Chery Explores Manufacturing Partnership Options in South Africa

China's Chery is holding discussions with several South African car manufacturers regarding plant-sharing arrangements to produce its vehicles locally, according to the company's regional head speaking to Reuters.

Chinese automotive firms pursuing worldwide expansion have increasingly established production facilities in foreign markets as a safeguard against potential regulatory actions targeting Chinese vehicle imports by overseas governments.

The Chinese manufacturer is assessing various possibilities, including establishing a joint venture, building its own greenfield site or utilising another carmaker's existing production facility.

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

Liu said the company is taking a measured approach to its strategy, particularly considering potential import tariff hikes. The production facility might function as a complete knocked down operation, which involves assembling vehicles from component kits shipped to the location, Liu noted.

The company's initial vehicle range will feature its compact Tiggo 4 SUV, focused on the domestic market before expanding to other African countries. Chery also plans to relocate some of its Chinese suppliers to assist with meeting local content regulations.

"We are interested in the long-term investment in South Africa," Liu said.

When asked about reports that Mercedes-Benz could allow another manufacturer to share its South African plant, outgoing CEO Andreas Brand told Reuters he would not discuss decision-making processes, but pointed out that the East London production site had previously manufactured different brands.

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

South Africa – the continent's premier car-manufacturing nation – introduced a strategic plan in 2021 aiming to boost production to 1.4 million vehicles by 2035 from the current average of 600,000, whilst increasing the proportion of locally manufactured content by attracting more producers and suppliers.

Chery's localisation plans, along with similar moves by companies including Stellantis, could assist the country in advancing towards its strategic targets as it manages a surge in imported vehicles.