Chery Faces Backlash as Luxeed Sales Plunge Instigates Owner Threats to Switch Brands

July 11th — “In our partnership with Huawei, we’ve found success when heeding their advice and faced challenges when diverging. Hence, our current principle is: during disagreements, we follow Huawei; when in alignment, we proceed with Chery’s approach.”

Chery Auto Chairman Yin Tongyue once described the collaboration with Huawei on the Luxeed brand in these terms, winning over consumers with Chery’s perceived willingness to listen.

However, a series of recent events have led many Luxeed owners to question this stated commitment, suggesting a discrepancy between words and actions:

Persistent industry rumors suggest friction in the Chery-Huawei partnership, impacting Luxeed production capacity. In monthly sales reports, Chery consistently positions the Luxeed brand last, contrasting sharply with how other Huawei partner automakers highlight their collaborative brands. Concerns over unequal treatment arose when Luxeed vehicles lacked a standard Bluetooth key feature offered by its sibling brand, the Sterra ES, under the Chery umbrella. Critically, the Luxeed brand’s official video channel recently streamed the launch of a new Chery model.

This sequence of events ignited Luxeed owner frustration. Many voiced strong objections, labeling Chery’s actions as commercially opportunistic. Vocal critics in live streams even suggested swapping out the “Chery Auto” badge for one signifying “Harmony Smart Drive,” driven by the sentiment: “We paid over 300,000 RMB for Luxeed, attracted by the brand, not Chery itself.”

Compounding these tensions, Luxeed sales plunged to 2,459 units in June, hitting a multi-month low. Owners increasingly attribute this decline to Chery’s perceived strategic ambivalence towards the Luxeed brand.

A Triple Apology Fails to Quell Outrage

On July 8th, Chery hosted the global launch of its newly unveiled Fengyun A9L. To the dismay of Luxeed owners, the official Luxeed Zhixing video channel streamed this event.

The utilization of Luxeed’s channel for a Chery model promotion sparked immediate backlash. Online commentary quickly filled with questions like “This is Luxeed, what does Chery Fengyun have to do with it?” and accusations of Chery exhibiting “poor commercial practice.”

Faced with intense criticism, Luxeed abruptly ended the stream. Cielo Lan Tian, Product Director for Luxeed under the Harmony Smart Drive umbrella, subsequently issued three separate apologies via the app, promising “Today’s incident has been addressed and will not recur!” and emphasizing commitment to Luxeed owners. Lan Tian further pledged tighter controls.

Despite the apologies, owner dissatisfaction persisted. Comments under Lan Tian’s posts reflected deep frustration: “As a Luxeed buyer, we invested over 300,000 RMB for the Luxeed brand, not Chery – I could have bought a BMW or Mercedes-Benz at that price.” Calls to physically remove the “Chery Auto” badges and replace them with “Harmony Smart Drive” gained traction among owners.

Plummeting Sales Fuel Questions Over Commitment

The backdrop to this friction includes Chery Chairman Yin Tongyue’s publicly stated principle for the Huawei collaboration: prioritize Huawei in disagreements.

Despite this declaration, the execution is being questioned. The Luxeed venture has faced significant turbulence since the Luxeed S7’s November 2023 launch. Persistent delivery delays fueled speculation about Chery prioritizing production for its own Star Era ES model over the Luxeed S7, contributing to stagnant sales.

Observers noted contrasting approaches in sales reports. BAIC highlighted its Huawei-collaborative Arcfox brand prominently, whereas Chery placed Luxeed last in its communications, a subtle signal interpreted by some as prioritizing internal brands.

Beyond Partnership Strains: Additional Headwinds

The brand encountered two further controversies in 2024:

The “Key Controversy”: In May, owners discovered Luxeed models required purchasing a Bluetooth key separately, unlike competing models under Harmony Smart Drive or the related Sterra ET. Perceived inequity led Luxeed to announce free retrofits and refunds for earlier purchasers using loyalty points.

The “Price Adjustment”: In late June, Harmony Smart Drive announced an immediate cash discount of 20,000 RMB (~$2,800) on all Luxeed models. While seen by the market as a competitive move against rivals like the Xiaomi SU7, it infuriated existing owners who purchased without such discounts. Demands for compensation have yet to be formally addressed.

These incidents demonstrably impacted sales. After peaking at 17,736 units in December 2023, Luxeed deliveries dipped below 5,000 by April 2024, collapsing to just 2,459 units in June – a record low.

Restructuring Hints: Is Luxeed Heading for Independence?

Chery’s recent major restructuring announcement added another layer. The company formed a new Group for Domestic Branded Business, dividing operations into four distinct divisions: Exeed, Arrizo/Tiggo (iCar), Fengyun, and QQ. Notably, the Luxeed brand was absent from this reorganized structure.

Significantly, management responsibilities for the self-owned Exeed brand, seen internally as Chery’s home-grown premium effort, were folded into this new domestic group. While Yin Tongyue frequently expressed public support for Luxeed, the internal resource allocation and portfolio goals for Exeed had historically caused strategic friction.

The restructuring suggests a potential elevation for Luxeed. By incorporating the potentially competing Exeed brand directly into the domestic operations group while leaving Luxeed unmentioned (following its earlier shift to a separate BU in 2024), Chery may be positioning Luxeed for greater independent operation.

Product Director Lan Tian implied a significant shift in early July app posts: “…Events this week hold pivotal significance for Luxeed’s development… The past conflicts are still vivid… Post this week, Luxeed can sprint forward!” He concluded optimistically: “…The clamor surrounding Luxeed has settled. Luxeed, press onward and upward!”

Furthermore, Anhui Luxeed New Energy Automobile Co., Ltd., wholly owned by Chery Auto, was officially established earlier this year. These combined signals point towards a future of more autonomous operation for Luxeed.

However, overcoming the stark sales nadir of June and translating organizational changes into tangible market recovery presents a significant challenge for the Luxeed brand.