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Cowin Auto: win-win or no-win?

“Creating a smart and connected automobile that young people love.”

This is the slogan of Cowin Auto (Kaiyi Qiche), yet another Chinese brand that has emerged in a hotly contested market.

The brand was officially unveiled to the media and the public on August 28 after over a year of speculations on this “semi-spinoff” from Chery Automobile.

Although executives of the company stressed that Cowin Auto is a new brand and manufacturer independent of Chery, its ties with Chery are undeniable.

Both Cowin Auto and Chery are under the control of parent company Chery Holding. Cowin Auto chairman Lu Jianhui is a co-founder and former vice president of Chery, while President Zheng Zhaorui used to be in charge of Chery sales. Virtually all of Cowin Auto’s employees come from Chery’s former sub-brand divisions Cowin (Qiyun) and Karry (microvan and commercial vehicles). Even the first model to be launched by the company, the C3, is essentially a modified version of the Chery A3 and contract manufactured by Chery.

These make it feel like Cowin Auto is simply another new brand created by Chery. In fact, Cowin Auto is dubbed as Chery’s “Jiangbei Project” in industry circles because it utilizes many of the idling assets of Chery and has set up shop in the Jiangbei District of Wuhu, where Chery is based.

Is Chery abandoning its “One Chery” strategy and going back to its old ways of “having multiple kids so they can fight better together?”

In reality, Cowin Auto is but another local government backed vehicle project. Half of the ¥2 billion ($325 million) invested in the project is funded by entities controlled by the municipal government of Wuhu. The new company therefore claims that it is parallel to Chery, not part of it.

However, Cowin Auto’s brand slogan has raised eyebrows. Its goal, according to Zheng, is to become an innovative Internet automobile company and build cars with the Internet in mind. Its strategy is to operate with “light asset” with low-cost focusing on vehicle R&D and marketing & sales rather than manufacturing to quickly respond to market demand. One of the three core features of Cowin Auto’s cars, says the company, is “incorporating leading smart Internet technologies.”

The slogan sounds bold for a company that has come into being in a relatively short time. Cowin Auto seems to be trying to copy the successful business model of Chinese smartphone maker Xiaomi. Its emergence also follows the recent trend of automakers trying to go “smart.” SAIC Motor and Chinese e-commerce giant Alibaba are cooperating to develop an “Internet car.” BAIC has announced to work with Chinese smart TV provider LeTV to develop a smart car.

Cowin Auto’s different strategy and brand positioning may be interesting. But the fact that it was unveiled amidst 11 consecutive months of year-on-year market share decline for Chinese passenger vehicle brands casts some shadow to its future prospects. Can Cowin Auto’s trendy new strategy ensure success amidst cutthroat competition with more than 500 models vying for a piece of the market?

Ultimately, as Zheng pointed out, Cowin Auto’s fate will be decided on the viability of its vehicle products and the rule of the survival of the fittest.

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