Chinese cars here in a year

CHERY will become the first Chinese vehicle brand to be available in Australia, courtesy of Australian and New Zealand importing giant Ateco Automotive.

GoAuto can exclusively reveal that three Chery models, including a light car, a small car and a compact SUV, will be officially launched in the first quarter of next year, following their Australian public debut at the 2009 Melbourne International Motor Show.

The long-anticipated deal to import Australia’s first Chinese cars was brokered by Asian vehicle franchise veteran Ric Hull, who played an integral role in the full-scale introduction of South Korea’s Hyundai, Daewoo and Kia brands in Australia.

Mr Hull said Ateco had held talks with “many, many” Chinese car-makers, and that the arrangement with Chery, China’s largest independent vehicle manufacturer, was the result of three years of discussions.

“Ateco Automotive has signed a distribution agreement with Chery and we will be representing them in both Australia and New Zealand,” Mr Hull told GoAuto in an exclusive interview this week.

“There are probably about 27 major vehicle producers in China who are in joint-ventures with global manufacturers, but there are a further 20 independent manufacturers – and the largest is Chery.

“We expect with Chery to be launching a light car, a small car and a small SUV, and it will probably now be in the first quarter of next year. We won’t be showing anything at the Sydney motor show because they will still be at least four months away from launch,” he said.

Mr Hull would not divulge names or details of Australia’s first three Chinese models, but said the small passenger car and SUV models were already on sale in China and in other export markets, and that the light car would be launched soon.

The SUV is almost certain to be the Tiggo 3, while the small car could be based on current models such as the A1 hatchback and the A5 sedan.

The Tiggo 3 is available in China with four petrol engines, while in Europe – where late last year it became the first Chinese vehicle to be assembled on that continent – it is sold with a Fiat-built 1.9-litre common-rail turbo-diesel engine. (Niche Italian firm DR Motor opened a new plant near Naples last November and began selling the SUV – rebadged as the DR5 – in Italy.

It intends to broaden into other western European countries this year.) The petrol engine line-up sold in China includes two SQR-series DOHC petrol engines – an 80kW/144Nm 1.6-litre and a 97kW/170Nm 1.8-litre unit – and two SOHC 16-valve four-cylinder engines.

Unlike the SQR series, the latter are available with a four-speed automatic transmission (in addition to a five-speed manual) and bigger displacements: a 92kW/168Nm 2.0-litre unit and, perhaps of most interest to Ateco, a Mitsubishi-sourced 2.4-litre version that produces 95kW at 5500rpm and 195Nm from 2500-3000rpm.

Fuel consumption ranges from 6.5L/100km for the 1.8-litre manual to 8.9L/100km for the 2.4-litre automatic.

Left: The Chery A1 and Tiggo 3.

The Tiggo sits on a 2510mm wheelbase and measures 4285mm in overall length, 1765mm in width and 1705mm in height. Kerb weight ranges from 1375-1475kg and both two-wheel drive and 4WD versions are available.

Chassis construction is believed to be monocoque, with an all-independent suspension including MacPherson struts up front and a double wishbone configuration at the rear.

Disc brakes are used front and rear, supported by an ABS system (with EBD) from German manufacturer Tevis. Dual front airbags are also part of the package.

Unveiled 12 months ago at the 2007 Shanghai auto show, the A1 is being described by Chery management as an “epoch-making product” that is set to become one of its key export models.

The front-wheel drive five-door hatchback was styled by Italian design house Bertone and is sold in China with two iterations of its SQR-series four-cylinder 16-valve DOHC petrol engine – a 1.1-litre producing 50kW at 6000rpm and 90Nm at 3500-4000rpm and a 1.3-litre producing 61kW at 6000rpm and 114Nm at 3800-4500rpm.

Paired with the standard five-speed manual gearbox, it returns fuel consumption of around 6L/100km, according to the manufacturer.

The A1 rests on a 2390mm wheelbase and measures 3700mm in overall length, 1578mmm in width and 1527mm in height. Its kerb weight is listed at a meagre 1040kg.

Suspension hardware includes MacPherson struts up front and a semi-independent trailing arm-type rear end. Front disc and rear drum brakes are used, with ABS with EBD available as an option.

Other safety equipment includes dual front airbags, a tyre pressure warning device and reverse parking radars.

From 2009, the A1 will be the donor car for a new small, inexpensive model for Chrysler’s Dodge brand to sell in Europe, the US and other overseas markets, including Australia.

This vehicle is currently in development and Chrysler engineers are working with Chery to ensure it meets all international safety standards – a situation that bodes well for the prospective Chery-badged car.

The A5 is another main consideration given the high level of equipment and engine/transmission options available.

The small sedan is offered in China with 80kW/144Nm 1.6-litre, 97kW/130Nm 1.8-litre and 95kW/180Nm 2.0-litre SQR-series engines, the latter with a four-speed automatic.

The A5 returns between 6.8L/100km and 7.2L/100km, depending on the variant, and its kerb weight ranges from 1290kg to 1326kg.

It sits on a 2600rpm wheelbase and measures 4552mm in length, 1750mm in width and 1483mm in height. All-independent front strut/rear multi-link suspension is used, along with disc brakes front and rear with standard ABS/EBD.

Chery manufactures a number of other vehicles in China, including the V5 seven-seat station wagon, the Eastar large sedan, the Cowin medium sedan and the Riich II and Karry people-movers.

There is also a QQ3 micro hatch and QQ6 sedan equivalent, while a premium QQ5 hatch – a production version of the S16 concept, based on the QQ3 – is due to commence production this year and could form the basis of the micro-car Ateco plans to bring to Australia.

A Pininfarina-designed small-medium model known as the A3 is also set for production late in 2008 and is a strong candidate for the Australian export program. The A3 will initially be available in sedan and hatchback form, and, from 2010, as a coupe-cabriolet.

An A6 prestige-oriented medium sedan, unveiled at the Moscow auto show last year, is also in development, along with a larger SUV known as the Tiggo 5.

Contrary to early speculation, light commercial vehicles will follow the availability of passenger cars from China, rather than emerging here first. The first Chery LCVs are expected to appear here “within months, not years” of the brand’s local launch.

Ateco will import Chery-designed and manufactured LCVs under the same name, rather than retailing Chery-badged vehicles produced by another manufacturer in a “Harvey Norman-type” arrangement that was also considered by Ateco, but abandoned due to aftersales requirements.

“Interestingly, I think cars are going to be the first major commodity from China that are marketed under their own brand names. So much of what we buy is indeed made in China, but it’s difficult to recall a Chinese brand name,” he said.

Mr Hull said Chery plans to launch a further four models in China this year, and that a staggering 38 new models would emerge from the Chinese giant within the next five years.

“When you consider they produced their first car in 1999, they produced their half-millionth car in 2006 and their millionth car in 2007, perhaps then the suggestion that there are 38 new models coming is not that fanciful,” said Mr Hull, adding that he believed China’s car-makers were on a steeper learning curve than both Japanese and Korean makers.

“Unlike Korea perhaps at the same time in their development, China has all the technology in the world there. All the major players in the world are there and virtually every mainstream component maker in the world is there.

Chery also has a number of joint-ventures or collaborations with many well-known companies like Johnson Controls, Bosch and Delphi, so the technology is certainly there,” he said.

Mr Hull said that all three initial Chery models, which are currently undergoing Australian Design Rule certification but are yet to undergo the same Euro NCAP crash tests in which Landwind and Brilliance models performed extremely poorly, will meet ADR safety and exhaust emissions standards.

“Of course they’ve got to meet quite severe testing to meet Australian Design Rules and because they will all be petrol-engined cars, they will have to meet (emissions standard) Euro IV.

“I can tell you the Chinese are super-sensitive about what happened to Landwind and I think Brilliance also had some questionable (crash test) results in Europe, so I’m sure they’re absolutely determined not to allow a repeat of that,” he said.

Mr Hull played down the prospects of Chery models coming with the sub-$10,000 pricetag widely anticipated by some quarters.

“I think the cars will be extremely well equipped, but the price is not going to be absolute bargain-basement. The cars will be good value for money but I don’t think we’re about to see the sub-$10,000 car.” The Chery brand will be made available through a national dealer network of about 75 retail outlets from launch, expanding to about 100 dealers within the first 12 months.

“We’ve yet to complete a professional market representation plan but obviously we’ll cover off major metropolitan and provincial (areas), but we’ll need a rural network too, not only to sell cars but to provide national service coverage,” said Mr Hull.

While none of the Chery dealers will be existing retailers of the Fiat, Alfa Romeo, Citroen, Maserati and Ferrari brands currently imported and distributed by Ateco, GoAuto understands that a large number of volume-selling brand dealers have recently expressed interest in the Chery franchise, including current Kia retailers unhappy with the Korean brand’s recent sales decline.

Ateco relinquished the Australian distribution rights to the factory-owned Kia Australia enterprise in 2005, and remains highly regarded by many of the 140 Kia dealers it had at the time.

Under Mr Hull, Ateco took over the distribution of Kia vehicles from Japanese importer Itochu in 1999.

Mr Hull, who joined Ateco specifically to oversee the Kia operation, was also instrumental in the establishment of the Daewoo brand in Australia between 1994 and 1999 and, before that, was behind the initial success of the Hyundai brand, which for about 12 months prior to 1988 had been distributed by Alan Bond out of West Australia.

It is believed many of Mr Hull’s Asian light-car import experts are involved in the Chery deal.

“We have had a lot of dealer interest – 100-150 written expressions of interest from really good dealers, despite the fact we’ve been unable to say what we’re doing and with whom,” said Mr Hull.

More than three years in the making, the Ateco-Chery arrangement was first cemented by a memorandum of understanding signed by Ateco owner and governing director Neville Crichton in November 2005.

Mr Hull quashed suggestions a number of false starts had delayed proceedings, claiming that negotiations have been positive since then and included a visit to Australia by Chery’s then-president.

“The (Chery) product hasn’t been available in right-hand drive to meet Australian Design Rules including Euro IV until now. It was never going to be any earlier than this and the last thing we would want to do is bring a sub-standard product to market and incur the sort of negative publicity that others got in Europe,” he said.

“I think there is quite an expectation out there for Chinese cars, certainly among dealers and I guess to some extent among the public as well.” Mr Hull said he was unaware of plans by other Chinese vehicle brands to launch in Australia, including Geely, and added that bringing the right, rather than simply the first, Chinese vehicles to Australia was Ateco’s strategy.

At the current rate of growth, JD Power has forecast China will surpass the US as the world’s biggest vehicle market by 2025. Apart from being China’s largest independent car-maker, Chery is currently the world’s 27th largest car-maker, selling 381,000 vehicles in 2007.

Its three largest export markets are Egypt, Russia and Ukraine. Total exports to eastern European, South American and Middle East nations numbered 120,000 vehicles last year.

Chery will be launched next month in South Africa, where it hopes to sell 5000 vehicles annually. Coincidentally, that is the same number of vehicles Kia sold annually in Australia when Ateco took over the Kia franchise in 1999.

Since losing the distribution rights to it in 2005, Mr Crichton (who recently also made news for buying more heavily into luxury vehicle retailing in the UK) has made it clear he wants a new volume-selling new-car franchise to replace Kia, local sales of which reached almost 30,000 vehicles per annum within six years of Ateco stewardship.

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