Qoros chief executive Phil Murtaugh to leave China-based carmaker

The Financial Times, January 6, 2016

Qoros chief executive Phil Murtaugh to leave China-based carmaker - FT.com Mail, Today at 2.57.27 PM

Qoros CEO Phil Murtaugh is stepping down

Struggling Sino-Israeli car start-up Qoros has shaken up its management for the second time in a year as it seeks to jump-start sales and chart a new course in the fast-moving and technology-driven automotive industry.

The Shanghai-based company on Wednesday said Phil Murtaugh, the former China head at General Motors who was installed as Qoros chief executive in February, would leave the group this month “for personal reasons”.

The announcement was accompanied by a sharp change of direction for Qoros, as it unveiled two new business units: one focused on electric cars and another looking at alternative business models to car ownership and self-driving technologies.

Commenting on Mr Murtaugh’s departure, Dan Cohen, Qoros vice-chairman, said: “What was missing and what the shareholders were hoping to see were, one, higher sales and secondly we wanted to see a car company that is not just another [manufacturer] — that is a unique player . . . That was very difficult and slow to develop.”

He added Qoros wanted a top manager who was “more Silicon Valley-like”.

Qoros was set up in 2007 as a joint venture between Chery Auto, a state-owned domestic Chinese carmaker, and Israel Corp, a conglomerate controlled by Idan Ofer, the London-based billionaire.

With a team of European engineers, the company set about building cars that went beyond other domestic Chinese products.

But despite dreams of being the first “GM” to break out of China, Qoros has so far failed to gain significant traction. Sales in 2015, at 14,000 cars, fell far short of the 35,000 target.

By contrast, Tesla Motors, another prominent auto start-up, shipped more than 50,000 cars in 2015.

Under Mr Murtaugh, Qoros had set itself a target of generating an operating profit by 2018.

Bill Russo, managing director of Gao Feng Advisory, a consulting firm, said the Qoros business model was predicated on volumes in the hundreds of thousands.

“[It] is far off the pace of a viable business case for continuation,” he added. “They need to pursue an alternate approach, as they are not succeeding as a conventional carmaker. On-demand electric mobility is a logical choice for a Chinese company, but they will need a partner who can provide a platform to connect to the end users of such services.”

The company said on Wednesday that Mr Murtaugh, who was formerly chief executive of Coda, a failed electric car start-up, would be replaced temporarily by Anning Chen, Qoros chairman. He also chairs Chery’s joint venture with Jaguar Land Rover.

Qoros and its shareholders — including Kenon Holdings, which controls Israel Corp’s investment — are hoping that a new sport utility vehicle, called the Qoros 5, will help sales accelerate when it arrives in dealerships in March. But Robin Zhu, analyst at Bernstein Research, said the brand was “still pretty unknown to most Chinese‎”.

With only around 100 dealerships in China either built or in the works, Qoros lacks the scale of smaller premium brands such as Cadillac and Volvo, which have between 200 and 250 outlets, and mass-market carmakers that typically have more than 500.

Leave a Reply

Your email address will not be published. Required fields are marked *