Chery reaches Europe through Turkey

Chery has fit perfectly into the Turkish automotive market by offering quality vehicles at a lower price. The products help change the mindset of the public regarding Chinese goods, and despite the global economic crisis it has managed to increase sales. Now the company is planning to invest $550 million to start a production line in Turkey
 
China's fourth-largest automotive company Chery, which was founded in 1997, is planning to invest in Turkey and start a production line in the country.

"There is a significant prejudice against Chinese products," said Sedat Piroğlu, executive board member of Mermerler Otomotiv, the Turkey distributor of Chery. "However, with Chery, consumers learned that those prejudices are not always well-grounded," he said at the TÜYAP Adana International Exhibition and Congress Center in Adana, where he was attending the Çukurova Otoshow 2009 Fair. The fair opened Saturday and runs until Wednesday.

Although Chery entered the Turkish market in mid-2008, which was a period of economic distress, the company's sales have been rising successfully, Piroğlu said. "When the Turkish consumers saw the quality of the Chinese automotives, they couldn't believe their eyes."

"A Turkish citizen dropped by our stand and told us: 'Well this actually looks like a real car. Not like a toy like we feared.' We couldn't help but laugh. Everybody had a different vision of what a Chinese product would look like. I believe we managed to demolish these barriers. Now, the public knows that there can be products much cheaper than its competitors and still have the same quality."

It would not be right to belittle China's achievements in the automotive industry. Spare parts of 22 brands including BMW and Mercedes have long been produced in China and the country finally started to produce its own vehicles 20 years ago.

Demand in the Turkish market for Chery has been increasing, said Piroğlu, adding that they have sold 5,000 vehicles so far.

"According to the agreement we have signed with Chery, if the company decides on investing in Turkey, it will collaborate with Mermerler Otomotiv," said Piroğlu. "Therefore, we are conducting infrastructure studies for a factory that will be established here."

"A factory constructed here would not only serve Turkey, but it would also reach Europe. That is why the Chinese have a warm approach to the idea of investing in Turkey. The products produced at the factory in Turkey will be to European standards and will help ease China's access to Europe. The investment is foreseen to be worth $550 million. It will have production capacity of at least 100,000 vehicles and it will employ 5,000 to 6,000 people. That will be a great contribution to Turkish economy."

A location for the new factory has not been determined yet, and feasibility studies are still ongoing, according to Piroğlu. Two to three areas were pre-chosen. "We are re-evaluating these areas," he added. A Chinese delegation will come over and visit these locations and give approval, he said.

The ground of the new factory is expected to be laid by the end of this year, said Piroğlu. The facility is foreseen to start operations within the next two to two-and-a-half years, he added.

Spare parts

The spare parts industry is quite important as well, Piroğlu said. "Therefore, we aim to turn Turkey into Chery's logistics hub for spare parts."

Currently Chery is sending spare parts via ships. "They are trying all transportation vehicles possible to reach to Egypt, Jordan, Tunisia, Syria and Russia. Instead, we offered Chery the opportunity to send its spare parts via Turkey. For that, we have prepared a facility. Chery officials will arrive in the upcoming days and visit the location. We hope to turn Turkey in to a logistics center in spare parts."

Mermerler Otomotiv and Chery have agreed upon the sale of 25,000 vehicles annually. However, this year, due to economic turmoil only 5,000 vehicles were sold in Turkey. Hopefully next year will be a better one, said Piroğlu.

"Every seven years we go through similar troubles and we pull through. If the expected environment develops then we foresee to double or even triple our sales. Next year we expect to sell 10,000 to 15,000 vehicles," said Piroğlu.

Chery will also launch three types of commercial vehicles and thee types of passenger vehicles by the end of this year. "We have revealed Chery's 'Chance' model for the first time in Adana. We trust in this model. It has attained much interest at the fair."