Just three and a half years after their introduction, the Riich and Rely brands are being discarded by Chery Automobile Co., Ltd.
The independent automaker and China’s leading vehicle exporter has decided to fall back on the Chery brand that has made it domestically and internationally famous, retaining only the Karry as the brand for its commercial vehicles.
The Riich and Rely were created in March 2009, at the height of China’s market boom driven by government stimulus policies, as mid- to high-end brands, thus effectively reducing the Chery as an entry-level brand.
With the recent corporate decision, all existing Riich and Rely models will be absorbed under the Chery brand, to be divided into two product lines – A Series (entry-level) and E Series (mid- to high-end levels). Chery’s downsizing also includes a drastic reduction of its vehicle and engine development projects from more than 130 to less than 30.
Chery’s decision is a recognition of its failure in prematurely adopting a multi-brand strategy.
The biggest mistake for Chery was Yin Tongyue and his management team’s belief that “giving birth to more siblings helps in their street fights with neighboring kids.” The company was trying to launch too many models under four different brands that overlapped one another. To date, the company makes more than two dozen models covering A00, A0, A, B, SUV and microvans. Product overlapping is especially severe between the Riich and Chery brands.
Due to a slowed market demand and increasing competition, Chery’s extensive model offering has not translated into more sales. The best-selling models to date are still the Chery QQ mini car, Chery Tiggo city SUV and the Chery Qiyun and Chery Fengyun compact sedans. These accounted for nearly 80 percent of Chery’s July sales.
The company realizes that its multi-brand strategy has failed in improving company brand image and the huge investment in product R&D and marketing of multiple brands have actually dragged down its growth.
Chery has ended up with too many siblings fighting among themselves. And the failed multi-brand strategy is a tough lesson for Chery and for all independent carmakers.