Earlier this month, Chery and Geleximco Group signed a cooperation agreement to become a joint venture. They plan to build a factory in Vietnam with a production capacity of up to 200,000 vehicles, with an investment of USD 800 million, to produce Omoda and Jaecoo brand vehicles.
When Chery entered the Vietnamese market 11 years ago, it cooperated with an experienced joint venture, Heping Motor Joint Venture Company (VMC). VMC once assembled well-known car brands such as Kia, Mazda, and BMW. However, Chery's adventure did not last long. It only survived for less than 4 years and eventually fell into chaos.
In this cooperation, Chery plans to build a 100-hectare vehicle assembly plant, determined to become Vietnam's "new energy" vehicle production center. In addition, Chery has already established two factories in Thailand and Indonesia. The new factory in Vietnam is geographically more suitable for the needs of neighboring countries and can be exported to Laos, Cambodia or the Philippines.
Chery's strategy in the Vietnamese market has changed. It no longer only sells cheap cars but has begun to focus on the high-end car market. Including models such as the Omoda C5, E5 and Jaecoo 7, which are all C-segment SUVs, targeting the automobile segment with large consumption in Vietnam. Chery chooses to sell cars in popular market segments and faces considerable competitive pressure.
Competitors in the same gasoline vehicle segment as the Omoda C5 include the Mazda CX-5, Hyundai Tucson Kia Sportage, etc. They sell for only about VND800 million and sell hundreds of units every month.
Not only does Chery have to deal with its own past image challenges, it also has to compete with a host of other Chinese car brands in Vietnam. In addition, flexibility in sales policies, improvement of service quality and accurate understanding of consumer needs are also crucial.