Chery to Set up JV to Target US, Europe
17 May 2007
Xinhua. Chinese carmaker Chery Automobile plans to set up a joint venture with Quantum LLC, a US subsidiary of Israel Group, Israel’s largest holding company, to explore the European and US market.
The 5.8 billion yuan (US$743.6 million) joint venture, to be located in east China’s Anhui Province, is expected to produce 150,000 vehicles a year—105,000 sedans and 45,000 SUVs—including Chery’s first high-end sedan.
Wuhu Chery Automobile Investment Co. Ltd., a subsidiary of Chery, will provide technology and land to the new company, in which it holds a 55% stake. Quantum LLC will acquire a 45-percent stake for US$225 million and will o expected to provide an additional US$180 million guarantee to help Chery raise additional capital.
Chery is China’s seventh-largest automaker and fourth-largest producer of sedans, with sales of 305,200 vehicles, including 272,400 sedans. It plans to double its exports this year, encouraged by last year’s exports of 50,000 vehicles.
Uh oh... the Chinese are arriving. Anyone who has read "The World is Flat" by T.L. Friedman should be familiar with the "flattening" effect China has when it joins a market.
I think Chinese vehicle production and export will have detrimental ramifications on the establishment, specifically the already suffering US manufacturers, and the European brands. I think the Japanese (in sharp contrast to GM, Ford, and the Euros) have been anticipating the arrival of the Chinese to the market. The Jaoanese have been successfully fending-off the South Korean threat for a quite some time now, and will be best positioned to compete against the Chinese offerings.
Sell, sell, sell: GM, Ford, VW/Audi, BMW, Daimler, Fiat!
However, on the plus side, the Chinese arrival will be a huge benefit to the consumer because it will force each manufacturer to offer more content in their vehicles at lower price points. More bang for your buck! Bring it on!
Posted by: DieselHybrid | 17 May 2007 at 10:15 AM