Chinese automaker Geely is reportedly in talks to acquire a third body assembly line at Ford's plant in Valencia, Spain. This line previously produced the Ford Mondeo and S-Max but has been idle since the models were discontinued. Geely plans to renovate the facility for the production of small electric vehicles (EVs) and hybrids tailored for the European market.
According to the Chinese economic media outlet, Economic Daily, Chinese automakers are expanding their global production bases by acquiring aging and idle factories abroad at low prices. As traditional automakers streamline operations in response to the shift to electric vehicles, they are selling off internal combustion engine production facilities, creating opportunities for Chinese companies to accelerate their localization strategies.
Chinese Capital Acquires Ford, Mercedes-Benz, and Nissan Plants
Chinese investments are rapidly filling the void left by Western and Japanese automakers in regions such as South America, Africa, and Southeast Asia.
A notable example is Chery Automobile's push to acquire Nissan's plant in South Africa. Reports indicate that Chery has reached an agreement to purchase the Nissan facility located in Roslyn, which has been operational for over 60 years and was a key production site for 45,000 pickup trucks annually.
In Brazil, the largest automotive market in South America, Chinese companies continue to make inroads. Great Wall Motors (GWM) acquired a former Mercedes-Benz plant and began production of 30,000 vehicles annually in August 2025. BYD also took over a closed Ford factory in Bahia, Brazil, in March 2024 and started assembling electric vehicles in October 2025.
These developments align with a trend of declining profitability in the Chinese automotive market due to intense price competition and oversupply, prompting companies to look abroad for growth opportunities.
BYD, a leader in the electric vehicle sector, reported a 50% drop in net profit in the first quarter compared to the same period last year, indicating a prolonged slowdown. In response, BYD is aggressively targeting international markets, with overseas sales accounting for 46% of its total sales. The company has set a goal to increase overseas sales by 40% this year to 1.5 million units.
Chinese Automakers Shift Focus from Exports to Local Production
Chinese automakers are increasingly recognizing the necessity of establishing local production systems abroad rather than relying solely on exports. As the European Union, the United States, Canada, and Brazil impose higher tariffs to limit the influx of Chinese electric vehicles, companies are moving to circumvent these barriers through local production.
The Rhodium Group, a U.S. market research firm, noted that last year, overseas investments by Chinese electric vehicle manufacturers surpassed domestic investments for the first time. Acquiring existing idle factories is viewed as a more efficient approach in terms of time and cost compared to building new plants, which typically take three to five years to complete. In contrast, existing facilities can be renovated and operational within about a year.
Chui Dongxu, secretary-general of the China Passenger Car Association (CPCA), commented, "The global strategy of Chinese automakers mirrors the globalization process of the Japanese automotive industry in the past." Initially focused on exporting vehicles for the domestic market, they are now evolving towards local assembly of components and ultimately establishing local production systems.
Aiming for a 'Yaris Moment' in the European Hatchback Market
To penetrate global markets, Chinese automakers are accelerating the development of models tailored to regional consumer preferences. This strategy recalls Toyota's successful introduction of the Yaris, a small hatchback designed for European consumers, which marked a significant moment in the market.
Pedro Pacheco, an analyst at Gartner, stated via Reuters, "Chinese automakers are striving to replicate the 'Yaris moment.'"
Hongqi, a brand under the state-owned automaker FAW Group and known as the 'official vehicle' brand for President Xi Jinping, unveiled a small global SUV aimed at the European market at the recent Beijing Motor Show. Additionally, companies like BYD, Chery, Great Wall, SAIC, and Hongqi are developing models ranging from small hatchbacks for Europe to pickup trucks for the Australian and Mexican markets.
While hatchbacks are in low demand in China, they are highly sought after in Europe, where practicality and narrow road conditions drive consumer preference. In some southern European regions, hatchbacks account for over 40% of new car sales, showing robust growth. BYD plans to launch its specially designed 'Dolphin G' hatchback model in June for the European market. Chery's new global brand, Rephas, is also developing a hatchback model aimed at Europe, and SAIC's brand MG is expected to release the MG2 hatchback model in Europe.
* This article has been translated by AI.
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