SAO PAULO, Brazil – Chinese automaker Jianghuai Automobile Co. (JAC) announced on August 1 that it will build a factory in Brazil that will begin producing vehicles in 2014, according to international media reports.
A JAC spokesperson confirmed the news to CBU/CAR but declines to go into details.
Sergio Habib, president of SHC Group, the Brazilian auto importer and exclusive distributor of JAC cars, and Dai Maofang, vice president of JAC Motors, signed the agreement in Sao Paulo for the investment of $600 million for the plant with a planned production capacity of 100,000 cars.
“After a certain volume and not a factory, a trading system does not get done right. We will have a solid base in Brazil, with actual cost and cost of manufacture consistent with our inflation and not to change,” said Habib.
SHC Group will have a majority stake in the JV plant. Habib said the partners have filed applications for the approval of the plant to the Brazilian and Chinese governments.
The plant will produce cars different from the Tongyue (Tojoy), a model JAC sold in Brazil since March.
JAC also held an official launching ceremony of its Heyue (Hojoy) brand (Brazilian name J5) the same day, which is the second model that the company exports to Brazil after the well-accepted Tojoy sedan.
According to company statistics, JAC Brazil received 22,559 orders for vehicles through June with 20,500 Tojoys and 2,059 J5. The company anticipates total sales of 40,000 of Tojoys in 2011, accounting for 2 percent of the Brazilian market share.
JAC through SHC now owns 46 4S stores and service centers in Brazil with another dozens 4S stores opened on August 1. The company expects sales of 10,000 J5 sedans in Brazil this year.
JAC sold 10,073 cars in Brazil through July 15, according to Brazilian auto dealers association Fenabrave. The company is the 13th biggest in Brazil by sales, accounting for 0.7 percent of the market that is expected to reach 3.7 million autos this year.
Besaliel Botelho, executive vice president of Bosch Brazil, told Wayne Xing, editor/publisher of CBU/CAR in Traverse City, Michigan during the annual Management Business Seminar that Habib told him sales of JAC cars in July would reach the 5,000 target.
JAC registered sales of 282,000 vehicles through June in China this year, according to China Association of Automobile Manufacturers.
Chery Automobile, which like JAC that comes from Anhui Province, also began building a factory in the city of Jacareí with investment of $400 million for a planned annual production of 150,000 units starting in 2013.
Another Chinese brand, Lifan has also signed an agreement with a partner in Brazil to invest $100 million to build a factory of 10,000 cars to assemble Lifan cars.