Promoting Localization Jianghuai Automotive intends to introduce parts suppliers to Brazil

Chinese automakers plan to build an industrial value chain in Brazil. After Chery Automobile decides to bring its suppliers to Brazil, JAC plans to introduce its component suppliers to the Brazilian market.

At the Third Forum for the Automotive Industry in Brazil in April this year, Srgio Habib, chairman of Jianghuai Brazil and president of the Brazilian partner SHC, said that he plans to introduce the company’s current supplier of components to China. Therefore, the vehicles exported by JAC to Brazil will meet the new regulations, and the localization level will meet the requirements of IPI (Imposto de Produtos Industrializados).

Srgio Habib stated: “It is impossible to achieve a localization ratio of 65% within 12 months. Within the three-year period set by the new policy, it is easier to achieve this goal.” Jianghuai began to supply parts and components. The business will bring it to Brazil to increase the localization of vehicles. In addition, JAC Brazil plans to use the Camaari Industrial Center in Brazil for the purpose of promoting localization. The center has important automotive industry equipment and supplies parts for the local Ford automaker.

The increase in the tariff rate for industrial products with an IPI of up to 30% has begun to have an adverse impact on imported vehicles in the Brazilian market. Usually JAC sells about 3,000 vehicles a month in the local area. After implementing the new barrier policy in Brazil in January this year, the sales volume has suddenly halved to 1,500 units, and it has slowly recovered to 2,000 units in March. Some media attributed Jianghuai's closure of three dealerships and 14 showrooms to the decline in sales, but JAC spokesman denied that the reason for the closure was a decline in performance and stressed that the total number of dealers has actually increased since the end of last year.

On March 27th, China Chery Automobile announced that it would build a complete supply chain in Brazil and hoped that its component suppliers would establish a branch near the new Chery plant in Brazil to meet the requirements of the Brazilian market for the localization of Chery's vehicles. However, Chery is still negotiating with these companies and has not yet established an investment plan.