Qoros seeks new strategy amid poor performance

Automaker's new leaders look for niche in market

Qoros' senior executives blamed the automaker's overemphasis on product development for its bleak sales in China since its first model hit the market less than two years ago.

Statistics show the joint venture between China's Chery Automobile and the Israel Group sold less than 7,000 models in 2014 in China, where passenger car sales exceeded 19 million units in the same year.

"I think where we went wrong was we never made the transition from an engineering project management company to an operating business," Phil Murtaugh, who joined Qoros as CEO two months ago, told China Daily during the ongoing Shanghai auto show.

"We launched the sedan in November 2013. We kept doing engineering and we launched the hatch in July 2014. We kept doing engineering and we launched the SUV in December 2014," he said.

"When you finish a project, the company has to change its focus into a business. You have to generate revenue. You have to control cost. You have to run the business. And that is why Sun Xiaodong and I are here," Murtaugh added.

Sun, Qoros' sales chief, joined the floundering company in late 2014. He had worked with Murtaugh to rapidly boost the sales of Buick models in China when they worked together at General Motors several years ago.

Sun said he has been trying to figure out a new market strategy for Qoros.

"The most fundamental thing is to find our niche in the market and find out whether we have a clear understanding about target customers," said Sun.

Generally speaking, the brand's target customers are about 35 years old and well educated, said the automaker. Sun said Qoros is carrying out a three to four-month market survey, which he hopes will reveal useful details to work from.

Qoros had about 80 dealerships in 2014 and plans to double the number in 2015. Sun said the small number was affecting the brand's performance.

"We have less dealerships and less chance to exchange ideas with consumers so we plan to open cafes in downtown areas so that we can integrate Qoros into their lives but not force our cars on them," said Sun.

"I mean real cafes where they can learn about cars but not showrooms as other brands have built where they offer coffee to customers," he added.

Qoros tried the cafe concept at the Shanghai auto show, where company chiefs sat down with potential customers and reporters over a cup of coffee during the automaker's press conference.

The automaker said for the first time that it is a Chinese brand rather than the international label Qoros used to use.

Analysts said the moves might help improve people's affinity to the brand as some critics, including John Zeng at LMC Automotive, said some consumers disliked Qoros because it tried to conceal its relationship with its parent company Chery.

Diversified sales

Sun said Qoros will also diversify its sales methods, both offline and online.

He added that online sales will not be as simple as using popular e-commerce platforms such as Tmall but did not offer any further details.

Some critics blamed the price of Qoros cars for its lackluster sales, but Murtaugh said the company would "absolutely not" cut their prices despite many other automakers, including Volkswagen, doing so in China's current market.

"Price is not an issue when people don't buy. So we think we are in the right ballpark," he said.

Murtaugh said from the 50 or so models he has been involved with during his career of more than 40 years in the auto industry Qoros cars were "the best".

The automaker's first model, the Qoros 3 sedan, won a five-star rating in Euro-NCAP crash tests, the highest score of a Chinese car in its segment.

"In fact, we have a higher conversion rate in the auto industry," said Murtaugh.

He said about 6 to 8 percent of people who test-drive a Qoros car make a purchase, while the industry average conversion rate stands between 4 to 5 percent.

lifusheng@chinadaily.com.cn

Phil Murtaugh (right), Qoros CEO, and Sun Xiaodong, the company's sales chief, share their ideas at the Shanghai auto show. Photo Provided to China Daily

(China Daily 04/27/2015 page18)