China’s fifth-largest automaker plans R$5.8bn investment to start production in Brazil
12/06/2024
Automakers setting up operations in Brazil typically begin by establishing dealerships, factory infrastructure, and staff training. GAC, the fifth-largest carmaker in China, is taking a different approach. As it enters the Brazilian market, its first move was to ink partnerships with local universities to research and develop ethanol-powered vehicles.
The new Chinese player aiming to invest in Brazil is leveraging its strategy to align with Brazil’s strengths in the global decarbonization of transportation—namely, the use of biofuels. It has chosen Brazilian researchers to assist in developing vehicles powered by this type of renewable energy.
GAC confirmed during an event in São Paulo on Thursday (5) an investment of R$5.8 billion in Brazil over the next five years. Out of this total, R$120 million was set aside for agreements signed the same day with the Federal University of Santa Catarina, the Federal University of Santa Maria, and the State University of Campinas.The universities will lead education and research projects in the fields of vehicles, engines, and auto parts. According to the company, these partnerships will include internships for students and professionals in both China and Brazil, as well as joint training programs. The cooperation agreements are set to last five years, with the possibility of renewal.
The presidents of the three universities attended the event, where they signed memorandums of the technical cooperation agreements alongside Wei Haigang, CEO of GAC International, and Alex Zhou, who will serve as GAC’s CEO in Brazil.
In a prior speech, Mr. Haigang stated that the company’s goal, established in 1997 but with origins dating back to a manufacturer from 1955, is to “revolutionize the Brazilian automotive industry.” “We will not only produce automobiles but also help define the future direction of the Brazilian industry,” he emphasized.
Mr. Haigang’s role gains greater significance through the Brazilian operations. Outside of China, GAC has only small operations in Malaysia and Thailand. With production in Brazil, the company plans to export to the Latin American region, he said.
Mr. Zhou was selected to lead the Brazilian operations due to his experience in the Americas, having previously worked in the United States.
The executives have not revealed where the brand’s vehicles might be produced. They did not confirm any connection between the partnerships with the universities based in the South region and a potential intention to establish a factory in the same region.
Nor did they confirm the idea of possibly acquiring plants from Honda or Toyota—both Japanese companies are GAC’s partners in China, where their vehicles are produced by GAC. Toyota is in the process of downsizing a plant in Indaiatuba to focus its production in Sorocaba—both cities in the São Paulo state. Honda has also ceased car production in Sumaré and relocated operations to Itirapina, in São Paulo.
According to Mr. Haigang, the company is still evaluating the best location for production, considering the possibility of acquiring an existing factory. The plan is to begin production in 2025.
On the other hand, the first models to be marketed will be imported in early 2025 and have already been defined. The compact electric Aion and a line of sport utility vehicles are included in the company’s program.
Mr. Haigang said the plan is to have 30 dealerships in the first phase and quickly expand to 50. According to him, the aim is to produce both electric and ethanol-powered hybrid vehicles as well as combustion-engine vehicles. “We will research what consumers want,” he said.
The intentions for strong plans in Brazil are evident in the choice of local executives. One of the first hires, for the marketing department, was Marcello Braga, who brings extensive experience from the Brazilian group CAOA.
Guangzhou-based GAC is listed on the Hong Kong and Shanghai stock exchanges. In 2023, it produced 2.53 million vehicles in China alone, exceeding the entire Brazilian market.
The interest in Brazilian research is part of GAC’s core. In China, the automaker has one of the most comprehensive research and development centers, which the company claims has consumed an investment equivalent to $25 billion. The center employs over 5,000 people.
In November, GAC and Huawei announced the creation of a new brand of smart energy vehicles.
“The partnerships with Brazilian universities will strengthen our international research and development network,” Mr. Haigang highlighted. According to the executive, Brazil needs to increase its competitiveness. “Brazil is an important country, it has a large market and uses ethanol,” Mr. Haigang said. “We want to set a new standard for the industry,” he added.
On Wednesday (4), GAC marked its arrival in Brazil by setting up its office in São Paulo. If its plans succeed, the brand could become another player in the strong wave of new Chinese competition.
*By Marli Olmos
Source: Valor International