Chery confirms that cooperation with Subaru to make domestic first domestic models still remains suspicious

The upsurge of self-owned brands' foreign joint ventures will continue to be staged this year. On the domestic rumors of Jaguar Land Rover, another domestic foreign partner, Subaru, who is also urgently looking for domestic partners, has already quietly pushed its domestic door.

An insider of Chery Automobile revealed to reporters that Chery has now been identified as a joint venture of Subaru's domestic plans, and that the joint venture's factory in the future may be located in Dalian. It is reported that this news may be officially announced at the end of this month.

Judging from the current news, Fuji Heavy Industries of Japan and Chery will jointly invest 30 billion yen (about 2.4 billion yuan) to build a plant in Dalian to produce Subaru. After the completion of the first phase of the project, an annual production capacity of 50,000 vehicles will be formed, with a final production target of 150,000 vehicles. This will make China the second largest overseas production base for Subaru following the United States.

Holding hands on Subaru Chery is more urgent

Subaru currently has the largest market in the world, the United States, followed by Japan, and the third is China. In addition to Japan, Subaru currently only has factories in the United States, and China’s auto sales have increased significantly for several consecutive years, making Subaru’s emphasis on the Chinese market.

Relevant statistics show that since Subaru's re-entry into the Chinese market in 2004, its market share has continued to increase. Based on sales of 35,000 vehicles in 2009, Subaru's sales in China reached 57,000 units in 2010, a year-on-year increase of 62.9%. Ranked in the forefront of the imported car market. According to media reports, in January of this year, Subaru's SUV model Forester sold more than 600 vehicles in Beijing in a single month, exceeding BYD F3, becoming the highest-selling product in the Beijing market.

In the face of many foreign brands that have sold 30,000 vehicles a year as a domestic market threshold, Subaru has undoubtedly stood by the door.

As one of the largest independent brands in China's production and sales volume, Chery has achieved remarkable results in 12 years since it was put into production in 1999. In January of this year, Chery sold 85,860 cars, ranking among the top five passenger car sales. In addition, Chery Automobile has invested 4.7 billion yuan in the Dalian Free Trade Zone to establish a new production base and prepare a platform for Subaru's domestic production. The project has received strong support from the Dalian Municipal Government, and Dalian is near Beijing, Tianjin and Linyi, Japan and is at the core of Northeast Asia. It can provide more convenient transportation conditions for domestically produced Subaru models.

Earlier reports from the Japanese media claimed that the highly anticipated localization project for Subaru vehicles has entered a substantive negotiation stage. Of the many joint venture partner candidates, Chery has become the most powerful competitor.

Gao Qiyi, Head of Product Planning at Subaru Automotive (China) Co., Ltd., said that in 2011 Subaru's sales target in China was 60,000 units, and its sales volume was 57,000 last year. Takahashi said that there are many uncertainties in the Chinese auto market this year. To deal with potential risks, Subaru will strengthen its brand promotion in China and familiarize more consumers with Subaru's vehicles.

Previously, it was reported that many domestic auto companies such as FAW, SAIC, Beiqi, Jiangling, Chery, and Lifan are negotiating with Subaru for cooperation. However, the latter is silent on this and only indicated that the localization process has been started, but it is not yet possible to finalize the joint venture partners. Who is it? Recently, Japanese media reported that Subaru will establish a joint venture with Chery in Dalian, and is close to signing relevant agreements, but both parties have disclosed inconvenience and have not yet confirmed to answer questions from the industry, and Subaru gave the media "in 2010 The promise to announce the answer was also renewed to March 2011.

Industry analyst Jia Xinguang believes that China’s auto market has enjoyed rapid growth for 10 consecutive years, and joint-venture car companies are profitable; in contrast, the situation of self-owned brands is much more difficult. This is the fundamental reason why many car companies including Chery are pursuing Subaru. .

In recent years, under the direction of the Big Chery Strategy, Chery has invested heavily in the development of its products and sales network. However, because its main product itself is mostly located in economic cars with a meager margin, its profits are difficult to meet the needs of development funds. The data shows that in 2010, Chery's annual sales of 682,000 vehicles, net profit is only about 200 million yuan. By establishing a joint venture company to obtain more market profits on products, Chery is concerned that with the slow progress of listing financing, it will be a win-win situation for future development and listing plans.

Localization still has suspense

In fact, Subaru is no stranger to the Chinese market. As early as 1992, Subaru (when it was called Fuji Heavy Industries) and Guihang Group, a military background, introduced their best-selling mini-vehicles into the country through technical cooperation. After the unfavorable result in the first battle, Subaru It also raised investment, invested 450 million yuan in the shareholding of Guizhou Skylark, and directly sent operational management personnel to Guizhou Lark.

These efforts did not change the situation in Guizhou Skylar's sluggish sales. In 2002, Subaru reluctantly chose to withdraw from the domestic market. There are many reasons for the failure, including the choice of the product itself, the differences between the Chinese and foreign shareholders, as well as the influence of General Motors' strategic presence in China, the controlling shareholder of Fuji Heavy Industries.

Subsequently, in 2004, Subaru began to enter the Chinese market in the form of pure imports. In 2005, Toyota took over 16.5% of GM’s shares in Fuji Heavy Industries, and Subaru regained the confidence of the joint venture.

However, Subaru Auto (China) Co., Ltd. is relatively weak due to the pure import sales method adopted by Subaru, and its marketing promotion basically relies on agents. How to balance the relationship between former agents and Chery's sales network after realizing domestic production will be a problem that Subaru must face. Subaru's distributor in northern China, Zhongmu Subaru, controls more than 80% of Subaru's sales in China and has been the company's most important source of profit.

In the selection of the first domestic-made model product, although the current appeal of the Subaru Forester is high, it is against the wishes of Subaru. All along, Subaru’s best-selling products are forests, and domestic foresters are certainly relatively small. However, for Subaru, who had always hoped that Legacy and Impreza could increase the percentage of total sales, the domestic foresters were not willing to see Subaru. Therefore, Legacy and Impreza would also become the first domestically-made popular models, especially the wings. Leopard, its low-profile model can fully test domestic prices a lot.

However, domestic impreza is also at risk. Impreza has always been the main sports performance. Long-term exposure to WRC's high-strength test is undoubtedly the best label for Impreza, but in the Chinese market, the demand for pure sports products may not be The outside world thinks so strongly. It can be seen from Mitsubishi's launch in China that the appearance of the wing-like EVO's market performance can be seen in the domestic market.

In addition, Subaru's ability to maintain its current level of profitability after being made in China is also an issue of concern to the industry. In June 2010, Subaru reduced the price of parts and components of its models nationwide. The price adjustment covers Subaru’s official entry into the Chinese market in 2004. The average decline rate of all models is about 20%, among which the price cuts for sheet metal parts are outstanding, up to 40%.

This move directly drove Subaru’s sales in China directly, but for Subaru’s joint venture with Chery, it weakened the effect of reducing production costs through local production methods.

Although the Subaru brand has grown rapidly in China, Subaru products still belong to niche models in terms of total sales volume. Therefore, the way to reduce costs through scale production in China remains to be seen. In the short term, the profit from domestic production is not It will greatly exceed the profits obtained through sales in the form of net imports. How to recover the investment will be a problem for Subaru.