20 millionth vehicle to be launched and delivered. Yin Tongyue stated that the company will no longer engage in price-based competition (i.e., "involution") and instead focus on enhancing the brand and making technological breakthroughs. However, Chery's domestic sales have declined (150,000 units less in the first half of the year), while exports have surged by 71.5% year-on-year. High-end brands such as the Zhijie and Xingtu have seen significant sales declines. The Fengyun A9 is expected to play a crucial role in boosting domestic sales and elevating the brand's image, but its pricing remains somewhat "high-specification at a low price." Whether it can establish itself in the highly competitive pure-electric market and achieve a higher brand premium remains to be seen.
1. The 20-Million Unit Milestone: Export Success Masks Domestic Pressure
Half of Chery's sales breakthrough of 20 million units came from exports, with 943,800 vehicles exported in the first half of the year, a year-on-year increase of 71.5%, setting new monthly export records for four consecutive months. The overseas market has become a stabilizing factor for the company's growth. However, the domestic market has been lukewarm: despite a slight increase in total sales, Yin Tongyue acknowledged a decrease of 150,000 units due to an intentional effort to reduce inventory and eliminate excess stock held by dealers, avoiding the practice of holding back products to boost sales, which some brands employ. The penetration rate of new energy vehicles in the domestic market has exceeded 60% for three consecutive months, but Chery's high-end new energy brands have not kept up, leading to a loss of market share.
2. The Truth Behind "No More Involution": The Need to Shift from Quantity to Quality
Yin Tongyue's decision to "stop involution" refers to the industry's focus on price wars and low-profit sales strategies. Why now? Because the domestic market is too competitive, with many brands engaging in price battles, resulting in thin margins and struggling brand development. Chery aims to change its approach by focusing on making the brand more valuable (e.g., selling vehicles at higher prices), using advanced technologies (such as better batteries and chips), and providing greater customer satisfaction. This shift is driven by the pressure of declining domestic sales; the company hopes to use new models like the Fengyun A9 to improve performance in the second half of the year.
3. The Mission of the Fengyun A9: To Support Both Sales and Brand Development
The Fengyun A9 is not just another ordinary vehicle; it marks Chery's 20 millionth production unit and represents a new beginning for its pure-electric product line:
- Addressing Weaknesses: The previous Fengyun series included hybrid and range-extended models, and now the addition of a pure-electric model complements the company's new energy portfolio.
- Advanced Specifications: The vehicle is equipped with a 70 kWh Rhino battery (guaranteed by the manufacturer) and a 3nm chip-powered intelligent cockpit for a better user experience, and it has also won a Red Dot Design Award.
- A Critical Role: Yin Tongyue believes the Fengyun A9 can help dealers improve their performance and assist Chery in breaking away from its "low-price" reputation by competing in the pure-electric coupe segment.
4. High-End Brands Struggling: Poor Performance of Zhijie and Xingtu
Chery's efforts to elevate its brand rely on high-end models like the Zhijie (in collaboration with Huawei) and the Xingtu, but both have faced significant sales declines:
- The Zhijie sold only 44,900 units in the first half of the year, a 56.9% decrease year-on-year, falling short of even some smaller competitors like NIO and Xpeng.
- The Xingtu sold 60,200 units, a 44.9% decline year-on-year, indicating difficulties on the high-end market.
Although cooperation with Huawei has improved Chery's management capabilities (in areas such as supply chain and project management), sales have not increased significantly. Whether these efforts will lead to success in the long term is uncertain. This is why the Fengyun A9 is so important; if high-end brands cannot perform, Chery must rely on its main models to drive growth.
5. The Challenges Faced by the Fengyun A9: Can "High-Specification at a Low Price" Succeed in a Competitive Market?
The Fengyun A9 is priced between 109,900 and 129,900 yuan, which represents a reduction of 6,000 yuan from its pre-sale price, reflecting the fierce competition in the domestic market. Its strategy focuses on cost-effectiveness. However, it faces two major challenges:
- Survival in a Competitive Market: The pure-electric coupe segment is highly competitive (with players like the BYD Han and Tesla Model 3). Can the Fengyun A9 maintain monthly sales of over 10,000 units? If not, it will not be able to significantly boost Chery's domestic business.
- Brand Premium: Can the vehicle help raise the overall brand value? If it continues to rely on low prices to attract customers, the goal of enhancing the brand will remain unattainable.
- New Vehicle Effect: The industry often experiences a "new vehicle death valley" where initial sales are high but later decline. Whether the Fengyun A9 can overcome this and maintain stable sales is key to determining whether Chery can truly break away from the competitive landscape.
In summary, while Chery's shift from focusing on quantity to quality is a positive move, the path ahead is difficult. With weak high-end brands and intense competition in the domestic market, the success of the Fengyun A9 will depend on consumer acceptance. After all, elevating a brand requires solid products and sustained sales performance, not just empty rhetoric.