Why are Chery cars so cheap?

Why are Chery cars so cheap?

It’s a simple question with a complex answer. Chery is one of more than 10 new Chinese brands to enter the Australian market in the last decade, but it has quickly made its mark thanks to its very affordable range.

So what makes Chery able to enter our highly competitive car industry and immediately undercut the established players? Well, there are several factors in Chery’s affordability and it starts with where they’re from. Put simply, labour costs in China are lower than most other car-building nations, so Chery is able to keep production costs lower.

This is also helped by lower costs for raw materials, as China also makes many of those in-country too. The Chinese government's support for its own industry is another major factor in this, too, as it has assisted not just Chery, but many of its brands as it looks to become competitive on the world stage after decades of European, American and Japanese dominance.

What is the history of the Chery car brand?

Chery Automobile only began in 1997, in Wuhu, China, as a local government initiative to stimulate the economy. Its first car was a reworked version of a Seat Toledo called the Fengyun, but also known as the Cloudwind.

It grew quickly, but not without some trouble. While early models were based on licensed platforms, General Motors accused Chery of copying one of its designs and filed a lawsuit, and Volkswagen Group also threatened legal action, but the case was settled out of court.

2026 Chery Tiggo 4

In 2001 Chery made a decisive move and began exporting cars and quickly became China’s leading vehicle exporter - a title it still claims today. So as sales grew in its home market, where it is one of the 10 biggest brands, Chery has established a bigger global network than many of its Chinese rivals; at least until recent years.

What types of cars does Chery make?

The Chery brand is focused on building relatively simple but very affordable SUVs. Its current Australian line-up consists of the Tiggo 4 Pro small SUV, Tiggo 7 mid-size SUV and Tiggo 8 seven-seat SUV. It currently sells the Omoda 5 with a Chery badge, but the company has committed to spinning off Omoda as a standalone entity alongside the new Jaecoo brand.

While introducing three brands into the Australian market less than three years after Chery returned to Australia is a bold strategy, it will allow for the Chery brand to remain focused on offering more affordable models while positioning Omoda and Jaecoo as slightly more premium experience proportions.

2025 Jaecoo J7

But this is also just the tip of the iceberg, with Chery Automobile overseeing no less than 11 brands in total. In addition to Chery, Omoda and Jaecoo there’s also the Exeed and Lepas premium brands, Luxeed (a joint-venture with Huawei for electric cars), the SUV focused Jetour, iCar for electric SUVs, Karry for commercial vehicles, and Exlantix and Aiqar that are also export brands. Plus it also offers the Chery Fulwin plug-in hybrid and Chery New Energy electric car sub-brands. And to complete the portfolio is Chery Jaguar Land Rover, another joint-venture that makes the British brands’ vehicles in China.

Where is Chery Automotive based?

Since its first days Chery Automotive has been based in Wuhu city in the Anhui province in eastern China.

2025 Chery Omoda E5

Where are Chery cars designed and manufactured?

While Chery's core operations remain it Anhui, where it has two car production plants, two engine plants and a transmission factory, it has expanded its operations with more Chinese factories as well as production facilities in overseas markets in South America, the Middle East and Asia assembling ‘knock-down kits’. 

Notably, as the brand has expanded and increased its focus on export markets, Chery has increased its global presence. While it has three design studios in China, it also has one in Germany to get more European influence on its vehicles.

2025 Jaecoo J7 PHEV

What are some other reasons why Chery cars are so cheap?

Being a relatively new car company (only 28 years) means it does not have many of the legacy costs that impact much older brands. Particularly American brands that have significant costs associated with employee pensions and legacy production costs.

Chery has also rolled out innovative ways to reduce manufacturing costs, such as robotised factories that have helped automate assembly lines and streamline the production process. 

It’s also a very deliberate strategy from Chery management to keep the costs low for its models, which is helping to grow sales and establish its footprint around the world. We’ve seen this already in Australia, where the Tiggo 4 is already amongst the cheapest vehicles available and has almost immediately found buyers.

2026 Chery Tiggo 4

But keeping its cars cheap has meant making some compromises. As Chery’s international engineering boss recently revealed to CarsGuide, some of its active safety systems were rushed and need refinement in order to operate more seamlessly.

Obviously offering cheaper vehicles will boost sales initially, but it will impact other aspects of the brand. Resale value is likely to be lower than average, as the gap between a new and used Chery will be smaller.

Chery also needs to establish its long-term credentials in the Australian market, having first entered the country with an independent importer in 2011, only to quickly disappear when its very cheap ($9999) J1 hatch was simply not good enough to convince people to buy one. 

2025 Chery Tiggo 8 Pro Max

Second time around things look better, but how long it retains its title as ‘Australia’s most affordable car company’ will likely play a big factor in its long-term success.