Chery to Invest $75 Million in Korea's KG Mobility to Bolster Overseas Expansion

China’s Chery Automobile has agreed to invest $75 million in South Korean automaker KG Mobility Corp through convertible bonds, a move aimed at expanding its global manufacturing and sales footprint. The investment, if converted into shares, would grant Chery a stake of approximately 10% in the company formerly known as SsangYong Motor, KG Mobility announced.

Strategic Partnership Details

The collaboration extends beyond a simple capital injection. KG Mobility is set to launch a new midsize SUV, codenamed SE-10, in January, which will be built on Chery’s T2X vehicle platform. The model will be available in both gasoline and plug-in hybrid versions for domestic and international markets.

This partnership provides Chery, China's largest auto exporter, with access to KG Mobility's underutilized overseas production facilities. "We believe these locations could become key areas for future cooperation between our two companies," Zhang Guibing, president of Chery International, told reporters in Seoul. He cited sharing global production capacity and collaborating on distribution as key opportunities.

Global Market Ambitions

The deal underscores a broader trend of Chinese automakers partnering with established foreign manufacturers to accelerate their international growth. Chery is actively exploring entry into the U.S. market, though Zhang noted the company would need to navigate a complex landscape of laws and regulations before proceeding.

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For its part, KG Mobility has no immediate plans to export the upcoming SE-10 model to the United States but remains open to the possibility, according to Chairman Kwak Jae-sun. Exports are a critical component of KG Mobility's business, accounting for about 60% of the more than 55,000 vehicles it sold in the first half of the year.

Broader Cooperation

Beyond vehicle production, the two companies have agreed to form a joint task force to explore deeper collaboration in other strategic areas. According to Kwak, this could include cooperation in semiconductors, robotics, raw materials, and steel.

KG Mobility is South Korea's fourth-largest automaker, ranking behind industry giants Hyundai, Kia, and General Motors. This strategic investment from Chery could provide the necessary capital and technological support to enhance its competitive position both at home and abroad.