Chongqing Lifan Industry has started construction of a vehicle assembly plant in Russia, reports Automotive News China. The plant, located in Russia's western state of Lipetsk Oblast, will be a wholly owned plant. Lifan is expected to invest USD300 million in the plant, which will likely start vehicle assembly in late 2017 or early 2018. The plant is to be equipped with a welding line, paint shop and assembly line, and will have an annual capacity to assemble 60,000 units from completely knocked-down (CKD) kits imported from China. The Chinese automaker said it intends to boost the plant's capacity to 200,000 units and undertake production without specifying a timeframe. The report said conventional fuel-powered vehicles and electric vehicles will be assembled at the plant.
Significance: Currently, Lifan has an agreement with Derways Automobile Company, which assembles cars in Cherkessk from semi-knocked-down kits supplied by Lifan. While the company did not disclose if the agreement with Derways will be terminated following commencement of its own plant, IHS Automotive's production forecast indicates the Lipetsk plant will become the sole plant to assemble Lifan vehicles in Russia in 2022. Assembly volumes for Derways are expected to start declining from 2017 onwards, although the Cherkessk plant will continue to assemble Lifan vehicles through 2021. Lifan is one of the biggest Chinese brands in Russia and its investment in the country comes after several unconfirmed reports.
