Chery to build car plant in Brazil
April 27th, 2009
Chinese car maker Chery Automobile announced it will invest up to US$700 million in a car production plant somewhere in Brazil. With a capacity of up to 150,000 vehicles per year, the plant will produce for both the Brazilian market and for export to other Latin American countries and the US. It is the company’s first production plant in Latin America, though it has an assembly facility in Uruguay.
The 150,000-unit/year plant represents one of the biggest investments yet by a Chinese car maker in Latin America. Chongqing Changan Automobile said in February that it will begin car production in Mexico next year, forming a joint venture with Autopark Mexico to build 50,000 vehicles per year. Meanwhile, China’s biggest privately held car company, Geely Holding is building a 300,000-unit/year facility in León, Mexico, to be in full swing by 2013.
Mexico has been the traditional destination of choice for Chinese automakers coming to the Americas both for its industrial infrastructure and proximity to the US market, itself the Promised Land for these automakers. The strategy is to skirt the heavy tariffs on exporting directly to the US by instead building the cars in Mexico and exporting north of the Rio Grande duty-free under NAFTA.
By contrast, Chery setting up a major facility in Brazil represents a major commitment to expanding its presence in that country and South America as a whole. Besides the plant’s physical distance from the US, Chery will likely be turning out ethanol-burning or fuel-flex cars to suit the local market, where nearly all cars use some amount of ethanol as a fuel source.
Keep your eyes peeled for QQs (pictured above) on the streets of Rio in the coming years.
Image: dancewithshadows.com