The story of the automaker that would be shipbuilder

Anhui-based Chery Auto has always been a special case in the panorama of China’s automotive industry.

The country’s number 9 automaker (selling over 1.2 million vehicles in 2022), that has gone through a bumpy ride recently (with several changes of shareholders before coming back in the orbit of the SASAC [State-owned Assets Supervision and Administration Commission] of its home-town Wuhu), was a pioneer as far back as 2003.

A pioneer turned wrong?

It produced then its legendary « QQ », the first nationally designed modern car – although designers of its quasi-twin GM-Daewoo Matiz strongly contested this qualification at the time.

More recently, it has been among the early players in the development of EVs (Electric Vehicles), accounting for 22% of its sales last year and ranking number 6 among Chinese actors in that dynamic field.

Nevertheless, when Chery acquired Wuhu Shipyard Co in 2007, its innovative policy was considered with some circumspection.

The fact a money-earning automaker would buy from giant CSSC (China State Shipbuilding Corp.), struggling small tankers and bulk carriers builder, was considered nothing more than a local arrangement for keeping the latter afloat.

Sixteen years on

Sixteen years later, the promoters of Chery’s shipbuilding diversification may have revenge.

Beginning of this year, Wuhu Shipyard served as the vehicle for acquiring the assets of Sanjin Shipbuilding Industry Co in Weihai (Shandong). And this time, the rationale is clear for any observer.

The shipyard established in 2000 by South Korea’s Samjin Shipbuilding has been in a difficult situation recently; but it has knowledge (although dating) on PCTC (Pure Car and Truck Carriers) building.

And those vessels, dedicated to out-of-the-factory vehicles transport, have become the focus of China’s auto manufacturers’ attention since last year.

PCTC fever

Preparing an export offensive based on their strong positioning on EVs, major Chinese automakers (including SAIC Motor, GAC [Guangzhou Auto Corp.], and BYD) have been, directly or through joint ventures with shipping specialists, feeding the order-books of domestic shipyards dominating the global PCTC segment.

The Weihai acquisition could – pending confirmation of the shipyard’s capacity – prevent Chery from the escalating waiting times for ship delivery linked to that situation. And internalize the benefits of building tools for its own use (with an order for three ships that carry 7,000 cars each, mentioned as following the acquisition) or for third parties.

Strategy in an evolving environment

Seeing foresight in the original Chery acquisition of Wuhu Shipyard would undoubtedly be wrong – the local arrangement was the real motivation at the time.

But the strategy is set in an evolving environment. And the odd acquisition of 2007 may transform into a valuable asset, as China’s automakers are preparing the Armada that will carry their global ambitions over the years to come, and Chery may build its own.

Photo © Sanjin Shipbuilding (colors modified)