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Chery could be privatised

November 12, 2008 by Matt Brogan  

Chinese auto manufacturer Chery, suffering from the current hard economic times, has started laying off employees and freezing development of some new models.

 chery_001.jpg

The state owned company, controlled by the Wuhu city government in Anhui province, admits that whilst such extreme measures have improved its cash flow in the immediate term, long term growth may only come by privatising the company and putting a halt to its so-called “reckless expansion”.

Since establishing itself in 1997, Chery has produced over one million vehicles ranging from small cars to SUVs with a planned expansion in to light commercial and luxury vehicles on the drawing board.

This aggressive pursuit of scale however has stretched Chery’s limited resources to breaking point with supplier sources saying Chery’s cash flow is always tight. Unable to fund new projects with earnings, the company relies heavily on bank loans for financing.

chery_002.jpg

Auto manufacturing is becoming increasingly competitive in China, though state-owned companies are typically slow to respond to changing market needs and conditions. It is considered that privatising Chery can be done through stock listing, management buyout or taking on private shareholders.

Chery has been planning to issue shares on the domestic stock exchange for sometime now, and with the bear stock market in China stalled, privitisation is becoming not only a consideration, but a necessity.

chery_003.jpg

Compared to other Chinese automakers who produce their own brands, Chery has been more severely hurt by weak markets in and outside China with sales down 9 percent year-on-year, or below 275,000 units.

Privitisation is a big step for Chery and one certain to change the face of Chinese automotive industry.

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  • Comments

    12 Responses to “Chery could be privatised”
    1. Vote -1 Vote +1Bret
      says:

      Typo on the date: “Since establishing itself in August 2007″

      Chery timeline:
      Mar. 1997 The ground-breaking ceremony of Chery No.1 Engine plant marks the beginning of Chery Automobile Co., Ltd.
      May 1999 Chery’s first engine rolled off the production line (CAC480).
      Dec. 1999 The first Chery car came off the production line. ………..

    2. Vote -1 Vote +1Stevo the Devo
      says:

      In South Australia you can get 10c for an empty aluminium can at recycling depots – maybe they could crush up a few thousand, ship them over here and make a few bob.

    3. Vote -1 Vote +1Flow
      says:

      A stock listing of a car marker in the current financial climate?

      They’re screwed.

    4. Vote -1 Vote +1WVB
      says:

      Hell, freezing development on a chinese car would be like saying, ‘everyone, pencils down that’s enough tracing for today’
      Curious that they themselves acknowledge a ‘reckless expansion’. That’s putting it mildly in economic terms. Try ‘voraciously meteorically reckless growth’ like cancer.
      I would say their observation applies to china in general
      Privatisation is something western societies could teach them a thing or two about.
      Privatisation is the government buzz word for damage control after all.

    5. Vote -1 Vote +1Realcars
      says:

      Apparently if their economy dips under 8% growth they will experience massive levels of unemployment.

      If they maintain growth above this level then life as we know it is doomed even sooner.LOL.

      Surely they must still be short of the two car per family figure. How many cars is that 2,3,4 billion cars. Who really knows.LOL.

      Better for the environment that they buy a new Eastar as opposed to a Grey import Diesel Toyota Surf blowing copious amounts of black fumes as they do.LOL.

    6. Vote -1 Vote +1Carl
      says:

      WVB…..you beat me to the punch, i was going to say that there reverse engineering program has been frozen due to hard economic times!!!!LOL

    7. Vote -1 Vote +1Carl
      says:

      ^^^^Typo meant to write THEIR not THERE^^^^

    8. Vote -1 Vote +1Frontman
      says:

      Just show’s that the probelms are not limited to just the US three.
      I reckon Messers Wall & Stone and co are breathing a sigh of relief that is has taken so long to get the import setup sorted out right about now……

    9. Vote -1 Vote +1Floyd
      says:

      The first car in the picture look like a cheap knock-off of GM / Daewoos’s Matiz.
      Except for the front grill and lights the third half of the car is exactly the same.

    10. Vote -1 Vote +1Frenchie
      says:

      Bye bye Chery.

    11. Vote -1 Vote +1Reckless1
      says:

      Chery ripe for takeover.

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