Chery Automobile Co, an emerging carmaker from the Chinese mainland, has agreed with Taiwan's Shengrong Auto, a subsidiary of Prince Motors, to make its own brand cars on the island for the local and other markets.

Chery A3 has succeeded in meeting Taiwan's safety standards in a local collision test.

In a statement to China Daily, Chery, based in the eastern city of Wuhu, Anhui province, said it will start to assembly its A3 compact model at Shengrong Auto's plant in Taichung city of Taiwan province at the end of this year with kits from the mainland.

Chery's Riich G6 and G5 mid-sized sedans will also be made in Taiwan next year.

Shengrong Auto will invest heavily to raise the plant's annual manufacturing capacity to a maximum of 100,000 units a year. It will also be the exclusive agent for Chery vehicles in Taiwan.

The two sides also plan to jointly develop all new models in the future.

Chery spokesman Jin Yibo said the A3 succeeded in meeting Taiwan's safety standards in a local collision test in June, helping remove allay Taiwan motorists' doubts on the safety of cars from the mainland marque.

The A3 to be made in Taiwan now has hatchback and notchback versions on the mainland with three engine options: 1.6, 1.8 and 2.0 liters.

The model retails between 70,000 and 100,000 yuan on the mainland.

Chery is one of a few mainland carmakers planning to foray into the Taiwan vehicle market, which is dominated by Japanese brands.

However, new vehicle sales on the island with a population of 23 million tumbled by 29 percent to 229,000 units last year from 2007.

Other Chinese automakers are also planning to foray into the Taiwan market.

A top executive from Geely, the privately-owned carmaker in mainland's Zhejiang province, said it plans to produce its Panda micro car in Taiwan with Yulon Motor Co, another carmaker based in the island.

However, as the first step, Geely will start to export the 1.0-liter Panda to Taiwan through a trading subsidiary of Yulon in the second half of this year.

Foton, a truck and SUV maker owned by Beijing Automotive Industry Holding Corp, is reportedly in talks with a Taiwan auto agent to sell its vehicles in the island.

Taiwan now imposes a 25 percent tariff on vehicle imports and a 12.5 percent duty on spare parts imports.

Chery's Jin said its cars sold in Taiwan will partly use locally-made spare parts in the future since there's a sound spare parts sector in the province.

The mainland's biggest auto exporter is boosting overseas sales mainly through producing abroad.

It now has nine plants in seven foreign countries, including Russia, Ukraine, Egypt, Iran, Indonesia, Malaysia and Uruguay.

Chery Chairman Yin Tongyao said it will have a total of 15 overseas plants this year.

The company announced earlier this year that it aims to sell 156,000 cars abroad in 2009, up from 135,000 units last year.

Chery and US firm Quantum LLC also have set up a joint venture in Wuhu which is to begin production of Chery's high-end cars at the end of this year for domestic and foreign markets.

The venture will have a manufacturing capacity of 150,000 units a year in the first stage.

Chery now has an annual production capacity on the mainland of 650,000 vehicles, 650,000 engines and 400,000 gearboxes .

Its lineup includes micro, sub-compact, compact and mid-sized cars, SUVs and commercial vehicles under the brands of Chery, Riich, Rely and Kerry.

(China Daily June 29, 2009)