Chery, China’s largest passenger vehicle exporter, says that its new plant in Brazil will start production either at the end of this year or the beginning of 2014. The full-scale plant, as opposed to a CKD assembly facility, will allow Chery to avoid Brazil’s high custom duties on imported vehicles. It will be the first full-scale factory built by a Chinese automaker in the country.

The plant is located in Sao Paulo, the largest city in the South American nation, and its first product will be the Chery Celer subcompact, also known as the Fulwin 2 in China. The 1.5 litre hatchback will be powered by a flex-fuel engine designed to run on gasoline and ethanol, the norm in Brazil.

With a total investment of $400 million (RM1.32 billion), the plant will produce up to 150,000 vehicles a year after a second phase of construction is completed. Chery started exporting vehicles to the Brazil in 2004 but sales were hit hard after the government raised import duties on imported vehicles. In the first half of this year, Chery sold 2,504 cars in Brazil, down 73% year-on-year.

Closer to home, Chery will set up a factory in Malaysia that will begin operations in 2014, according to reports from China. The plant won’t be just making cars for local consumption, but will assemble vehicles in knockdown form to be exported to countries in South Asia and ASEAN. Click here for the full story.