* Second Chinese carmaker to produce vehicles in Brazil
* 80 pct of capital will come from local SHC Group
* Government driving up the cost of imported cars
By Vivian Pereira and Brad Haynes
SAO PAULO, Oct 7 The Brazilian operator of
China's JAC Motors brand announced a 900-million-real ($510
million) investment to build a factory producing affordable
cars in the world's No. 4 auto market.
JAC Motors will provide 20 percent of the capital, with the
rest coming from the local SHC Group run by businessman Sergio
Habib, SHC said in a statement on Friday.
The plant in Bahia state, expected to produce 100,000
vehicles annually beginning in 2014, will be the second
producing Chinese-branded cars in Latin America's largest
economy, where authorities are pushing up the cost of imported
Chinese carmaker Chery started building a plant in Brazil
JAC called off plans to invest $600 million in a Brazil
factory after the government, aiming to protect local jobs,
raised taxes on cars with less than two-thirds domestic
Habib's investment revives plans for the factory and moves
SHC into production as well as sales for the Chinese brand. The
group currently owns 40 JAC dealerships in Brazil and expects
to have 200 by 2014.
Habib brought France's Citroen brand to Brazil in the
Brazil is a key market for the world's biggest automakers,
including Italy's Fiat SpA , Germany's Volkswagen AG and U.S.-based General Motors Co and Ford
Motor Co .
The Brazilian economy grew a hefty 7.5 percent last year,
and the number of middle-class citizens has grown 25 percent in
the past decade, making the country a crucial growth market for
carmakers as major developed economies stagnate.
However, auto output plunged in September as carmakers
throttled back production due to high inventories and signs of
cooling demand, reinforcing evidence that Latin America's
largest economy is shifting into lower gear.