Chery joins torrid auto pace with Dalian plant

To meet the challenge of increasing investment by global brands and fierce competition in the world's most robust car market, Chery Automobile Co, the largest wholly Chinese carmaker, plans to build a 200,000-unit plant in northeastern port city of Dalian to make vehicles for both domestic and overseas markets.

Company spokesman Jin Yibo told China Daily that total investment in the Dalian plant, Chery's first domestic facility outside its home base in eastern city of Wuhu, would exceed 4 billion yuan after initial investment of 2 billion yuan.

The factory is to begin production of Chery's small and medium-sized cars in June 2011 and will be put into full operation in 2015, Jin said.

"The new plant will be a juncture between our domestic and overseas markets using Dalian's geographic advantage," he said.

Dalian is one of the biggest ports in China and has large container and car carrier docks.

Jin said the move is necessary for Chery to eliminate its "production capacity bottleneck" and further branch out in both domestic and foreign markets.

"We have to become big and strong to survive and develop amid unprecedented fierce competition. Many multinational companies are speeding up investment in China," he added.

Chery now has an annual production capacity of 450,000 vehicles and 450,000 engines at its home base.

In the first three quarters of this year, its sales jumped by 22.9 percent year-on-year to 337,600 cars, mainly boosted by robust domestic demand. In September alone, it reaped an all-time monthly record of 51,453 vehicles.

Jin said Chery's full-year sales are expected to hit 460,000 units, up form 356,000 units in 2008.

January-to-September vehicle sales in China grew by 34.24 percent to 9.66 million units. Industry officials and executives have projected that overall 2009 sales would top 12 million units, up from 9.35 million units last year.

Prompted by the strong growth potential, global automakers are investing heavily in China to expand capacity and launch new models.

Germany's Volkswagen Group, the largest passenger car provider in China, in August announced that it planned to spend 4 billion euros ($6 billion) between 2009 and 2011 to build new facilities in China and introduce new products.

Chery, the nation's largest passenger car exporter, is also planning to build more plants abroad to fuel its expansion, although it has suffered a slump in overseas sales this year as a result of global economic downturn and protective measures by other countries.

The company now has nine plants in foreign countries including Russia, Egypt, Iran, Indonesia, Ukraine and Uruguay. It said the number will grow to 15 by the end of this year.

Recent news reports said Chery has started a feasibility study to build a $500 million plant in Turkey with a local partner to produce its A1 subcompact and A3 compact sedans for the Turkish and European markets.

In the first half of this year, Chery's overseas sales plunged by 82 percent to 15,000 vehicles.

China's overall vehicle exports tumbled by 60.21 percent to 142,400 units in the period, according to market data.

(China Daily 10/26/2009 page6)