Chinese automaker Great Wall assessing purchase of Daimler’s Brazil plant

RIO DE JANEIRO, BRAZIL – Chinese automaker Great Wall Motor is considering the purchase of one of Daimler’s plants in Brazil as part of its international expansion, according to people familiar with the matter.

The two companies are in negotiations over the potential deal, which could involve several hundred million dollars, according to the sources, who requested anonymity as the matter is private.

Talks are ongoing and the parties may choose not to strike a deal, the sources added. A Great Wall representative was not immediately available for comment. A Daimler spokesperson said the company continues to explore different options for the plant, but would not elaborate.

In December, the German automaker announced it would abandon car production in Brazil, citing difficult market conditions. The plant in Iracemápolis, in the interior of São Paulo state, was opened in 2016 to produce the Mercedes-Benz C-Class sedan and the GLA crossover.

The company allocated over R$600 (US$117) million in investments to the plant, which had an annual production capacity of 20,000 vehicles. Daimler’s operations in Brazil currently include buses, trucks and test vehicles.

Great Wall has bought several plants over the past two years. Last year it announced the purchase of General Motors facilities in India and Thailand.

The potential deal is being discussed at a time when Great Wall is facing increased competition in the Chinese SUV market, a key segment for the automaker. Great Wall is the largest private automobile manufacturer in China, specializing in SUVs.

Foreign brands such as Volkswagen and Toyota Motor have captured a larger share of SUV sales in China by 2020 than domestic companies and will apparently extend their lead, according to an assessment by Steve Man, a Bloomberg Intelligence analyst published in May.

Last year, Great Wall posted a 285.8 million yuan (US$44 million) turnover in Chile, its largest market in Latin America and sixth largest globally, according to the company’s annual report. The Chilean operation accounted for 2.8% of the Chinese automaker’s 2020 revenue.

Daimler’s largest shareholder, Chinese billionaire Li Shufu is also the founder and chairman of Zhejiang Geely Holding Group. Great Wall competes with Geely Automobile Holdings and has a partnership in China with Daimler’s German rival BMW.

Source: Exame