China’s Chery investigates plant-sharing agreements in South Africa

The regional leader of China’s Chery (9973.HK), which opened a new tab, told Reuters that the company is in talks with a number of South African automakers about sharing sites to produce its cars.

In an attempt to expand internationally, Chinese automakers have expanded their production facilities in other markets as a safeguard against potential restrictions on the importation of Chinese automobiles by foreign authorities.

A joint venture, constructing its own greenfield site, or utilizing an existing manufacturer’s facility are among the options that the Chinese company is considering.

Chery South Africa CEO Tony Lui stated, “We are in discussions with several existing OEMs (car manufacturers),” during a conference on Friday about automobiles. “Greenfield takes a little bit longer.”

According to Lui, Chery is carefully weighing its options in light of possible rises in import duties.

According to Lui, the plant might function as a “complete knocked down facility,” which entails putting automobiles together using parts that are transported to the location.

The little Tiggo 4 SUV will be Chery’s debut offering, initially for local consumers and subsequently for the rest of Africa. In order to assist with local content standards, it also intends to import some of its Chinese suppliers.

“We are interested in the long-term investment in South Africa,” added Lui.

Mercedes-Benz’s departing CEO, Andreas Brand, told Reuters that while he would not comment on decision-making, the East London manufacturing facility has previously developed other brands in reaction to rumors that the company could let another automaker use its South African plant.

“In the past it was reality, and there is technically no reason not to tap into that again,” Brand stated.

The largest car-producing country on the continent, South Africa, announced in 2021 that it would boost the number of cars built locally by luring in additional manufacturers and suppliers, and increase production from the current average of 600,000 vehicles to 1.4 million by 2035.

As the nation struggles with an invasion of imported cars, Chery’s intention to localize, along with others like Stellantis, might push the nation closer to the objectives in its strategic plan.