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Chery Automobile in China Planning to Produce 1.2 M
Passenger Cars and 300,000 Commercial Vehicles in 2010Also willing to enter premium passenger car market,
while conducting OEM supply to Chrysler and joint venture production with Fiat

Oct. 25, 2007 No.618


  In March 1997, the predecessor of Chery Automobile, an auto manufacturer that produces own-brand vehicles, was established in Anhui province, China. In March 2007, ten years after the establishment, Chery Automobile's monthly sales of passenger cars amounted to 44,568 (including exports), ranked first among auto manufacturers in China. The auto manufacturer achieved an accumulated total production of 1 million in August 2007.

(Note) Concerning production volume of passenger cars, Chery Automobile is ranked fourth with 259,000 following FAW-VW 317,900, Shanghai VW 314,400, and SAIC-GM-Wuling Automobile 310,100 in the January-August period of 2007. The fifth and lower-ranked companies are Changan Automobile 202,300, Shanghai GM 190,800, Guangzhou Honda Automobile 181,000, Dongfeng Nissan Passenger Vehicle 175,500, and FAW Toyota Motor 162,100 as a group (Guangzhou Toyota Motor 108,100).

  In 2006, Chery Automobile produced 308,425 passenger cars with an annual production capacity of 400,000. The annual production capacity will be increased to 700,000 passenger cars at the end of 2007. In addition, the auto manufacturer plans an annual production capacity of 1 million in 2008 and 1.2 million in 2010 (it will enter the high-end car market in 2009).

  Also, it will initiate production of commercial vehicles, planning to build up a production system for 80,000 in 2008 and 300,000 in 2010. Expansion of export is also a major factor that supports scale expansion. The Chery Automobile plans to increase export from slightly more than 50,000 in 2006 to approximately 200,000 in 2008 and further to 600,000 in 2010 (the 2006 actual export was 51,638). To achieve the goal, the auto manufacturer is currently enhancing its system for KD assembly bases in emerging countries.

  Additionally, the company formed a partnership with Chrysler on joint development of compact/medium-sized model and supply on an OEM basis in July 2007 and also reached an agreement with Fiat on joint production in August 2007. These partnerships are considered to be effective to acquire capability for development and marketing which is necessary for market cultivation in developed countries.

■Chery Automobile plans to build up an annual production capacity for 1.2 million passenger cars and 300,000 commercial vehicles in 2010

  Chery Automobile plans to build up an annual production system for a total of 1.5 million in 2010 - 1.2 million passenger cars and 300,000 commercial vehicles. The company plans to produce 400,000 passenger cars in 2007, 900,000 in 2010, and 1 million in 2012. It plans to manufacture 25,000 commercial vehicles in 2008, when it will start production, and 300,000 in 2010.

■Chery Automobile's medium-term business plan (1,000 vehicles)
  Annual production capacity plan Production plan Export
plan
Remarks (Plan)
Passen-
ger car
Commer-
cial
vehicle
Engine Trans-
mission
Passen-
ger car
Commer-
cial
vehicle
Passen-
ger car
2007 700 32 1,000 300超 393   70 Profit plan: slightly
more than 1 billion RMB
2008 1,000 80       Light-duty
25
180~230 Operation of a light commercial
vehicle plant is planned
to start
2009         1,000   An accumulated total
production of 2 million passenger
cars is planned in March
2010 1,200 300 1,200 1,200 900 300 600 The number of overseas plants
is planned to increase to 14
2012         1,000 300   Production volume of
commercial vehicles is planned
to be slightly more than 300,000
(Note) 1. Export includes export of auto parts for overseas KD production. In August 2007, the company assembles/produces the product at seven bases in six countries - Russia, Ukraine, Iran, Egypt, Indonesia, and Uruguay.
2. The company plans a financial amount of production of 80 billion RMB in 2010 (70 billion RMB for passenger cars and 10 billion RMB for commercial vehicles).
3. Chery Automobile was certified as a Technical Institute for State class project and receives support for R&D costs. In addition, China Development Bank set a credit line of 5.8 billion RMB by 2010 (announced in December 2006).
4. The company will produce 600,000 Chrysler models during the five years until 2012. It plans to sell 200,000 in 2009 including a new model based on Chery model, which it will jointly develop with Chrysler.

■Chery Automobile's ten-year history since its establishment in 1997

1997 Mar. The company was established as Anhui Chery Automobile Co., Ltd. with the investments by the local government of Anhui prov. and five investment companies in Wuhu city.
Mar. The construction of the first passenger car plant and the first engine plant was started.
(At the time of the establishment, automotive parts were produced)
1999 May The first engine plant started operations and lined off company's first own engine, CAC480.
Dec. The company lined off company's first own passenger car, 1.6L Wind Cloud compact sedan (released in 2001)
2001 Jan. SAIC (Shanghai Automotive Industry (Group) Corp.) acquired a 20% stake of the company for free, renaming it as SAIC Chery Automobile Co., Ltd.
Oct. The company exported passenger cars for the first time (to Syria).
2002   The development of ACTECO engine was started (joint development wit Austria-based AVL).
2003 Feb. The company formed a partnership with Iran-based SKT on joint production with an annual production volume of 30,000 (its first overseas production plan. The start of production was delayed)
Mar. The second stage construction of the passenger car plant was completed (it was started in December 2001). The annual production capacity was increased to 400,000.
Jul. The company launched mini hatchback, QQ (currently QQ3) and medium-sized sedan, Oriental Son.
Aug. The company released Flag Cloud compact sedan (new Wind Cloud).
Aug. The construction of an engineering research center - Chery Automobile Co., Ltd. Engineering Institute - was started.
Nov. The company made a contract with MVM under the umbrella of Iran-based Kerman Khodro on CKD assembly of Chery models.
2004 Sep. SAIC Chery Automobile won approval for production of passenger cars from the State Development and Reform Commission.
Sep. SAIC returned the 20% stake it held to the former shareholders for free. The company was renamed as Chery Automobile Co., Ltd.
Nov. The company made a contract with Malaysia-based ALADO on CKD assembly of Chery models.
2005 Mar. The company released its first SUV model, Tiggo (T11).
Mar. The second engine plant started operations, beginning production of ACTECO engine.
May The company started export of right-hand-drive Chery A160 to Malaysia (switched to KD assembly in December of the same year).
Oct. The company launched Eastar 2.0L (New Oriental Son) as the first model that used ACTECO engine.
Nov. The company made a contract with Egypt-based Daewoo Motor Egypt on assembly of Chery models. (KD assembly was started in August 2006)
Dec. The company provided all the capital to establish a regional headquarters in Russia - Chery (Russia) Motors Co.
2006 Jan. The company launched compact sedans - 1.3/1.6L Cowin and 2.0L Chery A5 (A520).
Jan. The company made a contract with Russia-based Avtotor on SKD assembly of Chery models. (Flag Cloud was lined off in April)
Mar. ACTECO engine was exported for the first time (2,100 to the US).
Mar. The company made a contract with Indonesia-based Indomobile Group on CKD assembly of Chery models. (production began in August)
Jun. The company concluded a contract with Ukraine Automotive Industrial Corp. on SKD assembly of Chery models.
Jun. The company launched 3-row 7-seat Crossover - Chery V5 2.5L (B14: Eastar Cross) in Shenzhen.
Aug. A compact sedan - 1.6L A5 (A516) was released (selling price is 77,800-85,800 RMB).
Sep. A mini sedan - QQ6 was released in Shenyang (It was released nationwide in January 2007. The selling price is 46,800-51,800 RMB).
2007 Jan. The company added 1.8L spec to a medium-sized sedan Eastar.
Mar. The company made a contract with Argentina-based SOCMA Group on joint assembly of Chery models in Uruguay.
Mar. The company launched a 7-seat compact van - Karry.
Mar. The company's monthly sales of passenger cars (including export) were ranked first at 44,568 among all auto manufacturers.
Apr. The company released 5-seat hatchback - Chery A1 (Yaris/March-class model. The selling price is 53,800-59,800 RMB).
Jun. The company made a contract with US-based Quantum (2007) LLC on joint production of middle-class/high-end vehicles in Wuhu city, Anhui prov.
Jul. The company reached an agreement with Chrysler on a strategic partnership.
Jul. The company launched 8-seat compact MPV - 1.3L Riich R2.
Aug. The company made a contract with Fiat on supply of ACTECO engine.
Aug. The company reached an agreement with Fiat on the establishment of a joint venture company that produces Alfa Romeo and Chery models.
Aug. The third passenger car plant started partial operations (construction began in April 2003 with an annual production capacity of 300,000. It is scheduled to be completed in October 2007).
Aug. The company achieved accumulated production of one million units of a new model compact hatchback, A3, which was lined off at the new plant.
Aug. The company made a contract with Iran-based Iran Khodro and Canada-based Solitac on the construction of a three-way joint plant in Iran.
Sep. The company added 1.8L spec to A5 compact sedan and 1.1L spec to QQ3 mini hatchback.

Sources: Chery Automobile's publicity material and various media reports.

■In its production system for passenger cars, Chery Automobile will increase its annual production capacity to 700,000 as its third passenger car plant starts operations in the autumn of 2007

  In August 2007, Chery Automobile lined off the 1 millionth-unit of A3 passenger car in its accumulated total production at its partially-operated third passenger car plant in Wuhu city, Anhui province (construction began in April 2003). The construction of the third plant with an annual production capacity of 300,000 will be completed in October 2007. The plant is planned to start full-scale operations centered on production of Chrysler brand vehicles.

  Combined with its first and second passenger car plants, Chery Automobile's annual production capacity for passenger cars will increase to 700,0000. It also plans the fourth and fifth plants in order to boost the capacity to 1 million in 2008 and 1.2 million in 2010.

■Chery Automobile's finished car production system in China

  Production model Production volume (unit) Annual
production
capacity
(1,000 units)
2004 2005 2006 Jan.-
Aug.
2006
Jan.-
Aug.
2007
Chery
Automobile
1st
plant
Cowin 1.3/1.6L 22,301 56,874 103,333 65,802 63,022 400
A5 2.0L (A520)     7,556 6,518 9,201
A5 1.6L (A516)     19,143 3,047 42,633
2nd
plant
Eastar 2.0L 7,516 8,028 12,949 8,811 11,942
Eastar 2.4L   1,465 381 203 474
QQ3 (0.8L) 49,748 100,516 104,434 70,915 40,209
QQ6 (1.1L)   13,352 27,892 11,361 51,785
Tiggo 3 2.0L   5,353 29,448 15,463 32,580
Eastar Cross 2.0L(V5:B14)     9 0 3,204
Eastar Cross 2.4L(V5:B14)     2,087 794 1,457
Riich 2(1.3L V2:Riich 213)         768
Karry 3 (1.6L Karry)         1,689
3rd
plant
Chrysler Model (1.0-1.3L) Scheduled to be completed in October 2007. 300
Chery Quuantum Automobile Operation is planned to start in 2009 with an
initial production capacity of 150,000 units a year
(tentative name) Chery Fiat Automobile Operation is planned to start in 2009 with an
initial production capacity of 175,000 units a year
Passenger car total 79,565 185,588 307,232 182,914 258,964 700
Chery
Commercial Vehicle
Yingkesong (bus),
chassis
5,458 3,442 1,193 1,093 0 32
Grand total 85,023 189,030 308,425 184,007 258,964 732
(Note) 1. The annual production capacity is as of September 2007.
2. Chery Commercial Vehicle is Chery Commercial Vehicle (Anhui) Co., Ltd. Chery Automobile bought the former Wuhu FAW Yangzi Automotive Mfg. in April 2006 and renamed it. Production of light-duty commercial vehicles is planned to begin in 2008.

■Chery Automobile will enter the market for commercial vehicles and high-end passenger cars in 2008 and 2009, respectively

  Chery Automobile will also start production of commercial vehicles in 2008. The company will prepare an annual production capacity of 80,000 in 2008 and 300,000 in 2010. Its technical center has already started operations. It plans to start production of heavy-duty commercial vehicles in the medium run and is scheduled to begin construction of its engine plant for heavy-duty commercial vehicles in 2007.

■Chery Automobile will enter the commercial vehicle business and will start producing light-duty commercial vehicles in 2008 with the 2010 production target of 300,000

  Chery Automobile will enter into the commercial vehicle business. The company will prepare an annual production system of 80,000 in 2008 and 300,000 in 2010, targeting sales of 10 billion RMB/profit of 1 billion RMB in 2010.
  In January 2006, Chery Automobile acquired more than half the stake in Anhui FAW Yangzi Automotive Mfg. Co., Ltd. (located in Wuhu city), which is a commercial vehicle manufacturer in the China FAW Group, and then renamed it as Chery Commercial Vehicle (Anhui) Co., Ltd. in April 2006.
  Chery Automobile is currently upgrading a plant that has an annual production capacity for 30,000 chassis/2,000 small bus (site area: 270,000 square meters) with an investment of 260 million RMB. The company will increase the annual production capacity to 80,000 in 2008 and will begin producing light-duty commercial vehicles in January 2008 (initial production volume is approximately 25,000 a year).
  In 2006, Chery Automobile newly established Chery Automobile Co., Ltd. Commercial Vehicle Engineering Institute as a technical center for commercial vehicles. The company completed a base model for two new models of light-duty commercial vehicles in August of the same year (Mass-production is scheduled to begin in January 2008). It will also start production of L8 mini-van (selling price: 20,000-30,000 RMB) in 2008 and then plans to add a 13-seat bus, H13, and 1.3L 8-seat light-duty commercial vehicle S22.

  As for passenger cars, the company plans to enter the high-end car market. It plans to enter into the BMW 5 Series/Audi A6-class market under its new brand in 2009.

  In addition, the company is currently planning to establish a joint venture company that produces approximately 150,000 middle-class/high-end cars a year (currently awaiting approval from the government). Eyeing the possibility of export, it also plans to found a joint venture company that produces a bulletproof specially-equipped passenger car.

■Chery Automobile also enters the high-end passenger car market and plans to launch a model of BMW 5 Series/Audi A6-class under a new brand

  Chery Automobile will also enter into the high-end passenger car market. In April 2007, the company started commercialization of F11 (project name), which is a high-end car of BMW 5 Series/Audi A6-class, basic design of which is reported to have been completed at the end of 2004. F11 uses 3.0/4.2L engine, development of which is consigned to AVL, and is planned to be released with a model name, Xuanyuan, under a new brand as early as in 2009.

■Chery Automobile also plans to establish a joint venture company that specialized in middle-class/high-end cars with an annual production capacity of 150,000

  In June 2007, Chery Automobile Investment Co., Ltd., which is under the umbrella of Chery Automobile, signed a contract with Quuantum (2007) LLC, which is a US subsidiary of Israel-based Israel Corp., on the establishment of Chery Quuantum Automobile Co., Ltd. - a joint venture company that produces middle-class/high-end cars. The new company is planned to be capitalized at approximately USD500 million (approximately 3.75 billion RMB) with 55% (land/technology) by Chery Automobile Investment and 45% (cash) by Israel Corp. (In April 2007, Israel Corp. announced that it would raise a maximum of USD500 million capital for the establishment of a joint venture company with Chery Automobile)
  The new company will make an investment of slightly more than 5,832 million RMB (approximately USD777 million) in the Economic & Technical Development Zone in Anhui province to build a start-to-finish plant with an automobile testing course. Production of middle-class/high-end models of Chery Automobile is planned to begin in October 2009 with an annual production volume of 150,000 (currently awaiting approval from the government). Among the 150,000, B21 (A6) medium-sized sedan is planned to account for 40,000, B22 SUV 25,000, T21 SUV (2nd-generation Tiigo) 20,000, and M21 (3rd-generation Flag Cloud currently being developed) 65,000.

■Chery Automobile jointly produces bulletproof specially-equipped passenger cars with Uruguay-based Bognor in Wuhu City

  In March 2007, Anhui Purui Automotive Investment Co., Ltd., an investment company under the umbrella of Chery Automobile, signed a contract with a specialized manufacturer of bulletproof car in South America - Uruguay-based Bognor - on the establishment of Chery Amode Special Vehicle Co., Ltd. (Wuhu city, Anhui prov.), which is a joint venture that produces bulletproof passenger cars mainly for export. The new company is owned 70% by Anhui Purui Automotive Investment and 30% by Bognor. Chery Amode Special Vehicle will first launch bulletproof Eastar, which is jointly developed with Bognor, then planning to add bulletproof model of V5 and Tiigo.

■Chery Automobile will increase its annual production capacity to 1 million engines at the end of 2007 and to 1.2 million in 2010

  Chery Automobile, through its joint development with Austria-based AVL which started in 2002, developed 18 types of 0.8-4.2L ACTECO engine which meet Euro IV emission standards (including diesel-powered engines). Mass-production of ACTECO engine began in March 2005. Four series - 1.3/1.6/1.8/2.0L - are mass-produced as of March 2007.

  In March 2006, export of ACTECO engine began. The company plans to export 25,000 in 2007. It has made a contract to supply the engine to Fiat in August 2007, planning to supply 100,000 1.6/1.8L ACTECO engine a year.

  The annual production capacity of Chery Automobile is 400,000 engines in September 2007, which will be boosted to 1 million at the end of 2007 and to 1.2 million in 2010. The company also plans to increase the annual production capacity for transmissions from 300,000 in September 2007 to 1.2 million in 2010.

■Chery Automobile's production and sale of engines (units)
  Production Sale
In-house use Outside sale Total
2005 135,171 135,281 0 135,281
2006 262,542 254,919 6,979 261,898

■Chery Automobile plans to increase its annual production capacity to 1 million engines and further to 1.2 million in 2010

  Chery Automobile plans to increase the annual production capacity of its engine plant in Wuhu city, Anhui province from 400,000 at the end of 2006 to a combined total of the two plants of 1 million by the end of 2007 and 1.2 million by 2010.
  The company also plans to make it possible to produce 150,000 diesel-powered engines a year at its second plant, which started operations in March 2005 with an annual production capacity of 200,000, which are currently being enhanced to 500,000.
  Currently, the first engine plant produces gasoline engines such as 0.8L SQR372, 1.3L SQR475E (based on SQR480), and 1.6L SQR480. The second engine plant produces 1.3/1.6/1.8/2.0L ACTECO engine, of which the company led the development (Production of 1.8T turbo engine was also started in August 2007).
(Note) 1. The first plant introduced a production line and production technology from Ford's UK plant (it bought an old-type production line from the UK plant for USD25 million in 1996), starting production of engines in May 1999.
2. The second plant bought facilities from companies such as Germany-based Cross-Huller/Heller/Gerhing/Junker/Mauser and Italy-based Comau, starting production of engines in May 2005 (it also began export in March 2006).

■Chery Automobile supplies slightly more than 100,000 ACTECO engine to Fiat a year

  In August 2007, Chery Automobile concluded a contract with Fiat to supply slightly more than 100,000 1.6/1.8L ACTECO engine a year to Fiat (They exchanged memorandums in November 2006). Fiat uses ACTECO engine in models that it manufactures in China as well as Linea and other models that it produces in Turkey.

■Construction of an engine plant for heavy-duty trucks will begin in 2007

  Chery Automobile will begin producing light-duty commercial vehicles in 2008 and also plans to enter the heavy-duty truck business. The company has already secured a 2,666,700 square-meter site for a heavy-duty truck plant in Wuhu city, Anhui province, planning to start construction of an engine (GEs/DEs) plant for heavy-duty trucks as a first stage construction by October 2007.

■Chery Automobile ties up with Chrysler on joint development/OEM supply while it will also begin joint production with Fiat in 2009

  In July 2007, Chery Automobile announced its partnership with Chrysler (which was separated from DaimlerChrysler). The companies will jointly develop models in the field of compact/medium-sized cars where Chrysler has a limited lineup. Chery Automobile produces the product and supplies the produce under Chrysler or Dodge brand vehicles. Production volume is planned to be 200,000 in 2009.

■In its partnership with Chrysler, Chery Automobile supplies compact/medium-sized Chrysler-brand cars

  In October 2006, Chery Automobile and Chrysler exchanged memorandums on Chery Automobile producing Chrysler brand compact cars to export to the US (In February 2007, then board of auditors of DaimlerChrysler approved them). In July 2007, the compact car business between Chery Automobile and Chrysler was approved by the Chinese government and the companies concluded a contract on their partnership.
  The essential features of the partnership are (1) Chrysler will improve seven models of Chery Automobile's compact or medium-sized passenger car/SUV/Pickup (including models that are currently being developed) and launch the product under Chrysler brand in the market in Europe/North America. (2) The companies will jointly develop a global model based on Chery Automobile's compact platform. (3) They will jointly develop a medium-sized car. (4) All models covered under this partnership will be produced at Chery Automobile.
  Specifically, (1) The companies will launch improved Chery A3 under Dodge brand in the US/Canada/Western Europe in 2007 and will also export the product to the US/Western Europe by 2009 (Chery A1 is planned to be added), (2) They will jointly develop a new model using the platform of Chery A3/A1 (the development has already been started), (3) They will jointly improve Hornet, a 2-door compact car under Chrysler's Dodge brand, to produce under Chery Automobile brand, (4) They target sales of 100,000 Chrysler-brand compact cars based on Chery Automobile model in North America/Europe in 2010, (5) They will produce a total of 600,000 Chrysler-brand cars during the five years until 2012, planning to sell 200,000 in 2009.
(Note) 1. Chery Automobile has been exporting ACTECO engine to Chrysler since 2005.
2. In order to produce Chrysler brand vehicles, Chery Automobile is currently negotiating the transfer of a production line for 4-speed AT from Chrysler's Kokomo plant in Indiana, USA to China.
3. In November 2006, soon after it agreed with Chrysler on the framework of their partnership, Chery Automobile cancelled a contract that it made with US-based Visionary Vehicles LLC on a seller agent in December 2005 with a plan to start marketing in North America in 2007.

  In August 2007, Chery Automobile reached an agreement with Fiat on a joint production plan in China. The companies plan to start producing vehicles under three brands - Fiat/Alfa Romeo/Chery - with an annual production capacity of 175,000 in 2009.

■In its partnership with Fiat, Chery Automobile will jointly produce Fiat/Alfa Romeo/Chery brand models starting in 2009

  In August 2007, Chery Automobile and Fiat exchanged memorandums on the establishment of a fifty-fifty joint venture in Wuhu city, Anhui province (tentative name: Chery Fiat Automobile). The new company will produce models under three brands - Alfa Romeo/Fiat/Chery - with an annual production volume of 175,000 starting in 2009, planning to market the product in China. Concerning Fiat group models, it will first KD assemble Alfa Romeo 159 sedan (switch from import/sale) and then plans to gradually add Alfa Romeo 147 5-door hatchback and other models.
(Note) Fiat targets sales of 263,000 passenger cars in China in 2010 (the 2007 sales target of a joint venture with Nanjing Automobile - Nanjing Fiat Automobile - is 50,000).
Import and sale of Grande Punto/Bravo/Linea began in China in 2007. Local production of Grande Punto/Linea (D200) is planned to begin in 2008 (the production plant is undecided).

■Chery Automobile plans to export 600,000 in 2010

  In October 2001, Chery Automobile exported passenger cars to Syria for the first time. As of the beginning of 2007, the company exports passenger cars to slightly more than 30 countries, planning to export 180,000-230,000 in 2008 and 600,000 in 2010.

■Chery Automobile's export of passenger cars (units)
  2003 2004 2005 2006 Jan.-Jun.
2006
Jan.-Jun.
2007
Export volume including KD sets 3,261 16,518 17,358 51,638 18,185 53,136
(Note) 1. The export volume by model in the January-June period of 2007 is 20,058 Amulet (Flag Cloud: Cowin), 13,034 A5 (A21) (6,295 between January and December 2006), 3,244 Eastar (234 between January and June 2006), and 16,800 others.
2. Export was started in 2001. The accumulated total export including KD sets until July 2007 is 153,694. The ratio of KD sets in the total export volume is 20% in 2006 and 80% between January and July 2007.
3. Export destinations include Russia, Pakistan, Egypt, Iran, Malaysia, and Cuba - slightly more than 30 countries at the beginning of 2007.
In 2007, the company plans to begin selling the product in Turkey, the Philippines, and Bahrain.
Sales in Russia have been surging - 6,656 between January and March 2007 and approximately 16,000 between January and June of the same year.
4. In August 2006, Chery Automobile was certified as a state completed car exporting company by the Chinese government (Ministry of Commerce of PRC and State Development and Reform Commission), thus becoming a company that can receive financial support in terms of export.

■Chery Automobile deploys KD assembly bases in emerging countries, doubling the number of bases to 14 in 2010

  Chery Automobile has started KD assembly in some of its major export destinations - Russia/Ukraine/Iran/Egypt/Indonesia. The current annual production capacity is about a maximum of 200,000, which are planned to be boosted to the 600,000-level in these countries.

  In addition, the company is reported to be considering or negotiating a new assembly base in Cuba/Pakistan/Venezuela/Syria/India/Thailand (it is reported to be planning 14 overseas assembly bases in 2010).

■Chery Automobile's major KD assembly bases (1,000 units)
  (Planned) Production model Production plan
Russia Production at Avtotor's second
passenger car plant (Kaliningrad)
A160, Tiggo, A5, QQ,
Oriental Son/Eastar
48
Joint production with Kaliningrad and Avtotor (announced in February 2007) 150
Ukraine Production at CMI Five Chery models 100
Iran Production at MVM
(Kerman Khodro Group)
MVM 110 (0.8L QQ),
MVM 520Chery 520)
20
Joint production with Iran Khodro
(Canada-based Solitac will also participate in the joint venture)
200
(initially 100)
Egypt Production at Daewoo Motor Egypt A5, Oriental
Son/Eastar, Tiggo
50
(initially 25)
Indonesia Production at Indomobile Group QQ (0.8L), Tiggo 12 (production
level of QQ)
Uruguay Joint production with
Argentina-based SOCMA Group
Tiggo (QQ is a likely
production model)
25
Total 605

■In its overseas development, Chery Automobile establishes assembly bases in emerging countries while it also plans to build large-scale production facilities in Russia and Iran
■Russia-based Avtotor began KD assembly of five Chery Automobile models. There is a plan to build a large-scale joint venture plant

  In December 2005, Chery Automobile provided all the capital to establish Chery (Russia) Motors Co., which supervises investment and the production/sales business in Russia.
  In January 2006, the company formed a partnership with Russia-based Avtotor on production of Chery models. In September 2006, it began CKD assembly of Flag Cloud/Tiggo/A5/QQ/Eastar at its second plant in Avtotor, Kaliningrad, Russia. The monthly production volume is 4,000 in August 2007.
  In February 2007, Avtotor and the Kaliningrad government announced a plan to build a CKD assembly plant with an annual production capacity of 200,000 jointly with Chery Automobile. Prior to this announcement, Chery Automobile also announced its plan to invest USD200 million to build a joint venture plant with Avtotor in Kaliningrad having an annual production capacity of 150,000 in 2007. The new plant will export 50% of the products to Europe.
(Note) 1. Recently, Chery Automobile suggested a possibility of dissolving its partnership with Avtotor as tax breaks for Avtotor might be terminated and was reported to have begun the selection of a candidate site for its new plant in the southern part of Russia.
2. In November 2005, Chery Automobile announced a plan to SKD assemble four Chery Automobile models with an annual production volume of 30,000 jointly with Russia-based Transervis, but failed to win approval from the government. The extent of the progress is unknown.

■Ukraine-based CMI started KD assembly of Chery Automobile models at the end of 2006

  In January 2006, Chery Automobile and Ukraine-based CMI concluded a contract on CKD assembly of Chery passenger cars in Ukraine. The annual production capacity of an assembly plant is 100,000. In December 2006, SKD assembly of five Chery models was started. The company will add production models in the future and will switch to CKD assembly, planning to increase the local-content ratio to 40%.

(Note) In Ukraine, AVTOINVESTBUD in the CMI group imported/sold five Chery Automobile models starting in October 2005.
■Chery Automobile will jointly produce QQ6 with Iran-based Iran Khodro with the initial annual production volume of 100,000

  In August 2007, three companies - Chery Automobile, Iran-based Iran Khodro (IKCO), and Canada-based parts design company Solitac - signed a contract on the establishment of a joint venture assembly company for passenger cars in Babol City, north of Iran (IKCO and Chery Automobile reached an agreement on a joint production plan in November 2006). The investment ratio is 30% by Chery Automobile, 49% by IKCO, and 21% by Solitac. The total investment is worth USD370 million.
  The new company plans to produce Chery QQ6 and to export the product to neighboring countries as well. The annual production capacity is 200,000 (initially 100,000) with 40% of parts planned to be procured locally. It is reported that the selling price is set at USD6,500 or lower.

■Iran-based MVM boosted the annual production system for Chery QQ, which it CKD assembles, to 20,000

  In November 2003, Iran-based MVM (Kerman Khodro) initiated CKD assembly of Chery models. The annual production system for 0.8L QQ (Iranian name: MVM110. The selling price is USD7,500), which is marketed under MVM brand, was boosted to 20,000 in December 2006. (MVM also assembles/produces Chery 520 (MVM520))

■Iran-based SKT suspended assembly of Chery models

  In December 2006, Chery Automobile announced that it would terminate a contract with Iran-based supplier, SKT (Sanabad Khodro Tus), on KD assembly of Chery models. In February 2003, Chery Automobile and SKT made an agreement on cooperation for passenger car production, planning to construct a joint venture plant in the northeastern part of Iran with an annual production capacity of 30,000. After the plan was suspended due to the influence of the Iraq War, SKT began assembly of Chery models in 2004, but suffered poor sales.

■Daewoo Motor Egypt assembles A5/Oriental Son/Tiggo

  In August 2006, Chery Automobile and Egypt-based Daewoo Motor Egypt concluded a contract on KD assembly of three Chery Automobile models - A5/Oriental Son/Tiggo - at an existing plant of Daewoo Motor Egypt. The initial production volume is 25,000, but is planned to increase to 50,000 in the future.

■In Indonesia, Chery Automobile assembles Tiggo SUV in addition to a compact hatchback QQ

  Chery Automobile announced that it would CKD assemble Tiggo SUV starting in September 2007 following 0.8L QQ, which it started assembling/producing at the Tambun plant of PT National Assemblers in the Indonesia-based Indomobile Group in September 2006 (The monthly production volume is 1,000 at the mid-year of 2007. A portion of the products are also exported to Malaysia).

■Joint production in Uruguay with Argentina-based SOCMA Group

  Chery Automobile and Argentina-based SOCMA Group, which is also forming a partnership with GM/Peugeot/Fiat, plans joint production of Chery models in Central and South America. In March 2007, as the first step, the companies concluded a contract to establish Chery Socma S.A., which assembles/produces Chery models, based on SOCMA Group's plant in Uruguay as a founding body.
  The new company is owned 51% by Chery Automobile and 49% by SOCMA Group. When the upgrading of the plant is finished, it plans to KD assembles Tiggo SUVs for Mercosur countries with an annual production volume of 25,000. (it is reported that the possibility of assembly of QQ and large-scale joint production in Argentina in the future is also eyed)

■CKD assembly plan in Malaysia is deadlocked while negotiation on a partnership with Proton is progressing with difficulty

  In November 2004, Chery Automobile signed a contract with Malaysia-based aluminum-alloy maker, ALADO in the BSA Group, on CKD assembly and import/seller agent of Chery models. ALADO originally planned to gradually begin CKD assembly of six Chery Automobile models starting in 2005, but failed to win approval from the Malaysian government and the plan is up in the air. ALADO started importing/selling Chery models in 2004. The 2007 sales target is 2,000.
  Chery Automobile has been negotiating with Malaysia-based Proton on CKD assembly of two models mutually in China and Malaysia, but is proceeding with difficulty. (It is reported that Proton has made it a condition to CKD assemble two Lotus models at Chery Automobile's plant in China)
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source: MarkLines Co., Ltd. Copyright(C)MarkLines Co., Ltd. All rights reserved.