BEIJING – Chinese automaker Chery Automobile plans to start exporting cars to Europe in 2007 and begin making cars in Europe within five years, say Chery sources.
“We have signed a letter of intent” with an importer for Europe, says a Chery manager. “We will make a big trip to Europe in a couple of months and make our final decision on an importer by mid-year.”
The source did not name the importer, but said Chery is still talking to other candidates.
Spanish sources say Madrid-based importer Berge has been negotiating with Chery for months about European distribution. Berge imports and distributes 80,000 vehicles a year for several automakers. It operates in Spain, Morocco, Peru, Chile and Argentina. Berge opened a five-person office in China in the second half of 2003 to seek new business.
Chery plans to export first in order to test the European market before it begins building cars there, says a source in Chery’s research and development division.
“We definitely will start to build cars in Europe within five years, but we haven’t made any detailed plans yet,” he says.
Chery is investigating possible production locations in Romania, Poland and other eastern European countries because wages there are lower than in the European Union, the Chery sources say.
The European launch timetable is roughly the same as Chery’s plans to export to the US market by 2007.
American businessman Malcolm Bricklin, the founder of Subaru of America and Yugo of America, said his Visionary Vehicles company would by 2007 start exporting five Chery models to the US: three sedans, a coupe and an SUV.
Chery won’t necessarily export those same models to Europe, say sources. But whatever models it does export, at least half will likely be designed in Italy.
Chery has hired Italian design houses Pininfarina and Bertone to develop new sedans for export. Chery is also working with a Japanese design company called Cavax to develop a new crossover vehicle, supplier sources say.
The Chinese carmaker also has hired Austria’s AVL List to design
17 new engines, including diesel, gasoline and hybrid versions.
Those engines are to be built at a new plant in China. A second new engine plant is already on the drawing board. Chery also must add a new production line to make the cars for export.
Industry sources estimate Chery will spend more than $1 billion (currently E756 million) to expand and upgrade capacity, and make export-suitable models. The company has already built a new line for domestic production.
Paying for all that won’t be a problem, even though Chery’s sales fell more than 50 percent on many models in 2004.
“We are owned by the local government, so we can get its support,” says the Chery manager. “Also, central government leaders have visited us, and they told us we can get central government support.”
Chery’s existing models all resemble other manufacturer’s models.
The most egregious example is the QQ minicar, which is identical to the Daewoo Matiz/GM Spark, say sources at General Motors. GM Daewoo Auto and Technology Co. is suing Chery for unfair competition practices.
Says an executive for a European-based supplier: “You have to judge Chery by the new models that are coming out next year.”
– Paulo Soares de Oliveira contributed