Chery considers plant-sharing deals with SA automakers

As Chinese carmakers pursue international growth, they have increasingly established manufacturing bases in overseas markets to shield themselves from potential regulatory measures targeting Chinese vehicle imports.

The Chinese firm is weighing up several options, including forming a joint venture, developing its own greenfield facility or making use of another manufacturer's existing plant.

"We are in discussions with several existing OEMs (car manufacturers)," said Tony Liu, CEO of Chery South Africa, speaking at an automotive conference on Friday. "Greenfield takes a little bit longer."

Tony indicated that Chery is proceeding cautiously with its plans, particularly in light of possible import tariff increases. The facility could operate as a complete knocked down assembly plant, where vehicles are assembled from component kits shipped to the site, he explained.

Chery's initial vehicle offering will be its compact Tiggo 4 SUV, targeted at local consumers before expanding it to the broader African market. The company also intends to bring some of its Chinese suppliers to South Africa to meet local content requirements.

"We are interested in the long-term investment in South Africa," he stated.

Addressing speculation that Mercedes-Benz might permit another carmaker to utilise its South African facility, outgoing CEO Andreas Brand declined to comment on internal deliberations but noted that the East London plant had previously manufactured different brands.

"In the past, it was reality, and there is technically no reason not to tap into that again," Andreas remarked.

South Africa, Africa's leading automotive producer, unveiled a strategy in 2021 targeting production of up to 1.4 million vehicles annually by 2035, up from the current average of 600 000, whilst increasing locally manufactured content by attracting additional producers and suppliers.

Chery's localisation ambitions, alongside similar initiatives from manufacturers such as Stellantis, could help propel the country towards achieving its strategic objectives as it contends with rising volumes of imported vehicles.