Great Wall has announced a massive investment for Brazil, where it already has a former Mercedes factory, to launch 10 electrified models starting next year. It will invest a very generous sum, more than 1,160 million euros.
It was a jug of cold water for the Government of Spain and the Generalitat de Catalunya. The counteroffer made to Great Wall Motor Co. Ltd. did not satisfy Chinese businessmen. Not only did they consider the reduction in the rental of the facilities or the aid to be insufficient, they also saw that the factory did not have sufficient production capacity.
While we are still waiting to find out how Great Wall is going to establish itself in the European market as just another manufacturer, our attention turns to Brazil, where the Chinese manufacturer has announced a large investment. The Rio de Janeiro country will receive an investment of 10,000 million reaiswhich is equivalent to just over 1,160 million euros.
This money is going to be distributed throughout the decade to establish itself in the country and produce locally. This has a number of advantages, given the peculiarities of the Latin American market, where local production is favored by penalizing imports. Even Mercedes-Benz did it.
The Daimler factory acquisition agreement was formalized last year
The promised sum has a purpose, launch within three years a dozen models in the South American country, but with the peculiarity of being electrified. Therefore, we talk about hybrid and electricspecifically four 100% electric and the other six will be hybrid -we do not know if plug-in or conventional-.
The brands of these models will be Great Wall (Haval, Tank and Poer) and ORA
In addition to having alternative engines, which is already something a bit exotic in Brazil -it is a country that has greatly favored the use of alternative fuels such as bioethanol-, there will be other hi-tech features such as driver assistance to improve safety and connectivity through 5G data networks.
Latin American customers are not exactly used to manufacturers bringing them the latest models. Rather the opposite has been seen, obsolete or second division engineering with the excuse that they are customers with less money. Great Wall has another point of view, although they do not go to the heart of the market. Eye, and in cars of national production.
Iracemapolis Factory
And how are they going to put a dozen models on the street in such a short time? In addition to the resource of imports, they have the Iracemapolis factory, which was acquired last year from Daimler – which is now called Mercedes-Benz to dry, after separating the truck division – after a five-year industrial adventure that did not go well. This week they have officially inaugurated it as theirs.
Mercedes stopped producing cars for the Brazilian market in December 2020, with the main reason being economic infeasibility due to low volumes. They were turning to producing C-Class and GLA cars from Partially Assembled (CKD) kits from Europe.
Great Wall will have at its disposal a large land area, 1.2 million km², and a production capacity of up to 100,000 units per year when the refurbishment work is finished. The Chinese manufacturer hopes to have the factory operational in the second half of 2023. They will have 2,000 workers, many more than those that Mercedes put on the street, 370, less than there were at the beginning.
What is the relationship between Great Wall’s investment in Brazil and the withdrawal from the negotiations in Barcelona?
In principle, none. The establishment of Great Wall in Europe is for the European market, and the implantation strategy in Brazil is a separate thing, but it is striking that both news are linked in just a month and a half.
The 10,000 million reais are to adapt the factory -double the capacity of the Mercedes-Benz era-, improve the local logistics chain, invest in scientific and technological companies, and improve electrification and engineering. Speaking colloquially, with Mercedes-Benz the factory was for “assemblers”, there was little Brazilian touch there, and there was not much innovation or technology either.
Great Wall wants to expand outside China and surroundings, and have a manufacturing footprint in both Latin America and Europe. There will be another European location, although not in Barcelona, and it needs considerably more capacity than 100,000 units per year. Rather, they will need three times, or perhaps more, and for that the Free Zone would not have been able to cope.