Great Wall Weighing Deal for Daimler Auto Plant in Brazil

(Bloomberg) -- Chinese automaker Great Wall Motor Co. is considering acquiring one of Daimler AG’s factories in Brazil as it looks to expand outside its home country, according to people familiar with the matter.

The two companies are in talks about the potential deal, which could fetch several hundred million dollars, the people said, asking not to be named as the matter is private.

Deliberations are ongoing and the companies could decide not to pursue a deal, the people said. A representative for Great Wall wasn’t immediately able to comment. A spokeswoman for Daimler said the company continues to explore different options for the factory, but declined to comment further.

The German automaker said in December it would cease car production in Brazil, citing difficult market conditions. It opened its factory in Iracemapolis in 2016 to produce the Mercedes-Benz C-Class sedan and the GLA crossover. The company earmarked more than 600 million Brazilian real ($120 million) to invest in the plant, which had an annual production capacity of 20,000 cars. Daimler’s Brazil operations currently include buses, trucks and vehicle testing.

Buying a Brazilian plant would add to Great Wall’s string of factory acquisitions in the past two years. The company announced the purchase of facilities from General Motors Co. in India and Thailand last year. It took full ownership of the Thai plant in November, according to an announcement.

The potential deal comes as Great Wall faces increasing competition in China for sport utility vehicles, a key segment for the automaker. Foreign brands by firms such as Volkswagen AG and Toyota Motor Corp. captured a larger share of China’s new SUV sales in 2020 than domestic firms, and the challengers appear ready to extend their sales lead, Bloomberg Intelligence analyst Steve Man wrote in May.

Great Wall last year generated 285.8 million yuan ($44 million) sales in Chile, making the country its biggest market in Latin America and its sixth-largest globally, according to its annual report. Chile accounts for about 2.8% of the Chinese automaker’s 2020 revenue.

Daimler’s biggest shareholder, Chinese billionaire Li Shufu, is also founder and chairman of Zhejiang Geely Holding Group Co. Great Wall counts Geely Automobile Holdings Ltd. as a rival, and has a joint venture in China with Daimler’s own German competitor, BMW AG.

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