Chery, the renowned Chinese state-owned automobile behemoth, unveiled an ambitious plan to catapult its presence within Southeast Asia through the exportation of Indonesia-assembled vehicles to Vietnam and the Philippines. This move signifies a pivotal advancement in Chery’s Southeast Asian market infiltration efforts, utilizing the region’s trade agreements to augment competitiveness and extend market footprint.
Collaborative Ventures for Economic Growth
Chery’s Indonesian operations are executed in partnership with local entity Handal Indonesia Motor, focusing on joint assembly processes. This collaboration entails Chery supplying automobile components for assembly at Handal’s facilities in Indonesia, encompassing the assembly of Chery’s electric vehicle (EV) model, the Omoda E5. This alliance underscores Chery’s dedication to bolstering the Indonesian economy by aligning with the nation’s regulations on automobile manufacturing local content requirements.
Compliance with Local Content Mandates
Zheng Shuo, Assistant Vice President of PT Chery Sales Indonesia, emphasized their EV model, the Omoda E5, alongside their internal combustion engine counterparts, have surpassed the 40 percent local content threshold. This achievement not only aligns with the Indonesian government’s subsidy prerequisites but also positions Chery to capitalize on the import duty exemptions facilitated under the intra-ASEAN trade agreement. Shuo unveiled plans to initiate the production of export-oriented right-hand and left-hand drive vehicles in Indonesia within the first half of 2024, accentuating the trade benefits enabled through adherence to the ASEAN Trade in Goods Agreement (ATIGA).
Investment and Economic Contributions
The prior year witnessed Chery announcing a significant billion investment approximately $16 million to manufacture EVs locally with Handal Motor Indonesia, responding to the escalating demand for electric vehicles within the Indonesian market. Shuo alluded to the prospect of escalating this investment, reflecting Chery’s positive market demand prognosis and its pledge to deepen localization initiatives in Indonesia. This strategy not only cements Chery’s market stance but also supports the Indonesian government’s ambitions for economic advancement.
Strategic ASEAN Market Penetration
Chery’s strategy to export Indonesia-manufactured automobiles to Vietnam and the Philippines is meticulously timed to leverage ATIGA, which has markedly reduced tariffs within the ASEAN bloc, promoting enhanced trade among member states. With Vietnam’s extension of its import tax exemption for completely built unit cars from ASEAN countries until 2027, Chery’s strategy is well-positioned to seize market share in a region experiencing a surge in automotive demand.
Chery’s strategic foray into Southeast Asia, characterized by its collaboration with Handal Indonesia Motor and adherence to local content stipulations, establishes a benchmark for foreign automobile manufacturers aiming to penetrate the ASEAN market. By leveraging regional trade pacts and investing in local production capabilities, Chery not only aims for market penetration but also contributes to the economic dynamism of the region.
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