Biplab Das 
Chinese automaker Chery Auto has begun its sales operations in Italy with the launch of its petrol-powered Omoda 5 crossover SUV, priced from EUR 27,900 (USD 30,182). This move is part of Chery’s broader strategy to expand its manufacturing capacity and increase sales across Europe.
Chery Auto, known for offering budget-friendly vehicles, primarily electric, began its European journey earlier this year by entering the Spanish market. Now, the company is extending its reach within the continent, with plans to penetrate over 60 new markets globally in the next three years. Shawn Xu, Vice President of Chery, highlighted this ambitious expansion during a presentation in Milan on Thursday.
Navigating EU tariffs
The recent decision by the European Union to impose additional tariffs on Chinese-made electric vehicles (EVs) has posed new challenges for Chery. The company’s EVs will now face an extra duty of 20.8%, significantly affecting their competitive pricing in the European market.
Despite this, Chery remains committed to its European expansion. The Omoda 5, which currently offers a petrol version, will be available as an EV starting in September. By the end of 2023, Chery plans to introduce the larger Jaecoo 7 SUV in Italy, initially in petrol and subsequently in plug-in hybrid versions. By 2025, Chery aims to have three SUV models under its Omoda and Jaecoo brands, catering to various fuel types and different parts of Europe.
Local manufacturing prospects
As trade tensions escalate and tariffs pose new hurdles, Chery is considering establishing manufacturing facilities within Europe. This strategic move could help mitigate the impact of tariffs and boost sales. Earlier this year, Chery agreed with a local partner in Spain to manufacture cars in Barcelona and is now exploring additional production sites in the region.
Italy has shown significant interest in attracting Chery’s manufacturing investment. The Italian government has engaged in talks with several Chinese automakers, including Chery, to bring automotive production to the country. Industry Minister Adolfo Urso recently met with Chery Auto’s Chairman Yin Tongyue in Beijing as part of an official visit to China.
Future plans and market positioning
Chery’s expansion into Italy and other European markets reflects its strategic positioning to become a significant player in the global automotive industry. The company’s decision to introduce a range of fuel types for its vehicles aims to address diverse consumer preferences and market demands across Europe.
The Omoda 5’s petrol version is just the beginning of Chery’s offerings in Italy. The upcoming EV version of the Omoda 5 and the Jaecoo 7 SUV models are expected to strengthen Chery’s foothold in the competitive European market. By diversifying its product lineup and exploring local manufacturing opportunities, Chery is positioning itself to navigate the complexities of international trade and regulatory challenges.
Industry reactions and competitive landscape
Chery’s entry into the European market comes at a time when Chinese automakers are increasingly looking to expand their presence globally. The additional EU tariffs on Chinese EVs have heightened the need for strategic adjustments in pricing and manufacturing. “The uncertainty of how their products will be received in these international markets has been creating the most anxiety for China EV Inc,” said Tu Le, founder of consultancy Sino Auto Insights.
With the U.S. and EU settled on tariffs and rates, Chinese automakers like Chery can now adjust their global strategies accordingly. Establishing manufacturing facilities within Europe could provide a competitive edge, allowing these companies to circumvent tariffs and reduce production costs.
Chery Auto’s foray into the Italian market and its broader European expansion plans highlight the company’s strategic efforts to become a prominent player in the global automotive industry. By introducing a diverse range of vehicles and exploring local manufacturing options, Chery aims to navigate the challenges posed by EU tariffs and strengthen its market position. As the company continues to expand its footprint, its ability to adapt to international trade dynamics and consumer preferences will be crucial to its success.
