Chery Auto to invest $500 mln in new Turkey plant

Just the Facts:

* Chinese company will work with Turkish automaker Mermerler Otomotiv on a new plant to build Chery sedans and a small SUV.

* Total investment in the project is estimated at about $500 million, and construction is expected to be started later this year.

* The plant will have an initial capacity of 20,000 units per year.

ANKARA, Turkey — Chery of China has signed an agreement with Turkish automaker Mermerler Otomotiv on the construction of a Chery plant in the European part of Turkey. The plant will build Chery's A3/Niche and Change sedans as well as a small SUV, most likely a version of the Tiggo.

Total investment in the project is estimated at about $500 million, and construction is expected to be started later this year. After the completion of the first stage, the plant will have a capacity of 20,000 units per year, with the target by 2017 of up to 100,000 units per year.

The plant is expected to be located in the province of Sakarya. Chery expects that a new production site in Turkey will allow it to achieve one of the long-term goals and to start expansion of the EU auto market.

Chery has pinned large expectations on the Turkey market, where demand for the Chinese automaker's cars is already high. According to Mermerler Otomotiv General Manager Murat Mermer, the new project will create up to 3,000 jobs during the next five years and, in addition to the plant itself, will involve the establishment of a hotel and a shopping mall.

This is Chery's second and, analysts say, most successful attempt to get a foothold in Europe. According to previous reports, the Chinese company had plans to acquire the Polish Fabryka Samochodow Osobowych (FSO) factory, which is currently owned by Ukrainian corporation Ukravto. The plans for that one are still pending.