Editor’s note: Be it a time-honored business like Philips Automotive or a new car brand like Qoros, the goal is the same: reaching the leading edge of their respective segments in the auto industry. Shanghai Daily recently talked with the people behind the wheel of the two companies to see what they are doing to stay ahead of the curve.

With the recent launch of its first model and the opening of its first dealership in China, Qoros Automotive, a Shanghai-based joint venture between Chinese automaker Chery and Israel Corp since 2007, is driving headlong into the mid- to high-end segment of the market, undaunted by what many analysts see as significant challenges. 

China’s domestic carmakers have a poor track record in trying to capture that segment. Can Qoros break the mold?

“If a new brand can offer something special, then its existence is meaningful,” Guo Qian, chairman and CEO of Qoros, said during an interview after the launch of the carmaker’s first dealership in Shanghai this month.

“Otherwise, it is just another player in a price war,” he said. “I think the most valuable achievement of Qoros so far is creating a new user experience of styling and driving. For example, the combination of sportiness and comfort in our new Qoros 3 sedan cannot be found in any of our rivals.”

Lack of history frees the company from the burden of legacy, giving it the opportunity to create a design language and a product profile from scratch, based on latest market trends. This is how a newcomer can pull itself up alongside more established players and is, in fact, what the “Qoros model” stands for, Guo said.

The company has short-cut development time by outsourcing most of its engineering work to world-class suppliers. Qoros may not be viewed as an industry innovator, but that doesn’t seem to concern the company too much.

A lot to offer

Qoros ultimately will rise or fall on how consumers view their products, and the company said it has a lot to offer them. For example, the QorosQloud telematics services offer more than 30 functions covering navigation guidance, driving control and social sharing via a digital ecosystem comprising a mobile device, laptop and in-vehicle touchscreen. These functions can bring great convenience to motorists, said Stefano Villanti, head of sales and marketing at Qoros. 

“There are still people who think the competitive edge of carmaking in China is cost, which is a rather outdated idea,” Villanti said. “People here are really looking for high-value products with international standards.”

The Qoros 3 is the first car from a China-based brand to receive a maximum five-star safety rating from the authoritative crash test group Euro NCAP. It was also the top scorer so far this year. Test drive reports in the Chinese media have been generally positive, praising the car’s elegant styling, fine detail, stable performance, comfortable ride and noise control level.

But when it comes to the car’s price — which ranges from 119,900 yuan (US$19,747) to 167,900 yuan — opinions are quite divided. Bullish observers argue that “one gets what one pays for.” More bearish commentators say Qoros may be overconfident about its market influence as the starting price of the Qoros 3 exceeds those of many established, popular models and even approaches that of Sagitar made by Volkswagen, whose brand premium is often considered the highest in China.

Brand is an important factor in choosing a car, Villanti said, but it’s not the only factor. Qoros is targeting sophisticated consumers who have clear product demands rather than just a simple dedication to the brand emblem on the front.

Guo said the Qoros is more than just a means of transportation; it is also as an expression of quality life.

“If one sitting in a Qoros car can feel the excellent execution, the fine materials, the comfort of travelling and the joy of steering, then we are getting the message across,” he said. “Of course, as a new brand, we intend to offer consumers higher cost-effectiveness. If our product is a little bit better than its competitor in terms of each quality specification, then we will put the price a little bit lower than the rival.”

Customer interest

Villanti is not coy about his satisfaction with the carmaker’s marketing achievements to date. Dealership visits are on the rise. Qoros said it has had more requests for a test drive than any other auto brand launched in the past two or three years.

Villanti declined to disclose specific sales targets for the Qoros 3 sedan, though he did say that maximum annual production capacity of 150,000 units at the company’s plant in Changshu, Jiangsu Province, won’t be fully utilized next year.

According to international standards, the utilization rate at a new automotive plant gradually increases with time if the quality of production is to be maintained, Guo said.

The development of the Qoros sales network will follow the same pace, he said, adding that the most important issue for the company at this stage is not sales, but rather brand image and after-sales satisfaction.

More than 120 dealerships have signed sales agreements with Qoros, and all of them will go into operation by the end of next year.

Unlike most of brands that develop sales networks following the traditional Tier-1, Tier-2 and Tier-3 classification of cities in China, Qoros has chosen a strategy of city clusters — setting up presence in major cities that can influence surrounding areas, according to Villanti.

Of course, all these efforts will take some time to pay off. In the meantime, will investors keep their confidence in Qoros, whose net losses since 2011 have reportedly accumulated to 2 billion yuan?

Guo said he believes investors in the auto industry all understand they are making a long-term investment, and the industry’s ability to achieve long-term profit is based on good products, whose development should not be judged by short-term factors.

“Two weeks ago, when driving the representative of our Israeli shareholder from Shanghai to Changshu, I showed him the performance of the Qoros 3 sedan on the highway,” Guo said. “He was itching to have a try himself even before we got there. If a shareholder thinks the product does have a future, then he will help you through any difficulties.”