Chery Motors to invest $20M for first assembly plant in PHL

CEBU, Philippines - In its effort to level-up its brand popularity to that of Toyota, Chinese car brand Chery Motors Philippines, Inc., (CMPI) is going to invest at least US$20 million to set up an assembly plant in the Philippines, probably in the next three years.

Despite its failure to give utmost “after-sales” service to its clients immediately after it entered the Philippine market in 2007, Chery brand is not giving up. In fact, it is re-enforcing its customer service component in the Philippines starting last year to take advantage of the huge potential to get considerable share here.

In an interview with newly appointed CMPI president and chief executive officer (CEO) Si-Chung Chang he said that the establishment of the assembly plant in the Philippines would push the prices of Chery Car units by at least 10 percent to 15 percent.

This time, he said that prices of Chery Cars are largely affected by the importation tax and duties imposed by the Philippine government, which add up to the original cost to 50 percent.

Initially, according to Chang the company will partner with a Filipino firm, to jumpstart its assembly plant in Laguna that would probably make 100 units a month.

Once the plant will run successfuly and demand goes up to 1,000 units a month, the company will then decide to invest on a wholly-owned assembly plant in the country, which will not only supply the growing Philippine market, but also other Asian countries like Cambodia, Vietnam, and other countries.

Tentatively, CMPI is targeting to open up its phase I assembly plant project by August of this year, Chang said.

He admitted that few years after its entry to the Philippine market, particularly in 2009-2010 period, car sales dropped by an average of 50 percent due to “after-sales service” issues, which had not been addressed by the company until September of 2010.

As a result, CMPI lost considerable number of dealers around the country, from a total of 14 dealers to eight (dealers) today.

Notwithstanding the previous problem, sales of car units from September 2010 up to now, has bounced back considerably. In fact, the year 2010 ended with 600 units sold in the Philippines.

   In fact, in April to May 2010, the company posted an increase of 120 percent growth in terms of sales.

According to Chang, the growing population count in the Philippines is one of the reasons why the Chinese car maker pushing its presence here, even considered the country as one of its growth drivers in the Asian region.

CMPI vowed to improve not only its after-sales service to Filipino users, but also boost of the car’s improved quality and reliability that will compete at par with popular brands like Toyota.

In line with this commitment, Chang said Chery Cars is poised to compete head-on with Toyota, in terms of popularity among Filipino car users in the span of three to five years.

At present, Chery Car units average priced are pegged from P399 thousand (compact cars) to the highest of P500 thousand. Once, the plant will be established here, these prices will go down by at 15 percent.

Recently, CMPI, the exclusive Philippine distributor of China’s largest independent automaker—Chery Automobiles introduced two electric vehicles to the Philippine market.

The revolutionary electric vehicles were showcased during the Manila International Auto Show (MIAS 2011).

“We have negotiated with Chery China to have these two concept cars displayed here because we want to a feel of the alternative-fuel market in the Philippines,” said Chang.

“In the Philippines we may begin to test market the cars. But, the timing will all depend on how the consumer accepts it, and more importantly how the Philippine government will support such zero-emissions vehicles in relation to the country’s Clean Air Act. These electric vehicles may also be seen as a superb solution to the high cost of fuel,” Chang concluded.