Chery readies Corolla fighter

CHINA’S Chery Automobile is ready to fire its next salvo into Australia’s new-car market in the form of the Toyota Corolla-sized J3 hatchback.

Known as the A3 in China, the five-door J3 hatch will be the first small car to arrive in Australia from the world’s biggest automotive market, following on from the launch of Chery’s J1 city-car and the J11 compact SUV here in late February.

Just as the J1 and J11 set new price benchmarks in Australia at $11,990 and $19,990 drive-away respectively, the J3 hatch will also undercut top-selling mainstream Japanese small cars like the Corolla (from $20,990 plus on-road costs) and Mazda (from $21,330 plus ORCs) by a significant margin.

The hatch-only J3 should also be more affordable than the cheapest Korean small cars – Holden’s Viva (from $18,790), Kia’s Cerato ($19,390) and Hyundai’s i30 ($19,590) – but whether it will also undercut Australia’s most inexpensive small car – Malaysia’s Proton Persona sedan (from $14,990 drive-away) – and the closely related Gen.2 hatch (from $15,990 drive-away) remains to be seen.

Australian Chery distributor Ateco Automotive has received federal approval to sell both the J3 hatch and sedan, which unlike the J1 and J11 are fitted with electronic stability control (ESC) – the potentially life-saving safety technology that became mandatory for passenger cars sold in Victoria this year.

Left: Chery A3 sedan.

Despite that, the J3 hatch will become available in the third quarter of this year only through the 45 Chery dealers now open for business outside Victoria, before being released in that state via an additional 15 Chery dealers in November, when the J1 and J11 are also expected to be offered with ESC.

GoAuto understands that Ateco Automotive – the Sydney-based importer that also brought us Great Wall Motors, Australia’s first Chinese passenger vehicle brand, in June 2009 – does not yet plan to introduce the four-door J3, despite the fact sedans comprise about half of one of the nation’s fastest-growing vehicle segments.

Riding on a 2550mm wheelbase (90mm shorter than the Mazda3’s), the Chery J3 hatch measures 4352mm long, 1794mm wide and 1464mm high, making it about 100mm shorter but 40mm wider than the Mazda3, Australia’s most popular small car this year.

Like the sedan, Australia’s J3 hatch will enter a predominantly 2.0-litre/automatic market segment with only an 87kW/147Nm 1.6-litre four-cylinder petrol engine combined only with a five-speed manual transmission.

The 1310kg five-seater hatchback rides on 16x6.5-inch alloy wheels with 205/55 tyres and will have a 750kg towing capacity.

As with the J1 and J11, a healthy standard equipment list for its bargain-basement pricing will be a key selling point for the J3, which will come with a host of features in addition to the now-obligatory air-conditioning, remote central locking and power windows/mirrors.

However, in addition to ESC and ABS brakes, the J3 will also offer six airbags, putting it on par with the best-equipped vehicles in the small-car class, although the J3 is yet to receive a European or Australian NCAP crash safety rating.

Like Great Wall, Chery sales are expected to begin slowly before they pick up pace. The brand attracted just 53 buyers for the J1 and 166 customers for the J11 in March, their first month on sale.

However, Chery Automobile said at the brand’s official Australian launch in February that it hopes to notch up 5000 sales in Australia this year, before expanding its national dealer network to 90 within two years.

Great Wall notched up 10,000 vehicle sales in Australia last month – after little more than 18 months on sale here – with its X240 compact SUV and V240 one-tonne ute range and similar dealer numbers.

But Ateco, which also plans to introduce Great Wall’s first passenger car here this year and is in the running to add a third Chinese passenger vehicle brand to its stable, has cautioned that the ambitious 2011 sales figure announced by Chery was more likely to be achieved in the first full year with all three models on sale nationwide.

“We’re still putting the finishing touches on our dealer network and have yet to launch in Victoria, so we’ll be slowly building sales over the next few months,” said company spokesman Daniel Cotterill.

Ateco, which says an automatic version of the J3 is on the horizon and also has a sedan body style up its sleeve, will not reveal its J3 sales forecast but expects between 100 and 150 sales of the J1 per month and 250-300 J11 sales a month from its initial dealer network outside Victoria.

Chery’s official Australian launch was held in lavish style aboard the Star Ship on Sydney Harbour on February 24 and was attended by Chery deputy general manager Zhou Biren, who is also the general manager of Chery International.

At the time, Chery – China’s biggest passenger vehicle exporter – said the J3 would go on sale here in June as the third key model in its drive to sell 5000 vehicles locally in 2011, and made it clear Australia was a jewel in its ambitious export strategy.

Along with South Africa – another right-hand drive market that will soon launch the J3, as well as the new light-sized J2 hatch and sedan – Australia is seen as a key Western export market for Chery.

In China, Chery is about to release a facelifted A1/J1 micro-car and, apart from the B-segment J2 and C-segment J3, also sells an A5 mid-size Camry rival with 1.6, 1.8 and 2.0-litre engines, as well as a host of other A, B and D-segment models and a range of SUVs and commercial vans.

At the Sydney launch, Mr Zhou said Chery valued Australia as one of the most important automotive markets in the Asia-Pacific region, would introduce more models to Australia in the future and would build Australia into one of its most important overseas markets.

“Landing on Australia is of great symbolic significance for Chery to expand its overseas operation and deepen brand internationalisation, and serves as a touchstone for Chery to make massive entries into developed markets such as West Europe and North America in the future,” said Chery.

“At the same time, Chery is confident of competing with the early entered Japanese, US, European and Korean brands to promote the prosperity of the Australian auto market.”

Earlier in July, Chery had announced its new ‘Growth 2011’ business strategy, which focuses on “technology, internationalisation, brand and responsibility” and aims to bring its products in line with international standards as part of its plan to “accomplish the strategic transformation to internationalization”.

In response to a slowing Chinese auto market, Chery this year plans to shore up its existing 12 manufacturing bases, speed up the construction of four new plants and “progressively increase the ratio of procurement, R&D and talent indigenisation to ‘go out’ and take root abroad”.

“Industry insiders forecast that the growth of the Chinese auto market will slow down significantly in 2011 due to changes in policies and the market environment,” said Chery in February.

“The huge overseas market will create the greatest opportunities for Chinese auto-makers this year.”

Chery’s 2011 export aspirations started well, with 10,505 exports in January, mostly to emerging markets in eastern Asia, Latin America and the Middle East. That represented a 132 per cent increase on 2010 figures and brought it a step closer to achieving its goal of amassing 50,000 total exports in the first quarter of this year.

Last year Chery, which has more than 1000 sales outlets worldwide in more than 80 markets, exported 91,986 vehicles – up 93.2 per cent year-on-year – or about 13.5 per cent of its overall sales.

Domestically, Chery sold about 682,000 vehicles last year – up 36 per cent on 2009 – to remain China’s passenger vehicle market leader.