Qoros hopes new CEO will boost sluggish sales

Management reshuffle not the solution, say industry insiders

Qoros Automotive Co appointed former General Motors' senior executive Phil Murtaugh as its CEO last week, a move seen as one of the most aggressive attempts to turn around the floundering automaker's performance.

The joint venture between China's Chery Automobile Co and investment group Israel Corp made a loss of $95 million in the third quarter of 2014, up from $48 million in the same period the previous year.

The management reshuffle started on Dec 17 when the brand's former president and CEO Guo Qian was replaced by Chen Anning and sales chief Stefano Valenti was succeeded by Sun Xiaodong, a sales veteran in the Chinese auto market.

Chen, who serves as Qoros' president, said Murtaugh was chosen from a dozen candidates because of "his leadership in challenging situations".

Murtaugh's western background and work experience in China is believed to be another major factor, as Qoros has claimed to be an international automaker since it was established in 2007.

Murtaugh held several senior management posts in his career, including vice-president of Shanghai General Motors, president of General Motors China, executive vice-president of SAIC Motor Group and Asia-Pacific CEO of Chrysler Group LCC.

High hopes are pinned on Murtaugh and Sun to help Qoros fight its way out.

Murtaugh said he is excited to join Qoros and work with Sun, his former colleague at Shanghai General Motors, at a news conference after his appointment was announced.

He said he visited Qoros' production facilities in Jiangsu province and test-drove its models, which he said offered the best driving experience of all the cars in the same segment.

Murtaugh said Qoros is among the few qualified to compete with international brands in terms of design, manufacturing and quality. He said proof of this was the automaker's first model, the Qoros 3 sedan, which won a five-star rating in Euro-NCAP crash tests, the highest score of a Chinese car in its segment has achieved.

Qoros has suffered lackluster performance. It sold 5,928 cars in the first 11 months of 2014, a figure seen as disappointing in the world's largest auto market.

Murtaugh said he is well aware that the top priority is to improve Qoros' sales. Despite the challenges ahead, he said he is confident in the brand's future and added that the first step is to improve brand awareness and further consolidate the company.

Despite Murtaugh's enthusiasm, some analysts argued that appointing one or two senior executives would have little effect on the brand's performance.

"The brand's strategy itself is problematic. That is, the brand stays aloof from the general public," said John Zeng, general manager of Shanghai-based consulting firm LMC Automotive.

"One example is that you don't have to equip your cars with Continental tires when more popular brands are using cheaper ones for their models," he said.

Zeng said cutting prices could be a solution to boost sales, as competition in the segment is "extremely fierce".

Industry insiders said a lack of models on offer and ineffective marketing campaigns are also reasons for Qoros' sluggish sales.

The brand has just three models in the Chinese market: a sedan, a hatchback and a crossover.

A less-developed sales network is believed to be another impediment to Qoros' sales. The automaker said about 80 dealers would start business by the end of 2014 and the number would rise to 160 in 2015.

lifusheng@chinadaily.com.cn

(China Daily 02/09/2015 page19)