GUANGZHOU -- Chongqing Changan Automobile Co. has started assembling passenger vehicles in Malaysia. The company aims to use Malaysia as its manufacturing as well as export hub for Southeast Asia and Africa.

 

Changan Berjaya Auto Sdn Bhd, Changan's Malaysia-based joint venture with local investment group Berjaya Corp., started production and sales of the Changan Benben and CM8 mini cars in Malaysia on January 19.

 

The Benben, renamed Era CV6 by the joint venture, is a small 5-door hatchback with a starting price of 36,862 yuan ($5,390) there. The CM8 is a seven-seat mini van selling from 37,716 yuan ($5,515). Both cars are powered by 1.3-liter gasoline engines.

 

Yang Shichun, a marketing manager of Chana International Corp., Changan's export company, says Changan Berjaya plans to produce a total of 10,000 vehicles in Malaysia this year.

 

He adds 5,000 units will be sold in Malaysia and the rest will be exported to nearby countries including Brunei, Singapore, Indonesia, India, Thailand and Sri Lanka.

 

Yang also says about 40 percent parts in value of the vehicles are sourced from Malaysia. The local parts are mainly non-mechanical components such as seats and tires while core components such as the powertrains and chassis parts are all sourced from China, he adds.

 

Under the Association of Southeast Asian Nations (ASEAN) Free Trade Agreement, vehicles with a 40 percent local content rate are entitled to preferential tariffs of 0 to 5 percent when exported from one ASEAN member country to another.

 

"Malaysia is a strategic market for Changan's global plans because it is an important base for Changan to export to Southeast Asia and even to the entire African market," says Wu Xuesong, president of Changan International Corp. in a statement released on the Web site of Changan Berjaya.

 

At present, the vehicles are not built by the joint venture itself. They are assembled by a third-party assembly plant in Malaysia's southern state Johor, according to information released by Changan Berjaya.

 

Changan Berjaya plans to build a manufacturing plant with annual capacity of 30,000 units in the Selangor state in central Malaysia. But it remains unknown when the Selangor plant will be established.

 

Changan and Berjaya signed the joint venture agreement in 2005. Berjaya owns 51 percent of the joint venture while Changan holds the remaining 49 percent.

 

Yang says Changan sold about 25,000 vehicles in overseas markets in 2008, of which about 10,000 units were the Benben. The cars were mainly sold to Africa, the Middle East and South America.

 

Changan operates or supplies three overseas assembly plants, in the United States, Ukraine and Vietnam. It is also building a plant in Iran, which is slated to start building the Beben small car later this year.