Chery Auto, China’s top automaker in terms of export volume, has announced its strategy to counteract new European Union tariffs on electric vehicle imports by ramping up its production capabilities in Europe. This move follows closely on the heels of the EU’s decision to implement additional tariffs of up to 38.1% on Chinese electric vehicles, with Chery specifically facing a 21% tariff on its imports.
Charlie Zhang, the vice president of Chery Auto and president of its European operations, shared these details during a media briefing. He highlighted that the company’s recent acquisition of a manufacturing facility in Barcelona, Spain—Chery’s first production site in Europe—will be operational by the end of the year. This strategic setup is expected to mitigate some of the financial strains imposed by the new tariffs.
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The decision to establish a manufacturing presence in Europe is part of a broader trend among Chinese automakers, who are increasingly looking to international expansion to offset slowing demand in their domestic markets. Alongside Chery, other Chinese companies like BYG and Great Wall Motor are also establishing manufacturing and assembly plants in Europe. These moves are aimed at competing more aggressively with European car manufacturers by introducing more affordable car options to the market.
Zhang also mentioned that while the Barcelona facility will kickstart their European manufacturing efforts, it will not suffice to meet Chery’s medium- and long-term objectives in the region. Consequently, the company is already exploring options for a second manufacturing site in Europe, though specific details have not been disclosed.
Further demonstrating its commitment to expanding its market reach, Chery has plans to start selling its Omoda and Jaecoo brand cars in Italy starting the third quarter of this year. This initiative marks Italy as Chery’s second European market, signaling a significant push to establish a robust presence across the continent.
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Despite the challenges posed by the new EU tariffs, Zhang expressed a strong determination to proceed with Chery’s expansion plans in Europe. The company views these plans as crucial to its global strategy and is poised to navigate through the complexities of international trade regulations to solidify its footprint in the European automotive market. This approach not only diversifies Chery’s production and sales avenues but also aligns with the global automotive industry’s shift towards more sustainable and economically priced vehicles.
Key Points:
i. EU Tariffs Response: Chery Auto, China’s leading automaker by export volume, is planning to start production in Europe to mitigate the impact of new EU tariffs on Chinese electric vehicle (EV) imports, which could reach up to 38.1%, with Chery facing a 21% tariff.
ii. European Production: Chery has acquired a factory in Barcelona, Spain, marking its first manufacturing site in Europe, with operations expected to commence by the end of the year.
iii. Expansion Plans: The move is part of Chery’s strategy to expand globally and compete with European automakers by offering lower-cost cars, especially as domestic demand in China slows.
iv. Future Growth: The Barcelona plant will begin Chery’s European manufacturing efforts, but it will not be sufficient for the company’s long-term goals in the region, prompting plans for a second European site.
v. Market Entry: Chery plans to launch its Omoda and Jaecoo brand cars in Italy in the third quarter, establishing Italy as its second European market following this strategic expansion.
TL Holcomb – Reprinted with permission of Whatfinger News
