China’s Chery plans investment drive to build Omoda, Jaecoo brands in Europe

MILAN (Reuters) – Chinese carmaker Chery Auto is ready to spend billions of euros to ensure its Omoda and Jaecoo brands are embraced by European customers within three years, the head of the two brands for the Italian market told Reuters.

Chery Auto is launching Omoda and Jaecoo in Europe this year, with an initial focus on petrol engine vehicles. After sales started in Spain, Italy, Poland and Britain, more countries will be added in the coming months, as well as hybrid and fully electric models.

Kevin Cheng, Omoda and Jaecoo CEO for Italy, said in an interview the brands were watching the likes of Kia, Hyundai (OTC:HYMTF), Nissan (OTC:NSANY) and Volkswagen (ETR:VOWG_p) as benchmarks.

He said South Korea’s Kia took almost 20 years to become a trusted brand in Europe.

“Our goal is to achieve that within three years,” he said.

Investment plans in marketing and brand development in Europe were confidential, “but it’s a huge amount of money, it’s billions of euros,” he said.

Omoda and Jaecoo, which are export brands, have not provided cumulative data about their European sales but have said their global sales amounted to almost 150,000 vehicles between January and August.

The European Union is proposing an additional 20.7% tariff on Chery cars as part of its duty scheme on Chinese-made electric vehicles (EVs).

“It’s a challenge,” Cheng said, adding that Chery faced lower tariffs than some other Chinese peers, such as SAIC Motor.

“We want to establish good relationships with the EU,” he said. “Producing cars in Europe will help us avoid tariffs”.

Chery, China’s largest automaker by export volume, is expected to start production with a local partner by the end of this year at its recently-acquired Barcelona factory in Spain, its first manufacturing site in Europe.

The group is also assessing options for a second site in the region.

The Italian government is in talks with Chery and other Chinese automakers, including Dongfeng Motor, to attract manufacturing investments to the country.

Chery is also considering eastern Europe as an option for a second facility, a source has told Reuters.