China’s Chery Automobile Company, based in Wuhu, Anhui Province, has announced plans to sell more than 50% of the plant it opened in 2014 in Jacareí, in the Brazilian state of São Paulo, following a US$400 million investment, Brazilian website Auto Data reported.
The announcement said the group will accept proposals until 7 November and expects to raise 421 million yuan (about US$64 million) from the sale.
The Brazilian website added that the Chinese group’s decision to sell a controlling stake in the Brazilian factory is intended to “alleviate the negative financial pressure exerted in the last six years by the loss-making subsidiary in Brazil,” with the group’s Brazilian arm posting losses of US$166.3 million in 2016.
Auto Data also said that between late 2016 and early 2017 Chery attempted to negotiate the transfer of its commercial operations to Grupo Caoa, which since 2007 has been manufacturing Hyundai models in Anápolis (Goiás state) and operates one of the largest conglomerates of automotive representatives in Brazil including the Hyundai, Ford and Subaru brands.
The decision by the Chery Automobile Company to build a plant in Brazil, with an installed capacity of 150,000 vehicles per year, was due to the fact that it wanted to avoid the Industrialised Products Tax surcharge applied to imported cars as of 2012 by the Brazilian government to protect the domestic market.
The Brazilian subsidiary’s sales were always very weak and fell steeply to 2,000 units in 2016, leaving the Jacareí plant practically at a standstill compared to its installed capacity of 50,000 vehicles per shift. (macauhub)