Chery Auto plans to open factory in Brazil by 2013

Chinese carmaker Chery Automobile said it plans to open a $700 million factory in Brazil and will produce a local version of its S18 minicompact there.

S18 is the development code name for a small hatchback that is built and sold in China as the Chery Riich M1. The Riich sub-brand and the M1 were unveiled at last year's Shanghai auto show. Chery also is planning to build an electric version of the M1 in China. Prices for the M1 in China start at just over $6,000.

Chery's decision on where to locate its new Brazilian plant will be made later this year, according to the Brazilian Web site IG.

A year ago, Chery announced plans to begin selling its Tiggo crossover vehicle in Brazil. At the time, the company said it was studying plans to construct a factory in Brazil.

Chery will offer the S18/M1 and other vehicles with flex-fuel technology, to take advantage of local incentives that back the production and sale of ethanol and other biofuels.

Inside Line says: Ultimately, Chery could use its future Brazilian factory as a production base for North America-bound products.