Chery lay first stone for its manufacturing hub in Kaifeng, Henan province, last week. First to be built is the main factory to produce mini cars and vans under Chery’s brand "Karry." Designed production capacity is 200,000 units a year, and construction is scheduled to finish by February 2011. Later this year, construction of other parts of the project will begin according to plan, which will make auto parts, light trucks, agricultural and construction machineries.
Initial investment for the whole project is close to Yuan 1.8 billion, and total spending may reach as high as Yuan 10 billion.
Chery’s current production is based in Wuhu, Anhui. As its sales have soared in recent years, it has sought to open new factories in other parts of China.
Henan is located in central China, and is the most populous province in the country, with about 100 million people living there. Its economy lags behind many eastern and southern provinces. Local officials have been working hard to win this project, which they hope will help the place catch up with those more developed areas. Chery is believed to be richly rewarded with incentives and subsidies by provincial and local governments because of its decision to invest there.
Chery has been specially targeting the huge countryside market and other areas of second-tier development to sell its low-priced mini cars and vans. By opening production lines in Henan, it hopes to cement a competitive edge in those areas.
Karry as a sub-brand of Chery was launched in 2007 for mini vans and small MPVs, or what may be called "small commercial vehicles." Its logo reminds us of the American "blue oval." Karry has the same pronunciation as the English word "carry," and is supposed to share its meaning as well. In the first quarter this year, Karry sold 36,000 units. The sales target for 2010 the whole year is 150,000. Three models are available currently, Youpai, Youya, and Youyi. At least three all new modes are to be added to the lineup.
At the same time, Chery is building a sedan plant in the northeastern harbor city of Dalian. The size of the investment as well as planned production capacity is of the same with those for the Henan factory– Yuan 2 billion and 200,000 units per year. This plant will start rolling out new cars in 2015, and serve mainly overseas markets, as Dalian has one of the biggest sea ports in China. Chery now has at least 10 assembling car plants outside China, mostly in developing countries including Egypt, Iran, Ukraine, Thailand, and Malaysia. Several more are to open within a year or two. In more advanced markets like the US and Western Europe, Chery has yet to find a firm foothold after planning for years.