Dongfeng Weighs Making 100,000 Cars a Year in Italy as Chinese Peer Chery Re...

TMTPost -- Established Chinese automakers are ratcheting up their production capacities in European market.

Credit：Dongfeng

Dongfeng Motor Corporation Ltd., one of of the "Big Four" state-owned car manufacturers in China, is weighing building a facility with annual capacity of more than 100,000 units in Italy, Bloomberg reported, citing Qian Xie, head of its operations in Europe. Dongfeng is in talks with the Italian government, which will offersome options for production sites in the next few weeks, Xie said in an interview in Milan.

The new plant could be a win-win for Dongfeng and Rome as the auto company is under pressure at home where demand for fossil fuel vehicles has been falling and Italy, home for Stellantis’ key brand Fiat, is lagging behind European peers in electric vehicle (EV) adoption. Xie suggested a plant located in Italy enables Dongfeng to take advantage of "all the strong legacy that the country has in the automotive industry." "Italy is one of Europe's largest automotive markets and for a Chinese carmaker having local production means that you can supply all other countries in the area," Xie said. He said while Dongfeng has a strong belief of an electric future, the company would need to focus on hybrid cars as of now for Italy.

The plan to produce vehicles in Italy, if it came true, would be Dongfeng’s next major effort to expand in Europe. In the beinning of this year, Dongfeng signed a coopeartion agreement with Spanish Salvador Caetano Group,the largest automotive group in the Iberian Peninsula. The two companies announced they will work together on VOYAH, Mhero and Dongfeng brand EVs in the Spanish and Portuguese markets in 2024. " Landing in the Iberian Peninsula means the opening of a new stage of Dongfeng European business. Since the first landing of VOYAH brand in Europe in 2022, Dongfeng has continued to expand its business territory. In the future, more Dongfeng series brands will be introduced to Europe to meet the diversified and multi-level travel needs,” said Ma Lei, General manager of the international business division of Dongfeng, at the signing ceremony in Wuhan, base of the company.

Dongfeng’s consideration of new plant in Italy came as Chinese peer Chery Automobile Co. Ltd., gets ready for automaking in Spain, Europe's second-largest car producing nation after Germany. Chery signed a deal with Spainish company EV Motors to establish a joint venture. Through the venture, Chery will start production of its model Omoda in a former Nissan factory in Barcelona firs, and EV Motors, as the majority shareholder, will begin producing its own vehicles in the fourth quarter. “I see the step as a confirmation of Chery's clear commitment to Europe. This decision proves Chery has come to stay," said Jochen Tueting, managing director for Chery Europe. It’s unclear whether Spanish authorities had offered public aid to Chery, though Catalonia's government said it would finance training programs for Nissan's former workers to facilitate a quick transition.

Chinese EV startup Zhejiang Leapmotor Technologies Ltd. Is also on the track to make vehicles in Europe through its partnership with Stellantis NV, the second largest European automobile manufacturer by sales. Stellantis said last October that it will spend 1.5 billion euros (US$1.58 billion) to acquire a stake of about 20% in Leapmotor. The two companies are going to set up a joint venture, in which Stellantis will own a 51% stake and have the exclusive rights for the export, sale and production of Leapmotor vehicles outside Greater China. The venture is expected to begin shipments in the second half of 2024 starting in Europe, aiming to sell 500,000 units outside of China by 2030, according to Stallantis’ presentation about earnings in the third quarter of 2023. It said Leapmotor targets sales of 1 million units annually in China in the long run, capitalizing on position as tech-led, pure-EV domestic leader. It expected the venture will have no material impact to Stellantis’ industry-leading adjusted operating income (AOI) margins.