Chinese group Zhejiang Geely to start selling cars in Brazil in August

Chinese group Zhejiang Geely Holding is due to start selling the cars it manufactures in Montevideo, Uruguay in Brazil next August, when it expects to have 20 showrooms in the south and southeast of the country, the Brazilian press reported.

According to newspaper O Estado de São Paulo, imports of the LC and EC7 models will be the responsibility of the Gandini group, owned by businessman José Luiz Gandini, which also represents South Korean car manufacturer Kia Motors.

The agreement between the two groups was signed in July 2011 but was frozen following an announcement, two months later, that the rate of Tax on Industrialised Products (IPI) for cars manufactured outside Mercosur and Mexico had been increased by 30 percentage points.

"With the factory in Uruguay, imports have become economically viable," said Gandini, as, as well as not having to pay the increased tax rate, they also benefit from import tax exemption applied to products manufactured in the Mercosur bloc.

However, the Chinese group is also considering building a factory in Brazil, and some of its officials have visited some States, including Sao Paulo, Santa Catarina and Bahia.

Gandini also said that his group would continue as a distributor and was not interested in taking a stake in a future Zhejiang Geely Holding factory in Brazil which, in order to produce 100,000 vehicles per year requires initial investment of between US$400 million and US$500 million.