Chery Australia is taking a distinctly different approach to pricing compared to some of its competitors in the increasingly crowded Chinese car market. Rather than engaging in frequent price adjustments and promotional offers, the brand is adopting a “launch and hold” strategy, aiming to build customer trust and maintain resale values.
Why Avoid a Price War?
Lucas Harris, Chery Australia’s Chief Operating Officer, explains that the company believes constant price changes erode consumer trust and negatively impact the resale value of their vehicles. In his view, there’s no real need for a “price war,” and the brand doesn’t want to participate in what he sees as a destabilizing cycle.
A Case Study: The Tiggo 4
To illustrate their strategy, Harris points to the Tiggo 4 SUV, which has remained at the same price point since its launch 18 months ago. The company has no current plans to alter this pricing. While acknowledging past mistakes, such as an initial miscalculation in the launch price of the Tiggo 7 and, to a lesser degree, the Omoda 5, the emphasis is now on getting the pricing right from the outset.
Data-Driven Decisions and Dealer Consultation
Chery’s pricing strategy isn’t based on reactive benchmarking against competitors. Instead, it relies on extensive dealer consultations and consumer research. The goal is to thoroughly analyze the market before launch, rather than reacting to competitors’ moves. Harris explains that looking at competitor pricing doesn’t necessarily provide a relevant indicator, as the market can change rapidly.
The Benefits of Predictability
The long-term objective of this “launch and hold” approach is to create stability in the vehicle’s residual values and, subsequently, bolster customer confidence. Constantly fluctuating prices can be detrimental to consumers, particularly those financing a vehicle. Furthermore, consistent pricing allows dealers to better plan their margins and manage stock turnover.
A Partnership Approach with Dealers
Beyond simply informing dealers of pricing decisions, Chery emphasizes a collaborative approach. Pricing discussions occur before a car is launched, fostering a sense of partnership. This ensures dealers are active participants in the process and feel invested in the pricing strategy.
The Trade-Offs and the Focus on Trust
While maintaining a consistent price may mean sacrificing short-term sales gains – especially when competitors reduce prices or offer promotions – Chery believes the benefits of predictability outweigh these potential losses. They’re betting that customers value trust and strong resale values more than short-term promotional deals.
Ultimately, Chery’s pricing strategy is a calculated risk: that building trust and ensuring strong resale values are more important for long-term success than chasing weekly sales victories. The true test of this approach will be how consistently Chery sticks to its strategy and how transparently any necessary adjustments are communicated to both customers and dealers.
