China's car companies hit by eco blitz
CHINA WATCH China has frozen planned industrial projects in six cities and five industrial parks along four major river systems to prevent them from being further contaminated.
Wuhu industrial park is one of the five which were indicted by the State Environmental Protection Administration (SEPA) for its role in polluting the rivers.
CHERY Automobile, China’s fourth-largest auto maker, was hit by this eco storm: it has to postpone its joint venture project in Wuhu industrial park from this Nov. to no sooner than next March.
CHERY has teamed up with America’s Quantum LLC, a U.S. subsidiary of Tel Aviv-listed Israel Group, an Israeli company, in its attempt to explore the European and U.S. markets. Their total investment in the new venture, which will produce high-end vehicles in China for sale overseas, amounts to 5.8 billion yuan (US$753 million).
The new venture is expected to turn out 150,000 units a year, lifting Chery’s total production capacity to 500,000 vehicles. Zhang Yu, an analyst at auto consulting firm CSM Asia Corp, said the new cooperation will help Chery gain important financial support.
Since this project is forced to be put off until they get environment approval next year, CHERY is under pressure at the moment, as its mainstream model, the Chery QQ compact, is priced at less than 50,000 yuan ($6200).
