IPO needed for Chery Auto expansion

Shanghai, April 8 (Gasgoo.com) Chinese carmaker Chery Auto will set up a new car manufacturing plant in Turkey, and is considering production of right-hand-drive vehicles in Thailand. The company is also speeding up its entry into the European and American markets. To finance this wave of overseas expansion, Chery Auto may be more eager to launch its IPO this year.

Compared with Geely Auto and BYD Auto, two booming private Chinese automakers, Chery Auto is the largest Chinese-brand car company but has not got listed in the stock market yet, which might have been a big matter of concern to executives and staffers of the ambitious automaker.

To seize the opportunities of the government-urged "vehicles to the countryside" program, Chery plans to target mini vehicles of its "Karry" brand at tier-2 and tier-3 markets; to expand its growth overseas, Chery is to sell more of the mid- and high-end cars of its "Riich" and "Rely" brands to Southeast Asia and even to Europe and American markets. The company has to build sales networks and manufacturing facilities in the overseas markets, and these operations need large sums of money. That's why Chery's IPO is more urgent this year than ever before.

Four years ago Chery Auto put the IPO plan atop its corporate agenda. In August 2007, Chery's top management said the company is well prepared for IPO and called all people to buy the Chery stocks. These remarks indicated that Chery would go public soon in the A-share market.

Last June, Chery announced its new name Chery Automobile Co. Ltd. and planned to issue its IPO by the year end. But in late 2008 the global financial crisis broke out and heavily hit the stock market. As a result, Chery's IPO plan was delayed amid the market downturn.

A recent report of Shanghai Daily said that Chery Auto, the top Chinese-branded vehicle maker, has completed its financial restructuring and would resume its long-awaited stock listing plan as soon as the market recovers, citing a company official said.

"Chery needs money from the stock market to fund aggressive expansion," said Jin Yibo, a spokesman for Wuhu, Anhui Province-based Chery, to the English-language newspaper. "We give top priority to mainland bourses, and we are also encouraged by many investors to go overseas." Chery earlier reported it would raise 100 billion yuan ($14.7 billion) from a share sale.

Chery has been striving to drive into the higher market segment and overseas. The company will launch 15 models this year, including two sedans to compete with Toyota's Camry and Honda's Accord. It owns nine factories in seven countries and it is also building a new assembly plant in Taiwan.