China's Chery launches new Qoros brand

AP News
Posted: Nov 28, 2011 8:45 AM
China's Chery launches new Qoros brand

Chinese automaker Chery Automobile Co. and partner Israel Corp. are launching a new brand, seeking fresh appeal both overseas and in the slowing local market.

The 50-50 joint venture Qoros Automotive Co., introduced Monday at Shanghai's former Expo zone, intends to be one of the first Chinese car makers to meet stringent 2013 Euro auto safety standards, the companies said.

Chery and Israel Corp., an industrial holding company, originally launched their joint venture as Chery Quantum Auto Co., in 2007. Since then, the company has kept a relatively low profile.

Originally, the plan was for Chery, one of China's biggest independent automakers, to contribute "in kind" as in many joint ventures, providing, for example, land or workers. But that vision has evolved to one of starting from scratch, said Volker Steinwascher, vice chairman of Qoros.

Chery is now only a financial investor, leaving the company free to develop its own models and keep the brand separate.

"You don't have to have any legacies," Steinwascher said in an interview.

Qoros plans to introduce its first model, a compact sedan, in China and Western Europe in 2013, executives said. After that, plans call for a hatchback, an SUV and then an electric vehicle.

The name Qoros was a "new word meant to represent a company that stands for quality and works together like a chorus," the companies said in a statement.

"People like brands and products they can be passionate about," Steinwascher said. "Quality, design, connectivity and simplicity, these are the key drivers of our brand," he said.

Israel Corp. is Israel's largest holding company, with interests mainly in chemicals, shipping and energy.

Chery, whose best-selling model is the compact QQ, and other domestic car makers have struggled to break through with brands of their own. Joint venture brands and foreign imports still account for about 70 percent of sales, with domestic car makers holding only 30 percent.

A slowdown this year in vehicle sales, after years of double-digit growth, has proven a special hardship for some domestic makers already struggling with slender profit margins.

Chery has not yet followed through with earlier projects of its own aimed at launching sales in the U.S. For now, Qoros has no plans for the American market, where prices are "extremely competitive" and product liability issues a big concern, Steinwascher said.

The lack of powerful brand names and core technologies and the stringent safety standards in North America and Western Europe have prevented Chinese manufacturers from making strong inroads in those more mature markets, although they have expanded sales in emerging markets.

Qoros is aiming high, intending to meet 2013 European 5-star quality levels of the NCAP, an agency that assesses car safety.

To do so, it is working with Austria's Magna Steyr, a major independent automotive design firm, and has hired designer Gert Hildebrand, formerly of BMW Mini. Other suppliers include major auto parts companies like TRW, Bosch and Valeo.

"All our leading talent is in-house," said Steinwascher, who retired from Germany's Volkswagen AG in 2006 but said he found it was "too early."

"We're looking for very good people. We want to have a few people but good people," Steinwascher said.

Qoros is building a factory in Changshu, an industrial city west of Shanghai, that will have an annual capacity of 150,000 vehicles, which could expand in the future to 300,000. It has a research and development center in Shanghai.

Steinwascher said the first "drivable" Qoros would be ready this week, with most of the testing to be carried out in China.

For Chery itself, any benefits in technology sharing will come over time, he said, as the joint venture shares components and other quality improvements.