Daimler will recoup some of what it invested in Brazil five years ago by selling Great Wall the plant which was closed in December due to lack of demand. This way, Great Wall will have its first factory in America.
In December 2020, one of the shortest industrial adventures of Daimler AG -The parent company Mercedes-Benz- it didn’t even last five years. The Iracemápolis plant, in the state of São Paulo, has closed its doors due to impossibility. It was inaugurated in March 2016.
This site was waiting for an owner until the week that ends, since the Chinese group Great Wall Motor Co. Ltd. signed an agreement with Daimler to stay with her. The amount for which the deal was closed is unknown, everything except labor will remain.
According to., The acquisition was a rebound, as the Chinese group had been trying for months to obtain permission from the Indian government to set up there. Part of the $ 1,000 million they intended to invest was intended for the purchase operation in Brazil.
Production of the Mercedes-Benz C 180 at Iracemápolis
The facilities in Iracemápolis are extensive, 1.2 million square kilometers, and has a natural gas cogeneration system through which it generates half of the energy it consumes. Chinese want multiply plant capacity by five, up to 100,000 units per year.
The factory was built in a relatively short period of time, 19 months, after Daimler invested around 125 million euros. This is not a factory to use, since the cars were partially produced in Germany and arrived as kits. What in the industry is called CKD(Completely KO).
Its aim was to manufacture the most popular models in Brazil, the C-Class and the GLA-Class, at a rate of up to 20,000 units per year. He had been forced by the Brazilian authorities to have a more local presence if they wanted to sell their cars there. Brazil has protectionist measures, like other Latin American countries.
Aerial view of the complex
Daimler AG already had two sites in Brazil, in Juiz de Fora and São Bernardo do Campo, but both are currently dedicated to the production of commercial vehicles and components for them. In the past, Class A and Class C were also produced in Juiz de Fora. The Iracemápolis plant was exclusively dedicated to passenger cars and she was number 26 in the group.
But the impact of the COVID-19 pandemic, which hit the Portuguese-speaking country hard, ended up rendering the factory unsustainable because there were not enough sales. Because of this, Daimler was forced to shut down the plant late last year, although the coronavirus was the last straw.
Another Daimler AG plant was sold, that of Hambach (France), which will become INEOS
When it worked with Daimler, it started with 500 employees and it was estimated that it could generate up to 750 direct jobs and another 3,000 indirect jobs. According to Great Wall, the direct workforce will be around 2,000 employees, more than double for a maximum production up to five times higher.
The CKD model production line is less robotic
Great Wall would set foot in Latin America in the form of a factory, as it currently has nine locations in China, its main market, as well as Russia, Bulgaria, Iran and Thailand. However, The Great Walls are sold in several countries of the continent for the attractiveness of its price, such as Paraguay, Ecuador, Chile, Costa Rica, Uruguay, Peru, Argentina, Bolivia or Guatemala.
According to data from January to July of this year, Great Wall delivered 709,766 vehicles by adding its different brands (Haval, Wey, Great Wall, ORA, TANK…), or 49.92% more than last year at the same period (473,436). In 2020, its sales had increased to 1,111,598 units, 5.41% more than in 2019.
Chinese automaker wants to create up to 4 million cars per year by 2025
Great Wall did not specify which models it intends to produce there, although we know it will not only be for the Brazilian market, there will also be exports to neighboring countries. Before the end of the year the transaction will have been finalized. Production can presumably be restored within the next year.