Chery denies seeking loans to finance JV with Jaguar Land Rover

Gasgoo.com (Shanghai May 9) - Chery has denied media accusations that it has been seeking a six billion yuan ($951m) loan for its new joint venture with Jaguar Land Rover, China Business News reported today. In an interview with the paper, Chery Assistant General Manager Jin Yibo asserted that the reports were inaccurate, adding that the joint venture was still awaiting approval and that, as such, it was too soon to decide on any other specifics.

According to recent reports, Chery has been in negotiations with various banks to secure loans to provide a financial foundation for its new JV. "There have been no such [talks]," Mr. Jin said.

The much anticipated partnership between Chery and Jaguar Land Rover was officially confirmed in late March. Both manufacturers would establish a jointly owned JV company in China with the goal of developing and selling Jaguar, Land Rover and own brand vehicles in the country. According to their agreement, both manufacturers will invest 17.5 billion yuan ($2.77m) in building a new production site, which is scheduled to begin operation in July 2014. Upon completion the site will boast a production capability of 180,000 vehicles.

Zhang Zhiyong, an independent industry analyst based in Beijing, believes that, given its current situation, it will be very difficult for Chery to provide the agreed upon 8.75 billion yuan ($1.39b) for the new factory. Mr. Zhang's assertions seem to be backed by Chery's own handbook on its finances released last September. According to the handbook, the manufacturer estimates that its monetary demands will total 11.5 billion yuan ($1.69b) by 2015 and 30 billion yuan ($4.42b) by 2020. Other reports reveal that three billion yuan ($475.71m) for its seven billion yuan ($1.11b) Qoros factory in Changshu, Jiangsu was raised by the Export-Import Bank of China.

Chery exported a total of 17,400 vehicles in April. The figure, which is a new monthly record for the manufacturer, is 40.1 percent and 39.1 percent higher than results from March and last April, respectively. With the market for Chinese vehicles overseas continuing to expand, there is a good chance that Chery's exports this month could break the 20,000 unit barrier.