Opinion – Eduardo Sodré: Chery factory in São Paulo emerged in a difficult scenario and never reached production capacity

The closing of the Caoa Chery group factory in Jacareí (São Paulo countryside) is the end of a story that seemed promising. The first chapter took place 13 years ago, when the national automotive market recorded consecutive sales and production records.

The construction was confirmed in May 2009, but the opening took place in August 2014, the result of an investment of US$ 400 million. The forecast was optimistic: produce 150,000 cars a year.

But a lot has changed between the announcement of the plant and the start of manufacturing the cars. In October 2011, the IPI (Imposto sobre Produtos Industrializados) surcharge, which aimed to stop the arrival of imported models to the Brazilian market, stopped imports.

The impact was great for the Chinese brand: the cheapest car in Brazil at that time was the Chery QQ, launched in April 2011 for from R$22,900. It was a copy of the South Korean Daewoo Matiz, which in some markets was sold as the Chevrolet Spark.

Despite the price, sales did not take off. In addition to being an imitation, the compact was inferior to national and imported competitors, such as the Chinese JAC J3. Chery offered other models, such as the compact utility Tiggo and the tiny Face. The Celer hatch arrived in 2012 and, two years later, would become the automaker’s first national vehicle.

With the restrictions on imports and the incentives for domestic production that came with the Inovar-Auto program, the factory continued to be promising. But, when it was inaugurated, the market was already submerged in the midst of the economic crisis and the company was at war with the Metalworkers Union of São José dos Campos and Region.

A few months after production began, the assembly lines were paralyzed by a strike. Workers demanded better wages. Other interruptions occurred throughout 2015 and 2016, while the entire automotive industry recorded billions in losses in the country.

Everything indicated that the end was near, until the Caoa group took over operations in November 2017. An investment of US$ 2 billion was planned to revive the brand, renamed Caoa Chery.

But the strategy included the production of models in Anápolis (GO), where the Caoa group was already assembling cars from the South Korean company Hyundai. And the most profitable vehicles came from there, such as the Tiggo line in the 5X, 7 and 8 bodies.

The Jacareí plant was left with the Arrizo line sedans and the Tiggo 2 and Tiggo 3X compact SUVs. It was, therefore, with less profitable products and very far from the goals dreamed of at the time of the factory’s announcement.

The 150,000 units planned in the past were revised to 50,000 shortly after the Caoa group took over operations. The best result occurred in 2021, when 14,000 vehicles were assembled.

Today’s cars are much better than the imported Cherys of the past decade, but the difficulties have only increased. In addition to registering low sales volumes, the Cherys assembled in Jacareí suffered from the lack of parts resulting from the Covid-19 pandemic.