Chery Automobile, This Time It's Gone Too Far

Organizational surgery of the export champion and the quality cracks they try to stitch up.

In October 2026, Chery Automobile (HK:09973) had information density so high it was nearly overload; two sentences from the company's chairman Yin Tongyue are particularly worth pondering.

One sentence was at the 2026 Global Innovation Conference: "Chery is a high-tech innovation company wearing the guise of an automaker." The other was at the 2026 World Intelligent Connected Vehicle Conference, responding to the Malaysia OMODA 5 recall event: "Going global is not about harvesting, you must be humble and low-key, no boasting, blind expansion makes it easy to turn into land reclamation."

One is an offensive identity declaration, the other is a defensive self-reminder.

Putting these two sentences together, Chery's real situation emerges: it is using a new high-tech company vest to争取 valuation flexibility and strategic depth; but the manufacturing organization underneath the vest that defines itself by export scale, with system capabilities not yet synchronized globally, determines how far it can go.

More notably, Zhang Guibing's personnel adjustment is exactly a key stitch Chery Automobile dropped when trying to stitch the "vest" and "substance" together.

On November 1st, Chery Automobile announced: October sales were 282,500 units, up 7.2% year-on-year.

Among them, Chery brand sales were 200,600 units, up 18.2% year-on-year; Exeed sales were 5,637 units, down 40.6% year-on-year; Jetour sales were 58,400 units, down 1.1% year-on-year; iCAR sales were 11,700 units, down 5.5% year-on-year; Luxeed sales were 6,090 units, down 52.5% year-on-year.

For the first 10 months, Chery cumulative sales were 2.3593 million units, up 10.1% year-on-year; exports were nearly 1.7 million units, accounting for about 72%; new energy vehicle cumulative sales were 918,000 units, accounting for about 38.9%.

This set of data shows that Chery's growth is still mainly driven by exports and the main brand, and differentiation between brands is already very obvious; only the Chery brand grew year-on-year.

Scale is still growing, but the growth structure has exposed problems: Chery is becoming more like a company defined by exports, rather than a company defined by global system capabilities.

The day before the sales release, Chery Automobile's third-quarter report laid out the other side of scale growth.

In the first three quarters of this year, Chery Automobile revenue was 241.234 billion yuan, up 12.3% year-on-year; net profit attributable to parent company was 13.963 billion yuan, down 2.8% year-on-year.

More notably, Chery realized an exchange gain of 2.974 billion yuan during the same period last year, whereas in the first three quarters of this year, it faced an exchange loss of 3.171 billion yuan.

Revenue is increasing, profits are contracting. The higher the export proportion, the greater the disturbance of exchange rate fluctuations on the income statement; the more aggressive the R&D, the more short-term profit needs scale and quality credit to support it.

However, Chery recently encountered a troubled period in the overseas market. The National Day holiday hadn't even ended before Chery played a big game.

On October 6th, in Iskandar Puteri, Johor, Malaysia, a 2023 model OMODA 5 had its rear axle longitudinal arm break while driving, the rear axle connected to two rear wheels detached directly, the vehicle stopped in the middle of the road, fortunately no personal injury was caused.

On the evening of October 11th, Chery Automobile issued a statement saying that this batch of vehicles might have insufficient welding strength at local welding positions of the rear axle longitudinal arm, with a risk of welding tearing in extreme cases; Chery Malaysia subsidiary has started a recall for the affected 8,878 OMODA 5 units.

This event happened shortly after the HIMA brake pedal incident, basically falling within the same public opinion window, and provided practical evidence for the urgency of the new regulations issued by the Ministry of Industry and Information Technology and four other departments on October 10th with extremely high visibility.

Regardless for Chery, which has ranked first among Chinese brand passenger car exports for 23 consecutive years, or for other Chinese automakers who are making exports their second growth pole, this is simply a shake and disaster for the quality reputation of Chinese brands.

More critically, Chery is using Malaysia as a localization pivot for Southeast Asia.

In this market where they are preparing to take root long-term, investing capacity and channels, the mass-selling model OMODA 5 having its rear axle break twice in the same way within two years, the impact is not just sales, but the fundamental judgment of local regulators and consumers on whether Chery's manufacturing system is reliable.

The response from the Malaysia Land Transport Authority (JPJ) confirmed the severity of this judgment.

During the first axle break in 2024, JPJ only required a recall, no vehicle model certification freeze. But this time, JPJ directly suspended the OMODA 5 vehicle model certification (VTA), new car registration was completely stopped, and at the same time expanded the audit scope from certain batches of parts to Chery's production assembly line, quality control system, and rear axle supplier welding inspection procedures.

The blade of regulation cut from products to systems, this is much more important than the recall of 8,878 units itself. Yin Tongyue apologized directly to Malaysian Industry Deputy Minister high officials recently, which already explains the severity of the problem.

With scale accumulation being completed quickly, it is asking this company to use slow capabilities to support its endurance. Committing the same mistake twice makes it hard to get forgiveness.

"Autos K-Line" believes that the globalization of listed automaker sales systems can be spread out with channels and products within a few years, but the globalization of quality systems cannot be compressed by speed, nor tolerate even a tiny error.

From the timeline perspective, the Malaysia recall is not the trigger for Chery's personnel adjustment, but in an unforgiving way, it proved the authenticity of the disease that the personnel adjustment needs to treat: when sales end globalization runs ahead of the quality end, speed itself becomes a negative asset for brand credit.

When exports become the only growth engine, and premiumization cannot create brand premium in the domestic market, Chery faces a dilemma that must be broken - domestic and foreign operating separately, while the brand capability and quality credit that truly determine long-term profits must be unified under global standards.

Therefore, Zhang Guibing's task is not just to save a recall, but to demolish this wall.

On October 7th, Chery Automobile issued "Announcement on Deepening Globalization 3.0 Strategy Executive Division Adjustment", announcing the integration of the Chery main brand into the global market system, Chery Automobile Executive Vice President Zhang Guibing directly manages the Chery brand domestic business group, concurrently serving as General Manager of International Business Business Group, Chairman of Market and Marketing Management Committee; Executive Vice President Li Xueyong manages the Jetour Brand Business Unit, focusing on promoting the premiumization development of Jetour brand.

Zhang Guibing has been at Chery for 27 years, the brightest background comes from overseas.

He started as a quality engineer, ran through Chery's first overseas CKD project, ground out local experience in Brazil's tariffs, exchange rates and union environment, subsequently managed international business for a long time, spreading channels to over 130 countries and regions.

Putting such a person in the position of Chery brand domestic business group, while letting him continue to concurrently serve as General Manager of International Business Business Group, and coordinate global styling, HR, legal, spare parts, and MoJia Robot, Chery's intent is very clear: use the person most familiar with overseas battlefield standards to force the domestic system to accept global quality benchmarks and operational discipline.

In the October sales volume, Chery was the only main brand with year-on-year growth, which gives Zhang Guibing's task more weight: the main brand is not only Chery's current growth leader, but also the test field for quality system globalization.

Export proportion exceeding 70% means overseas is no longer Chery Automobile's supplement, but the main battlefield; but the main brand's production R&D, supply chain and channel teams still run with strong domestic market inertia.

Letting Zhang Guibing hold both ends at the same time is essentially pulling the global resource pool and regional markets into the same decision loop, using overseas already-verified systematic capabilities to irrigate the domestic in reverse. Zhang Guibing's style is results-oriented and rapid, which is exactly the character needed to demolish walls.

However, one person carrying main brand operations, international business, global functions and new robot business, power and responsibility highly concentrated itself, constitutes a risk variable that needs to be observed.

Zhang Guibing's other identity is General Manager of MoJia Robot.

He said very plainly about MoJia's positioning, automobiles and embodied robots share about 70% of technology that can be synergistically reused, MoJia is the first domestic robot enterprise to transplant supply chain system to automobile parts suppliers, synergy covering technical, manufacturing system and channel after-sales three levels.

At the 2026 MoJia Robot Global Launch Conference, Zhang Guibing disclosed, MoJia Robot global sales volume has exceeded 3,000 units, covering over 100 application scenarios, products and services entered 60 countries and regions.

However, MoJia's true strategic value for Chery lies not in short-term sales, but that it is Chery's only carrier able to enter the global market in a non-automotive identity. As technical products entering overseas markets, robot development flexibility and error tolerance space are not in the same magnitude as full vehicles.

Placing MoJia under Zhang Guibing's coordination, alongside global styling, HR, legal, spare parts, shows Chery has already treated it as a component of the global operation system organizationally, rather than a new track needing separate cultivation.

Yin Tongyue complained publicly in April 2026: "Although we embrace AI in every dimension, in the eyes of many capital market people, we are still treated as traditional automakers, so our price-earnings ratio is still low."

Admittedly, Chery H-share current P/E ratio is about 6.5 times, market cap hovers around 130 billion HKD, market pricing logic is still an export-oriented traditional full-vehicle manufacturer.

MoJia, Robotaxi, eVTOL, Agricultural Machinery these extensions, short-term are not enough to change Chery Automobile's profit structure.

However, they jointly bear a function, that is before premiumization in the auto main business realizes brand premium, fight for a blueprint framework and longer time window for Chery in industry discourse and capital market different from export automakers, use technology reuse to create strategic depth.

However, technical depth itself cannot automatically solve system credit problems.

Less than ten days after the Malaysia recall statement, Chery officially launched the industry's first Vehicle-to-Grid V2G scaled operation station on October 16th, 400Wh/kg solid-state battery appeared and gave 2027 mid-pilot production line commissioning plan.

On October 19th, CATL Chery (Wuhu) New Energy Technology Co., Ltd. was established, registered capital 1 billion yuan, CATL holds 51%, Chery holds 49%, this is already the second battery joint venture company between the two this year.

Third-quarter report shows, Chery first three quarters R&D expenses 11.046 billion yuan, up 40% year-on-year, provided financial footnotes for these technical actions. Chery's attack depth on electrification core links not only did not stop, but is accelerating.

But precisely because depth is real, the defensive cracks exposed by Malaysia rear axle weld seams may be even more eye-catching.

V2G and solid-state batteries point to future product competitiveness, rear axle detachment points to safety credit of products already running on the road.

In the view of "Autos K-Line", Chery has the ability to push technical depth to 2027, but failed to prevent a rear axle longitudinal arm from cracking on the Malaysia road in 2026 in the defense end. The deeper the attack depth, the less the defense bottom line should be torn.

Another noteworthy thing is, Luxeed entered the Ministry of Industry and Information Technology 412th batch "Proposed New Admitted Vehicle Production Enterprise" list on October 16th, production address is No. 8 Wuhuan Jiang Road, Wuhu; in the same batch of documents, the factory district Chery Automobile applied to cancel registration is exactly this factory district.

This means the qualification Luxeed obtained is not new capacity, but Chery transferring the production entity status of an existing factory, along with capacity, overall moved to Luxeed. This also means, from now on, new car rear badges no longer must hang "Chery".

Qualification landing, let Luxeed in law no longer be just "a product line inside Chery factory", but market level independence will not automatically solve within short time because of a announcement.

First 10 months of 2026, Luxeed cumulative sales 49,700 units, down 29.6% year-on-year, average monthly sales less than 5,000 units; beginning of 2026 set 300,000 to 350,000 units annual sales target, now completion rate less than 20%.

Sales decline and independent qualification landing combined together, make Luxeed "being pushed out" urgency stronger.

Luxeed management layer also underwent collective blood change in 2026, Guo Rui, Zhao Changjiang etc. with Huawei and BYD background people entered core positions. Pushing Luxeed out for independent accounting, independent financing, even leaving institutional space for future independent listing, essentially is Chery in listed company statement level a "stop bleeding" action.

This constitutes two sides of the same organizational surgery with Zhang Guibing's personnel adjustment.

Zhang Guibing's task is to pull domestic main brand into global system, using overseas standards force domestic system upgrade; Luxeed independent task is to peel the premiumization burden off main brand and listed company body, let Chery's core resources be more concentrated toward export main battlefield and quality system repair.

One does addition, one does subtraction.

At the performance communication meeting held on October 31st, Chery Automobile Executive Vice President Qi Shilong responded to Luxeed independence said, hope Luxeed team is more like new force enterprises, not simply made into "big-sized" traditional automakers.

After third-quarter report release, Citigroup downgraded Chery Automobile net profit forecast and target price, Soochow Securities included export tax refund reduction impact into profit expectation, Guotai Junan Securities downgraded net profit attributable to parent company expectation, these actions may to a certain extent reflect market worry.

For profit timeline concerned by outsiders, Chery Automobile management layer estimated, domestic new energy business is expected to gradually achieve break-even in second half of 2027; for 2027 overseas market, management layer gave target of year-on-year growth about 20%, and expressed actual performance is expected to exceed this expectation.

Views of AutosKline:

For Chinese listed automakers, globalization first half is about who sells cars farther, second half is about who on others' roads, under regulation and in front of consumers, makes cars more reliable!

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