Chinese vehicle manufacturer Chery is investigating the possibility of sourcing catalytic converters from South Africa for its production plants in China, says Chery International Asia Pacific and South Africa GM Tony Sun.

This not only provides opportunities in terms of local manufacture, but will also lower the costs of importing Chery vehicles into South Africa.

Chery South Africa (SA) MD Brett Soso says import duties on vehicles from China stands at 28%.

He says there are two ways to drive down these duties, with the first being local assembly, and the second manufacturing components in South Africa for the Chery supply chain.

Local assembly is not currently an option, he notes, as sales volumes are still too low.

Chery has sold 3 571 vehicles in South Africa since May 2008, with Soso optimistic that this will grow as the economy recuperates.

“We are looking at what components we can make here in South Africa, exporting them to offset the import duties on the vehicles we bring into the country.”

Government's current support programme, the Motor Industry Development Programme, due to come to an end in 2012, allows for such an offset.

Soso says Chery SA is looking into catalytic converter as well as seat manufacture.

“We are doing a feasibility study as Chery SA, and should have an answer by mid-2010.”

Soso says Port Elizabeth currently looks like the logical setting for any such component manufacture.

Chery expects to sell 490 000 vehicles worldwide this year, targeting the 800 000 mark for 2010.

The Chinese vehicle market is currently the biggest in the world, having overtaken the US earlier this year.

Year-to-date September, 9,4-million vehicles have been sold in China, with an additional 239 000 units exported, compared with the 8,76-million for the full 2008 year, with exports at 618 000 units.

It is expected that the Chinese market will reach around 12-million units this year.

This means it is a lucrative market for any South African component manufacturer to reach, should it prove able to compete with the Asian country's legendary low costs.

Chery was founded in 1987, and is the country's top-selling fully Chinese-owned brand. It has an 8% local market share. The company currently exports low volumes to 70 countries, and has 15 completely knock-down or semi-knock down plants around the world.

The company's ambition, says Sun, is to enter the Western European and North American markets in the next two years. To do this, Chery is gearing up its vehicles to pass some stringent emission and safety tests.

Catalytic converters play a pivotal role in emission-control.

PRODUCT LINE-UP

As part of its global push, Chery has launched the J1 in South Africa. This, the company's first global car, is also targeted at the European market.

The J1 still focuses on value for money, offering a 1,3 l Euro III engine with 62 kW at 6 000 r/min. Fuel consumption is 6,7 l/100 km.

The hatchback also comes with electronic fuel injection, dual airbags, ABS, side impact beams, alarm immobiliser, power steering, air-conditioning and alloy wheels as standard.

Pricing starts at R109 900.

Still to come to South Africa is the Chery S18 1 l small car at the end of 2010 or beginning 2011, the J3 sedan and hatch in mid-2010, and the H13 minibus taxi in the first half of next year.

These models will add to the current Tiggo, J5, J1 and QQ models.

“This a new era for Chery SA,” says Soso. “We have seen much improved quality, and enhanced safety features, and nobody can say they are copies of any other vehicles.”

Soso says Chery SA aims to grow its dealership footprint from 30 to 50 over the next few years.