Top-selling automaker planning assembly in Cuba

Top-selling automaker planning assembly in Cuba

CUBA STANDARD — As the Cuban government is gradually freeing new-car
sales for individuals, Chinese automaker Geely, already the No. 1 auto
seller on the island, is positioning itself for growth in Cuba and the
wider region.

The company is planning to establish a semi-knock down (SKD) assembly
plant in Cuba, Shanghai Geely International Corporation, Geely's
international arm, announced in a press release republished by Global
Times. The company didn't provide any specifics.

In an ambitious global expansion plan, Geely set a target of opening 15
assembly plants overseas by 2015, according to an article by Automotive
Logistics magazine.

In semi-knock down assembly, a manufacturer typically exports a kit with
complete car body, usually coated or already painted, to then add engine
and transmission, tires, wheels, seats, headlights, glass, batteries,
interior plastics, or other components in final assembly, some of them
locally sourced.

"At the request of several ministries in Cuba, including the Ministry of
Foreign Trade and Investment, the Ministry of Communications, and the
Ministry of Metallurgy Industry, Geely International is now preparing to
launch the SKD project in a local place," the company said in the press
release.

The announcement comes as the Cuban government is seeking manufacturers
to open shop at its new Mariel Special Development Zone, an
export-oriented zone around a deepwater port 30 miles west of Havana.

Cuba is the company's largest market in the Caribbean, Central America
and northern part of South America. Geely sold at least 3,200 vehicles
to Cuba in 2013, in two batches; the Geely CK has held the spot of
most-sold new car model in Cuba since 2009. The company is also selling
vehicles in Costa Rica, Colombia and Venezuela.

In 2012, the company opened a contract assembly plant in Uruguay in a
joint venture with a local partner, making it Geely's first in the
Western hemisphere. The plant, with a capacity of 20,000 cars per year,
is supplying primarily Mercosur markets Brazil, Argentina and Uruguay,
as well as Chile. Forty percent of the components in Uruguay are locally
sourced, with a goal of reaching 60 percent by the third year.

All Geely vehicles sold to Cuba in 2013 were made at the Uruguayan plant.

"Geely International actively takes measures in relevant areas and has
achieved essential progress," the company said in a recent statement
about the Cuban market.

On Dec. 19, official media announced that for the first time since 1959,
individuals will be allowed to purchase new cars without a permit. The
state will retain its monopoly over new-car sales.

"Geely is continuously improving the storage structure of its bonded
warehouse and is adopting multi-channel supply methods" for spare parts,
the company said. Geely's warehouse in Cuba now is at 80 percent of
capacity, up from 34 percent last year. The company has also signed
agreements with SASA, a local auto service provider operated by the
Committees for the Defense of the Revolution, to jointly open standard
service stations and spare-part sales stores.

Nearly 10,000 Geely-brand cars and trucks are already circulating on
Cuban roads, the company said. Government agencies, such as the
Committees for the Defense of the Revolution, the Ministry of the
Interior, and the Ministry of Tourism, have been the only buyers of new
cars until now. Geely's CK models are used as senior government
officials' cars; most police cars in Havana are Geely CK models as well.
At present, 80 percent of rental cars in Cuba are Geely CK, EC7 and EC8
models; all rental agencies are state-owned.

Source: Top-selling automaker planning assembly in Cuba « Cuba Standard,
your best source for Cuban business news -
http://www.cubastandard.com/2013/12/26/top-selling-automaker-planning-assembly-in-cuba/