Caoa Studies Building New Plant in São Paulo With Chinese Group

SÃO PAULO, BRAZIL – The Brazilian automotive group Caoa reported on Monday, January 13th, that it is studying to build a new plant in the state of São Paulo.

The statement was made after Governor João Doria had anticipated the announcement during a morning event held in the São Paulo capital.

The governor also confirmed that Caoa has officially given up trying to buy the Ford plant in ABC São Paulo, closed since October.

Ford, in turn, said again that there are other “potential buyers interested and engaged in talks regarding the São Bernardo do Campo facilities”.

The automaker further stated that it continues making every effort to achieve a positive result in the negotiations.

According to market sources, one of the potentially interested parties would be the Chinese BYD, which already produces buses in Campinas (SP) and has plans to manufacture trucks that are now imported.

The company’s headquarters, which would have been sought by Doria, will not comment on the matter.

A ‘strong’ investment

According to the governor, the Caoa group, of businessman Carlos Alberto de Oliveira Andrade, will make a “strong” investment in the State in partnership with a Chinese manufacturer, without disclosing the amount, the name of the partner and the type of product that will be produced (trucks, cars or both).

The announcement, according to Doria, should be made later this year. The company also provided no details regarding the project.

Doria further said that the city in which the new plant should be installed has not been determined.

The Caoa group currently owns a unit in Anápolis (GO), where it produces vehicles of the Korean brand Hyundai; it also and owns 50 percent of the Chinese Chery operations in a plant in Jacareí (SP). In addition, it is the largest Ford dealer in the country.

The governor’s statements were made after his participation in a footwear industry event in São Paulo.

According to him, the deal between Ford and Caoa was not completed because the group’s Chinese partner wanted a “larger physical space” for production.

However, what was said behind the scenes in the sector was that Caoa relied on financing from BNDES in order to buy the plant, but the bank said it had no lines for this purpose.

Market sources estimate that up to R$2 billion (US$500 million) in investments would be required to purchase the plant and modernize the production line to meet the new pollutant emission standards that will be compulsory for trucks.

The negotiations with Ford spanned ten months and in September, when they were still in progress, Andrade himself said that only half of the area would be sufficient for his claims. A month later, he said the chances for purchasing the plant were “remote”.

Partnership

On the occasion, Andrade also stated that he was talking to three Chinese companies and at least one of them had shown interest in producing cars in Brazil. This partnership, he said, might not involve the Ford plant, if confirmed.

According to the businessman, the Chinese would even be willing to enter a partnership in which the Brazilian company would retain 51 percent of shares – that is, it would have the majority control of the business.

At the time, however, he did not mention a new plant or that the operation would be located in São Paulo.