Chery Automobile Co., Ltd., China’s largest independent carmaker, has agreed with Taiwa’s Shengrong Auto, a subsidiary of Prince Motors, to make its own brand cars on the island for the local and other markets, China Daily reported on June 29.
The company, based in the eastern city of Wuhu, Anhui Province, said in a statement it will start to make its cars at Shengrong Auto’s plant in Taichung city at the end of this year with CKD kits from the mainland.
The Chery A3, which is approved to meet Taiwa’s safety standards in local collision tests, will be the first model to be assembled in Taiwan. The Riich G6 and G5 mid-sized sedans will also be made on the island next year.
Shengrong Auto will invest heavily to raise the plant’s annual capacity to a maximum of 100,000 units. The company will also be the exclusive distributor for Chery vehicles in Taiwan, which has a population of 23 million.
The two sides also plan to jointly develop new models in the future, said Chery.
The Chery A3 now has hatchback and notchback versions on the mainland, with engine options of 1.6L, 1.8L and 2.0L. Its local retail price ranges from ¥70,000 ($10,000) to ¥100,000.
Chery spokesman Jin Yibo said the cars to be sold in Taiwan will partly use locally made spare parts in the future since there is a sound spare parts sector on the island.
Geely, another mainland carmaker based in Hangzhou, Zhejiang Province, is also planning to foray into the Taiwan vehicle market, which is dominated by Japanese brands. A top executive of the company said Geely intends to produce its Panda mini car model with Taiwa’s Yulon Motor Co., Ltd.
As the first step, Geely will start to export the 1.0L Panda to Taiwan through a trading subsidiary of Yulon in the second half of this year, the company said lately.
Beiqi-Foton, a commercial vehicle maker owned by Beijing Automotive Industry (Holding) Corp, is reportedly in talks with a Taiwan auto agent for selling its vehicles on the island.
Taiwan now imposes a 25 percent tariff on vehicle imports and a 12.5 percent duty on spare parts imports. Last year, auto sales on the island tumbled by 29 percent from 2007 to 229,000 units.
As China’s biggest car exporter, Chery now has nine plants in seven foreign countries, including Russia, Ukraine, Egypt, Iran, Indonesia, Malaysia and Uruguay. Chery chairman Yin Tongyue 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 the U.S. 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 capacity of 150,000 units a year in the first stage.
Today Chery has realized an annual production capacity of 650,000 vehicles, 650,000 engines and 400,000 gearboxes in mainland China. Its lineups include cars, SUVs and commercial vehicles under the brands of Chery, Riich, Rely and Karry.