JAC Motors changes plans in order to secure factory in Brazil

In August 1st, 2011, JAC Motors has announced it would build a plant in Brazil. More specifically in Camaçari, Bahia. But Brazil is a country known to change the rules of the game while it is being played. Continuously. And the plant began to be also continuously postponed. Many believed it would not happen, but Sergio Habib, the Brazilian official importer of JAC Motors vehicles and former partner of JAC in the Camaçari plant, decided to end the indefinitions by taking the bull by its horns. He has convinced JAC to get out of the business and decided to build the factory on its own. But that has demanded a change of plans.

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While the original plant would require an investment of R$ 900 million (around US$ 580 million, in 2011), of which 80% would already be an investment from Habib, the new one will demand a fraction of that: R$ 200 million (US$ 50 million, today). Production capacity has also decreased from 100,000 units to 20,000 units. An interesting move considering the shrinking Brazilian market. The model that will be produced in this plant, as a CKD model, which will come from China already painted, will be the JAC T5, also known in the Chinese market as JAC S3. A solution for the economic crisis that is affecting everyone. And that could jeopardize Habib’s efforts to set a new car company in Brazil.

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The entrepreneur has been the responsible for the establishment of Citroën in the country. Besides owning a large number of dealerships of the French carmaker, Habib has been the Brazilian CEO of Citroën for many years. When PSA decided it would run the business alone, Habib decided he would start importing Chinese vehicles. Of all the car companies he has studied, JAC seemed to be the one with more chances of success. But not simply bringing them here.

Habib started giving the Chinese company inputs on things the Brazilian customer would not accept on the cars. That has created Brazilian specification cars produced by JAC, which eventually became the same ones the company would sell in China as well. With a higher level of quality.

The business has started in Brazil with the models J3 and J3 Turin, also known as JAC A13. Later there was the addiction of J5 and J6, also named M2, T8, or M5, and the most recent car to be added to the line-up was the T6, or S5. The company began to sell its cars with 50 dealerships at once, an impressive number for Brazilian standards and a way to ensure people who trusted JAC would have easy ways to buy and service their cars.

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But the Brazilian market started to falter. The Brazilian government raised imported cars taxes suddenly and was taken to the World Trade Organization for unfair trade practices until it announced a new program in order to attract more factories. Mercedes-Benz, Honda, Audi, Suzuki, Land Rover and BMW decided to open their first plants in the country or to increase their number. JAC also committed to keep its investments and received the possibility to a larger number of small cars, as the ones it intended to produce in Camaçari. They would be the replacements for J3, J3 Turin and a new small SUV that was not disclosed at the time. Habib helped design it in JAC’s studio in Turin. But the factory faced many problems to start to be built, mostly because of environmental licenses.

The economy maintained its pace towards recession. Cheap cars started to sell less than they used to. SUVs were the only vehicles that did not suffer from poor sales. It made no sense anymore to have a 100,000 vehicle per year plant with shrinking sales. This was when Habib decided to step up and ensure a plant, even if much smaller.

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The T5 was the chosen model due to the fact that it is similar in size to the vehicles Habib promised to have in his factory. It also fits because of the great interest in small SUVs, even though it was not the car conceived by Habib. This small SUV is the T3, pictured above, known as S2 in China and still not for sale there. The sedan would be a new model derived from the JAC A20, in order to get the J3 Turin out of business, with its hatchback version, still not revealed in China, replacing the J3.

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In a country in which rules change while the game is being played, the only ones that survive are the ones that adapt quickly. Habib and JAC are trying to do so. So far, they have succeeded.

 

 

 

Gustavo Henrique Ruffo

I have been an automotive journalist since 1998 and have worked for many important Brazilian newspapers and magazines, such as the local edition of Car and Driver and Quatro Rodas, Brazilian's biggest car magazine. I have also worked for foreign websites, such as World Car Fans and won a few journalism prizes, among them three SAE Journalism Awards and the 2017 IAM RoadSmart Safety Award. I am the author of "The Traffic Cholesterol", a book about bad drivers that you can buy at Hotmart, Google Play, Amazon and Kobo.