Chery wants to expand further overseas

Setting its overseas strategy into motion, Chery Automobile Co. has announced plans to build more plants abroad, China Daily reported.

Marking the production of its one millionth car at its home base of Wuhu Wednesday, the automobile maker announced plans to establish 14 overseas factories by 2010 to assemble Chery-branded cars in foreign countries. It named various countries such as India and Argentina as possible locations, the report said.

The move will help the company cut costs overseas to "reap more profits and improve price competitiveness," the reported cited the company as saying.

The top Chinese car exporter said by producing cars abroad, Chery will be able to avoid the tariffs set by foreign nations, on its China-built cars that are shipped to the country. Additionally, having factories overseas also provide more avenues to source for spare parts, Chery said.

Chery targets to boost its overseas sales to 400,000 units annually by 2010, up from 52,000 units in 2006, the report said.

The company has also plans to increase its total annual sale from 305,000 units to one million units. In the meantime, Chery aims to sell a total of 400,000 cars this year, of which at least 100,000 units are to be sold overseas.

At present, Chey has seven plants in six foreign countries, namely, Iran, Russia, Ukraine, Indonesia, Egypt and Uruguay. The exporter sells its cars in 56 foreign countries altogether.

Chery has also recently formed partnerships with foreign car makers, such as Fiat, Chrysler and Quantum LLC. With Fiat, it agreed to form a 50-50 joint venture to manufacture Chery, Fiat, and Alfa Romeo cars with an annual capacity of 175,000 units for the local and overseas markets. Chery recently signed with Chrysler to make small-sized cars and in June, formed a 150,000-unit venture with Quantum LLC, a U.S.-based Israeli investment company, to manufacture Chery cars for the global consumer.

Chery Automobile Co. was founded in 1997, and started car productions in 2001. It is currently building a new 250,000-unit plant in Wuhu to be ready in October, China Daily reported.