
Chinese automaker Chery has confirmed construction of an engine plant near Brazil's Jacarei (Sao Paulo) vehicle assembly and supplier park facilities already under construction. According to Automotive Business, the vice-president of Chery Brazil, Luis Curi, confirmed that the engine plant will not be part of the supplier park beside the vehicle assembly, but close by, with the decision based on logistics and manpower factors. The investment will be USD130m and will come from the ACTECO powertrain division, and is in addition to the USD400m investment in the vehicle plant. Operations are expected to begin in 2014. The engines expected for production will be 1.0-litre and 1.5-litre flex-fuel engines; the 1.0-litre, developed in partnership with Magneti Marelli, will feature turbo-charging and stop-start, and will be found in the QQ, due for production in Brazil in 2015. The 1.5-litre, using Delphi dual-fuel technology, is scheduled for the commercial Celer, which goes into production in July 2014.
Significance: The Innovate-Auto programme run by the Brazilian government encourages R&D as well as vehicle production in Brazil, and is impacting decisions taken by all foreign OEMs; in this case, R&D work on the engines will be done in Brazil (with close monitoring by Chery's Chinese headquarters). The investment Chery is making in Brazil is also significant in that it is Chery's first plant outside of China (excluding kit production in various countries). Chery sells six passenger cars in Brazil, with sales forecast to grow from 12,940 units in 2013 to 41,000 in 2014, and then to 96,000 in 2018. Production in Brazil is forecast to reach 72,000 units in 2018 from 18,000 in 2014.