China approves Chery-Quantum LLC joint venture project

Shanghai. January 4 (Gasgoo.com) – National Development and Reform Commission, China’s powerful top economic policy-making and regulatory body, has recently approved a joint venture project between Chery Automobile and Quantum LLC, a U.S. unit of Tel Aviv-listed holding company Israel Corp, China’s official media Xinhua News Agency reported today.

 

The project, with a total investment of one billion U.S. dollars (RMB 7.36 billion), is expected to turn out 150,000 units a year, lifting Chery's total production capacity to 500,000 vehicles.

 

These vehicles to be produced by the joint venture will mainly be exported overseas, Xinhua said, however the venture is “not prepared” for export to the U.S. market, according to a Chery official.

 

The venture will make four new models, including sedans and sport-utility vehicles. The vehicles to be produced at the joint venture include 40,000 B21 vehicles, 25,000 B22 vehicles, 20,000 T21 vehicles and 65,000 M21 vehicles.

 

Quantum LLC, a subsidiary of Israel Corp, will spend US$225 million for a 45 percent stake in the new entity and is also expected to provide an additional US$180 million guarantee to help Chery fund additional investment, according to a media report.

Rather than direct financial investments, Chery will provide land and technology in return for a 55 percent stake of the joint venture.

 

Parent Israel Corp is one of Israel's major holding companies. Its main activities are focused on chemicals, shipping, oil and energy, advanced technology.

Last year, Chery sold a total number of 381,000 vehicles, up 24.8 percent from one year earlier, becoming China’s forth largest automaker in terms of sales.

 

The company exported 119,800 vehicles in 2007, up 132 percent from one year earlier. Chery has been China’s biggest sedan exporter for five years in a row.