Chery plans to build Subaru vehicles on contract
Chery Automobile Co. has started drafting plans to build Subaru vehicles under a manufacturing agreement with the Japanese brand's owner, Fuji Heavy Industries, according to Chinese media reports.
The plan surfaced after Chery found out that it probably won't receive Chinese government approval to form a joint venture with Fuji Heavy, reported Sina.com, a Beijing-based news Web site.
Chinese regulations bar a foreign automaker from establishing more than two passenger vehicle joint ventures in the country.
Fuji Heavy is controlled by Toyota, which already has two joint ventures in China.
Alhough a contract production agreement is not ideal, it would allow Subaru to make use of Chery's low-cost production, reported Sina, citing Chery sources.
Currently, Subaru imports its vehicles into China.
Chery, headquartered in Wuhu in east China's Anhui province, has previously tried and failed to form joint ventures with Chrysler LLC and then Fiat S.p.A.
In the first eight months, Subaru sold more than 36,000 vehicles in China, up 2 percent from a year earlier. In the same period, Chery's sales rose 4.2 percent year-on-year to 349,000 units, according to J.D. Power.
