In recent years, the automotive industry has witnessed some significant changes, especially in the context of electric vehicles (EVs) and innovative technologiesOne of the prominent players in this landscape is Chery Automobile, a Chinese automotive manufacturer that has been making waves in both domestic and international marketsAfter a lengthy period devoid of initial public offering (IPO) aspirations, news has emerged that Chery is contemplating an IPO once again, signaling a potentially pivotal moment for the company.

Reports indicate that IDG Capital is in discussions to acquire stakes in Chery Holding Group, which prompts the revival of Chery’s IPO plansThe company is reportedly eyeing a submission for its first IPO as early as 2024, potentially valuing the firm at around 150 billion Chinese YuanHowever, the specifics of these negotiations and the overall accuracy of the reports remain uncertain, as Chery’s official spokesperson stated that while preparations for an IPO are indeed underway, other details circulating online may not be completely accurate.

Chery Automobile stands as a unique case in the landscape of Chinese automakers, as it is one of the few leading automotive brands that remains unlisted on the stock exchangeOver the years, it has established itself as a top player in exports, consistently ranking first among Chinese automobile exportersThe dynamics of the capital market, especially in the current era which favors renewable energy and electric vehicles over traditional fuel-powered cars, put Chery in a challenging positionThough the company has recently increased its production and sales of electric models, its primary product line is still heavily reliant on traditional fuel vehicles, leading to uncertainties surrounding its future valuation.

Reflecting on Chery's tumultuous history with IPO attempts, it’s evident that the journey has been anything but smooth

Advertisements

Over the last two decades, the company has made several bids to go public, but each initiative fell through due to various complicationsFor instance, Chery first sought to initiate its IPO back in 2004, but unclear stake relationships with SAIC Motor Corporation necessitated a halt in the plansSubsequent attempts in 2006, 2009, 2012, and 2016 also failed to materialize due to a host of reasons, ranging from market conditions to regulatory challenges.

In 2019, after a series of failed attempts, Chery shifted strategies and began a mixed-ownership reform initiative, selling portions of its stake in Chery Holding and Chery Automobile with an intention of raising 16.244 billion YuanConsequentially, this led to a significant investment from Qingdao Wudaokou, which in turn acquired 51% of Chery Holding and 35.58% of Chery Automobile in exchange for 19.6 billion Yuan, thus becoming the largest shareholder in both entitiesThe chairman of Chery Group, Yin Tongyue, expressed a renewed commitment for the company to achieve IPO status, lamenting that they had missed the opportunity to list ten years prior.

This financial injection from the mixed-ownership reform enabled Chery to adopt a more stable growth trajectory from 2019 to 2021. During this period, amidst some unfavorable rumors surrounding Qingdao Wudaokou, Luxshare Precision stepped in to acquire nearly 20% stakes in Chery Holding and Chery Automobile, positioning itself as a new strategic investorBy 2022, Chery's sales reached a breakthrough of over one million vehicles for the first time, with a total of 1.234 million units sold, representing a growth of 28.2%. This milestone positioned Chery as the fifth Chinese automotive brand to surpass the one million sales mark.

The significance of exports in Chery's success cannot be overlookedIn 2022, the company exported around 450,000 complete vehicles, making up 39% of its cumulative sales for the yearYear-to-date in 2023, Chery's sales have continued to climb, with figures reaching 1.6656 million vehicles sold as of November, a remarkable increment of 47.8%. Notably, the company’s export figures doubled, emphasizing its strong presence in international markets in regions such as Russia and South America, where they have established a reputation akin to that of their Chinese counterparts.

Given the intense competition in the automotive landscape, particularly in the EV segment led by companies like BYD and Tesla, Chery faces critical challenges as it strives to catch up

Advertisements

The Chairman has indicated that 2022 would serve as a kickstart for Chery’s IPO ambitions ahead of a projected 2025 deadline for completionDespite impressive sales records, Chery acknowledges falling behind in the rapidly evolving sector of electric mobility.

In the wake of new initiatives, the company has re-evaluated its strategy, laying out an ambitious roadmap for future innovations in the field of electric vehiclesThis includes a bold plan to invest 20 billion Yuan annually in R&D efforts over the next five years, amounting to a total investment exceeding 100 billion YuanThe establishment of the Yaoguang Laboratory aims at leveraging combined expertise, anticipating the recruitment of more than 25,000 specialized staff members focused on electric vehicle innovation.

In terms of product offerings, Chery is preparing to introduce a multitude of new models under various brands—including the new iCAR 03 SUV—aimed at targeting different segments within the electric vehicle marketCollaborations with tech firms such as Huawei signal a strategic pivot towards harnessing technology and innovation, with a joint venture rolling out the ZhiJie S7 electric sedan that has already surpassed substantial sales within weeks of its launch.

Despite attempts to develop a comprehensive array of electric vehicles, a disparity in product positioning remainsAnalysts point out that the overlapping nature of different brand offerings like Chery, Jetour, and Exeed may create unwanted competition internally, further complicating Chery's ambitions to establish a strong foothold in the electric vehicle market.

While the automotive landscape continues to evolve rapidly, with traditional combustion engine vehicles waning in popularity, the pivot towards electric vehicles presents both an opportunity and a formidable challenge for CheryThe market landscape is saturated with fierce rivals offering a diverse range of EVs, and Chery will have its work cut out to claim its share of this highly contested segment

Advertisements

Advertisements

Advertisements