Chery's Domestic Sales Plunge Over 40% Amid Intensifying Channel Conflicts and Dealer Strain

In May 2026, Chery Holding Group sold 247,800 vehicles, of which 181,900 were exported—a year-over-year increase of 80.5%—marking the third consecutive month of record-breaking monthly export volumes for Chinese automakers. Domestic sales during the same period totaled approximately 65,900 units, accounting for 26.6% of total sales. In the first five months of 2026, Chery’s domestic retail sales declined by 40.24% year-on-year, far exceeding the overall 19.5% contraction in China’s passenger vehicle market during the same period. Chery operates five domestic brands—Chery, Fengyun, Jetour, Exeed, and iCAR—but its offline distribution channels have splintered into eight independent networks: Jetour is divided into the Shanhai and Zongheng series, while Fengyun is split into the L-series and Flagship series, each operating separate dealerships. Except for QQ and iCAR, the other six channels focus on vehicles priced between RMB 100,000 and RMB 250,000. However, limited differentiation in vehicle size, specifications, and pricing has caused consumer confusion and frequent competition among dealers for customers and orders. Multiple dealers reported that monthly store sales have dropped from 70–80 units to just 30–40 units, leading to rising inventory coefficients and mounting pressure on cash flow and profitability. Although Chery reduced mandatory dealer procurement targets starting in the second half of 2025 and held a key dealer meeting in May 2026 emphasizing priority clearance of existing inventory without forced stockpiling, severe price inversions on new vehicles have left minimal profit margins on car sales. Dealer incentives have thus become critical to sustaining earnings. These incentive programs are tied to procurement volume, sales target achievement rates, and customer satisfaction scores. Dealers who do not procure vehicles struggle to secure base rebates, yet those who do procure face tied-up capital if they cannot sell the inventory. As of 2026, Chery maintains over 3,600 sales outlets across China, covering a price range from RMB 30,000 to over RMB 300,000. However, amid intensifying competition in a saturated market, shrinking demand for internal combustion engine (ICE) vehicles, and accelerating electrification, new channel additions have failed to generate incremental sales. Instead, significant product overlap and ambiguous brand positioning have exacerbated internal cannibalization. Between 2024 and the first half of 2025, localized dealer network withdrawals had already begun emerging in certain regions. In 2025, Chery’s ICE passenger vehicle revenue reached RMB 174.329 billion, representing 58.1% of its total revenue. This core business has been directly impacted by the rapid rise of new energy vehicle (NEV) penetration. Meanwhile, its NEV offerings are fragmented across multiple systems—including Fengyun, Jetour Shanhai, Exeed’s Stellar Era, and iCAR—each requiring independent brand building and dedicated channel support. However, the limited number of models per channel makes it difficult to cover dealership operating costs, further dampening dealer investment willingness. Currently, the RMB 100,000–250,000 price segment has become the most fiercely contested battleground in China’s NEV market, with dense product deployments from BYD, Geely Galaxy, Leapmotor, Changan Qiyuan, and Deepal. Without clear differentiation among its multiple NEV product lines, Chery risks being caught in a dual squeeze—internal competition and external market pressure. While robust export growth has temporarily cushioned overall performance pressures, the domestic market remains fundamental to achieving stable scale, risk diversification, and sustainable channel support.