Published on November 14, 2007
The new entity will set up a manufacturing plant in Thailand, to serve rising domestic and export demand.
The total investment is expected to reach more than Bt1 billion, in which each shareholder would hold an equal stake. The production plant will be established in potential areas, including industrial estates in Rayong province.
This is part of the group's diversified-business plant, with good experienced partners in both Thailand and China. The plan will also encourage the group to expand into the Asian car industry. In addition, it will create an opportunity for Chinese car brands to enter Asean markets.
CP Group vice chairman Thanakorn Seriburi said the group would invest through Chia Tai, its investment arm in China, with the Leenutaphong family, the former exclusive agent of BMW, and Chery Automobile.
"We want to have experienced partners in this synergy joint venture," said Thanakorn, adding that the deal was expected to be finalised this year.
Thanakorn, also chairman and CEO of the company's automotive and other industrial-products business, said the project would start next year, including the import of Chery cars and construction of a manufacturing plant.
The joint venture will focus on both passenger-car and pickup manufacturing. In the first phase, total production capacity will reach 4,000-5,000 units. It plans to show a profit in the third year.
Located in China's Anhui province, Chery Automobile is a leading auto-maker in China under its own Tiggo brand and also produces other models, including Chrysler and Fiat. In addition, the company is licensed in Indonesia to produce a city car under the QQ brand with an 800-1,100cc engine.
"The Chinese partner looks for investors to set up a manufacturing plant focusing on exports to third countries," said Thanakorn, adding that the company selected Chia Tai because the group had enjoyed a good business performance in various areas in China for more than 30 years.
He said Thai production would focus on exports to Indochina, while Indonesian production would be distributed instead to certain Asean countries.
The group will import QQ cars from Indonesia and test market them in Thailand for an average retail price of Bt300,000 to Bt350,000 each.
However, Chery failed to market its car in Malaysia, because the company could not access the domestic market, due to the Malaysian government's policy of protecting its local Proton brand.
"We hope the investment in Thailand will generate successful business for the partners," Thanakorn said.
To support the investment plan, Chery Automobile will send staff to survey the Bangkok International Motor Expo, which will be held from November 28 to December 10.