Chery to open UK R&D center, paving way for local production

• Chery’s UK R&D center will be located in Bedfordshire, England, and is set to open in late fall this year.
• Chery and its Omoda and Jaecoo brands took almost 8% of the UK market in July, up from about 3% a year earlier.

Chery (HKEX: 9973) will open a passenger car research and development center in the UK, the latest move by China’s largest vehicle exporter to deepen its presence in the market.

The center will be built in Bedfordshire, England, a hub for engineering and motorsport that is already home to several automotive R&D facilities, according to a Financial Times report on Wednesday.

Chery said the facility will open in late fall this year. Research will initially focus on calibrating vehicles for UK driving conditions, and will later extend to autonomous driving and AI.

The company said it plans to recruit local talent over the long term and create high-skilled jobs at the R&D center, according to the Financial Times.

The facility was “the next step in our long-term plan for the UK,” Chery International UK CEO Gary Lan said in a statement on Wednesday, as cited by the Financial Times.

“We waited over 20 years for the right time to enter this market, and our ambition has always gone much further than simply bringing vehicles here.”

Lan said at the FT Future of the Car Summit in May that an R&D center would be an important step in localizing operations, to be followed by manufacturing in the UK.

Manufacturing is already in the works. In June, Chery signed a non-binding memorandum of understanding with Japanese auto giant Nissan for the latter to build passenger cars for it at its Sunderland plant in the UK.

Nissan plans to start producing Chery models at Sunderland from next year, using the plant’s currently idle Line One. That will mark the first large-scale local production by a Chinese car brand in the UK.

Chery is one of the fastest-growing Chinese automakers in the UK market. Chery and its Omoda and Jaecoo brands together took almost 8% of the market in July, up from about 3% a year earlier, according to the Society of Motor Manufacturers and Traders data cited in the Financial Times report.

The group is expanding in Europe at the same time. In February, Chery launched its Lepas brand, designed specifically for European markets.

Exports are underpinning Chery’s overall growth. The group sold about 276,820 vehicles globally in July, including 202,533 exports, up 70% year-on-year, making it the first Chinese automaker to export more than 200,000 vehicles in a single month, according to data compiled by CnEVPost.

Chery will invest $75 million via convertible bonds, which would give it about a 10% stake in KG Mobility if converted.