Chery Raises Profile On Zooming Exports

Key Takeaways:

• Chery sold 1.75 million cars in the first three quarters of this year, up 40% year-on-year, fueled by strong exports
• The automaker’s monthly new energy vehicle sales nearly tripled year-on-year to a record of nearly 59,000 in September

By Lee Shih Ta

BYD (NYSE:BYD) has captured much of the spotlight in China’s climb to the top of the global electric vehicle (EV) leader board, banking on its early start that attracted legendary billionaire investor Warren Buffett. But a lesser-known story involves the smaller Chery, which has been nipping at BYD’s heels as the country’s second-largest EV brand.

Now, China’s largest EV brand you’ve never heard of may be looking to raise its profile just a tad with a drive into public markets. According to a Bloomberg report, Chery Holdings Group is considering taking its auto arm public in Hong Kong at a likely valuation of $7.1 billion, down by two-thirds from a reported 150 billion yuan ($21.2 billion) last year.

Founded in 1997, Chery isn’t well known in the West, despite its status as one of China’s major automakers with strong government backing in its home in Eastern China’s Anhui province. It is very much a state-owned entity, controlled by the State-owned Assets Supervision and Administration Commission (Sasac) of the municipal government in the city of Wuhu.

In addition to its core business in cars and auto parts, the company is also active in other areas including finance and real estate.

Unlike BYD and Huawei’s AITO brand, Chery has stayed rather low-profile in the EV space, with even lower visibility than some startups. Its founder and Chairman Yin Tongyue acknowledged last October at a company event that Chery “launched early but harvested late” in the new energy vehicle (NEV) business. But those days of living in obscurity may soon be over, as Yin promised that “Next year we are taking off the gloves.”

Big Sales Growth

As the market leader and pride of China, BYD has attracted kudos time and again each time it notches a new sales record. But Chery is also making some serious money.

The company says it sold 244,000 cars in September, up 28.6% year-on-year, with 109,000 of those exported, also up 20.6% year-on-year. Its NEV sales last month numbered 58,941, up 183.4% year-on-year to a record high.

Chery is also China’s top car exporter so far this year. According to data from the China Association of Automobile Manufacturers, the company sold 532,000 cars overseas in the first half of 2024, up 10.1% year-on-year, replacing SAIC as the country’s top exporter. During the same period, BYD exported just 201,000 cars, or less than half as many as Chery.

Chery sold 1.75 million vehicles in the first three quarters of the year, up about 40% year-on-year. That included exports of 829,000 vehicles, up 24.5%, while its domestic sales powered ahead by 57.2% to 923,000 units. Those strong growth figures contrast sharply with China’s broader passenger vehicle market, which notched five consecutive months of year-on-year declines before returning to modest 4.3% growth in September.

Early Exporter

Chery was one of the earliest arrivals to China’s car exporting scene, and has been growing steadily ever since. It entered the Middle East as early as 2001 and reached a modest milestone when it exported more than 1,000 units in 2004. From those modest beginnings, its exports were approaching the 1 million mark when it sold 955,000 cars abroad last year, as its exports charged ahead by an average rate of 52.2% annually over the last three years.

Its current main export destinations include Russia, Egypt and Brazil, which explains why many Westerners have never heard of the brand.

Chery is also quite the opportunist, swooping into Russia at the start of the Ukraine war when the likes of Toyota (7203.T) and Nissan (7201.T) pulled out. In the first half of this year, it ranked third in terms of sales in Russia, trailing only Russia’s own Lada brand and the Haval brand produced by China’s Great Wall Motor (601633.SH; 2333.HK). Last week, Reuters reported that Chery was now assembling cars in Russia for sale locally at three factories vacated by foreign brands including Volkswagen and Mercedes at the start of the war.

The company has also agreed to set up a joint venture with Spain’s Ebro-EV Motors in Barcelona and produce new NEV models, with plans to churn out 50,000 units a year by 2027 and 150,000 by 2029. That could make Chery the first Chinese company with a European production facility.

Following the EU’s decision to levy additional anti-dumping tariffs on Chinese EVs, however, Chery is reportedly considering delaying its production by a year to assess how tariffs will impact its plan to import semi-finished vehicles from China to assemble in Europe.

The company is also eyeing Southeast Asia as another potential production location, centered on an agreement with a Vietnamese company involving $800 million in investment. That plan would see the start of mass production by the end of 2025 with annual output of 200,000 units.

Falling Valuation

This isn’t the first time Chery has reportedly considered an IPO. As early as 2004, the Anhui provincial government was said to be contemplating an IPO for the company and it went through some reforms in its ownership and shareholding structure to pave the way for such a move. Some media reports pointed out late last year that Chery was in talks with IDG Capital, which they said was interested in buying pre-IPO shares at a valuation of 150 billion yuan – triple the valuation in the latest Bloomberg report.

In terms of its business performance, Chery has also been on a three-year winning streak. Its revenue rose from 105.6 billion yuan in 2021 to over 200 billion yuan in 2022 and jumped to 315.1 billion yuan last year, ranking it 385th on the Fortune Global 500 List.

People who drove Chery’s cars once received stares of pity from friends due to the company’s low reputation in China. But that’s changing as its name rises abroad, with its vehicles even becoming the State Car for the president of Brazil, according to a Chery vice president.

The ongoing rally in Hong Kong’s stock market could also provide good timing for Chery to float its shares if the gains continue. Beijing’s recent rollout of a subsidy program for people who trade in gas-powered cars for NEVs should also help demand for NEVs to keep rising, providing new momentum for auto stocks.

This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.