Chery begins Venezuela assembly
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China Daily, September 5, 2011
When production began at Chery Automobile's new Venezuela factory on Aug 29, it marked latest in a series of recent overseas moves by China's biggest car exporter.
Assembly of its A1 and A3 models in the state of Aragua will make Anhui-based Chery the first Chinese automaker to build cars in Venezuela.
The plant will help meet strong pent-up demand in Venezuela that has arisen due to the country's import duties, said Chery Vice-President Zhou Biren.
Venezuela imposes a 40 percent tariff on imported cars, so the factory will now clear that bottleneck and boost sales, Zhou said.
The Venezuela operation follows the roll out of Chery's Fulwin 2 hatchback in Ukraine, where it began to assemble cars in 2006 and has now produced more than 70,000 units.
The Fulwin 2 hatchback, along with its four-door variant, hit the Ukrainian market at the beginning of September. The models will also be imported to Russia and other Commonwealth of Independent States countries with zero custom duties.
Just a few weeks before the carmaker's moves in South America and Eastern Europe, it reached an agreement with the China-Africa Development Fund on Aug 19 to form the Chery Overseas Industrial Investment Co joint venture to provide financial and consulting services in Africa.
The new company with a registered capital of 1.27 billion yuan will be 55 percent owned by Chery, with the development fund holding the remaining share.
Chery first exported cars to Africa in 2003 and now sells about 15,000 vehicles on the continent, mostly from an assembly factory it since built in Egypt.
Analysts say the carmaker's new joint venture could be well positioned for a planned free trade zone of 26 sub-Saharan countries that will greatly reduce tariffs and increase demand for vehicles.
Hong Kong arrival
In August Chery also became the mainland's first homegrown carmaker to enter the Hong Kong market when its Tiggo and S21 models went on sale on the island.
Hong Kong now has more than 4 million vehicles, most of them imported from Europe, the US, Japan and South Korea.
The only Chinese mainland vehicles on the road before were a small number of sightseeing buses.
Industry observers say Hong Kong has strict standards on importing vehicles, so the exports are a breakthrough for Chery.
The carmaker has a sales goal of 2011 500 to 1,000 units for this year in Hong Kong and plans to increase the number of dealers from the existing two to four.
Due to fierce competition, a number of domestic automakers have now set their sights overseas.
Another Anhui-based automaker, JAC Motors, reported 280 percent growth in exports in the first seven months of 2011 compared to the same period last year, much of it to Brazil.
Lin Huaibin, an auto analyst at the Shanghai branch of the global research firm IHS, told China Daily that passenger vehicle exports to South America are growing the fastest. Exports to Eastern Europe, Russia and Egypt also increased, he said.
Sales expansion
Domestic automakers are also expanding sales networks to aid overseas sales, said Marvin Zhu, senior analyst at JD Power Asia Pacific.
Chery exported 17,008 vehicles in July, a 92.53 percent increase over the same month last year, bringing its exports to 88,835 units in the first seven months, an increase of 89.25 percent year-on-year.
Domestic automaker Geely Automobile Holdings Ltd reported exports of 13,385 vehicles in the first six months of 2011, a 93 percent increase over the same period in 2010.
Overall exports by domestic automakers in July hit 73,300 vehicles, a 57.7 percent rise over the same period in 2011. The performance was better than any previous month, even before the onset of the global financial crisis in 2008.
Total exports of China-made vehicles - including passenger and commercial vehicles - from January to July totaled 454,400 units, a 57.3 percent increase over the same period last year.
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