CHINAS CHERY AUTOMOBILE

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CHINAS CHERY AUTOMOBILE

• Ideas for Today and Tomorrow

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Vision Statement

• Our consulting company is going to present a
  report on a growing automotive company in China
  called, "Chery." We are first going to present
  its background, followed by an analysis of the
  automotive industry, and based on our findings
  and what Chery has done to expand, provide
  suggestions on what they should next at the same
  time provide answers to their problems.

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Goal and Objective

• PROVIDE CHERY WITH A LIST OF FUTURE SUGGESTIONS
• - Provide Background Analysis
• - Industry Analysis
• - Future Analysis and Suggestions

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Background On Chery Auto

• Auto manufacturer located in China
• State owned by local government
• Founded in 1997
• Purchased first factory from Ford Europe
  
• Joint Ventures and Strategic Alliances
• Lotus, Bertone, Pininfarina, AVL, Fiat, and Dodge

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Background On Chery Auto

• Overseas Manufacturing Plants
• Iran, Malaysia, Russia, U.K., Brazil, Egypt,
  Uruguay
• Most Popular Car
• QQ compact car
• Annual Sales
• 1.1 Billion Dollars
• 2006 sold 305, 000 vehicles

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Automobile Industry Analysis

• Traditional dominated by OEM (Original Equipment
  Manufacturers) i.e. Toyota and General Motors
• Developing Markets Brazil, China, India, and
  Russia. (BRIC)

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OEM Market Share
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Automobile Industry Analysis

• Global Vehicle Assembly Growth
• Light Vehicle Segment 8.5 million units 2010
• Asia responsible for 42
• BRIC responsible for half the growth
• Increasing Global Competition
• OEM vs BRIC vs Developing Markets

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Expected Growth in Vehicle Assembly
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Analysis of BRIC (Brazil, Russia, India, China)

• Brazil
• Flex Fuel Engine
• Russia
• Government encouraging foreign investment
• High demand for foreign vehicles
• India
• OEM investing heavily R D manufacturing
  facilities.
• China
• 2007 2nd largest automarket replacing Japan

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Analysis of BRIC (Brazil, Russia,
India, China)

• Future Trends
• BRIC- growing middle class, rising disposable
  income
• Free Trade Agreements
• Government Taxes, Tariffs, Duties, etc
• Alternative Sources of Fuel

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Suggestions for Chery Automobile

• China
• Developed Hybrid Chery A1
• Released to Chinese Market
• Why?
• A1 is already a popular vehicle
• Hybrid version more economical
• Middle Class earnings 7, 400 to 14,800
• Auto Sales increase 40 to 50 percent

CHERY QQ aka A1
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Suggestions for Chery Automobile

• Brazil
• Developed flex fuel engines in Brazil Auto-Plant
• Modify Chery A1 with Flex Fuel Engine
• Why?
• Flex Fuel economic, environmentally friendly
• 55 vehicles sold 1.0 Liter Engines
• Smaller Investment Plant already exists
• Free Trade Agreement Argentina and Mexico

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Suggestions for Chery Automobile

• Uruguay
• Develop full size SUVs
• Stop production of Chery A1
• Why?
• Plant already producing bullet proof sedan
• High security risk in developing countries
• Brazil already producing A1
• Local partner experience Bognar SA

CHERY EASTAR
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Suggestions for Chery Automobile

• Iran
• Produce and sell Chery A1 to Iranian Market
• Why?
• High demand for compact cars
• Local Partner Khordo stopped producing Peykan
• Manufacturing facility in place

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Suggestions for Chery Automobile

• India
• Build own manufacturing facility in India
  produce and sell Chery A1 to local market
• Negotiate with Chrysler joint venture includes
  RD center
• Why?
• Growing Middle Class (400 million people)
• GDP 650 billion to double by 2010
• Avoid high tariffs 16
• High market growth potential
• Ratio 6 cars for ever 1000 people
• 70 of car owners compact vehicles
• South Asia Free Trade Agreement (SAFTA)

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Light Vehicle Assembly Growth India
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Suggestions for Chery Automobile

• United States of America
• Develop mid-size and full-size SUVs/Hybrids
• Build manufacturing plant in US
• Sell under Cherys name after plant is made
• Why?
• Current Dodge Chery joint venture
• Increase brand recognition in North American
  Market
• Big market for mid and full-sized SUVs
• Low pricing strategy will undercut competition

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Chery Cars Under Dodge Brand
CHERY V5
DODGE HORNET
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Suggestions for Chery Automobile

• Global Strategy
• Change company name from Chery to Cheri worldwide
• Make airbags standard feature on all vehicles
• Why?
• Chery cant sell under own name in United States-
  Chevy
• Customers not a big adjustment
• Chery A1 no airbags

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QUESTIONS?