Arvin Meritor has said it has won a contract to supply shock absorbers to Chery and will build a new JV factory in China to make those parts for Chery and potentially other automakers for export.
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Phil Martens, who heads light vehicle sales for ArvinMeritor, said the new factory in Wuhu was already under construction and would begin production at the end of this year.
“The venture is such that we can manufacture products for sale to other customers world-wide. The design of the Chery shock is our common worldwide design,” Martens told Reuters.
ArvinMeritor said its contract with Chery covered the supply of 10 million shock and strut assembly units over five years.
“It will start in the fourth quarter but really hit full production in the first quarter next year,” Martens said of the joint venture plant.
Martens, speaking on the sidelines of the Beijing Auto Show, said the new ArvinMeritor arrangement with Chery reflected a trend toward automakers sourcing more parts in China in a bid to contain costs. The companies aim to supply the fast-growing local market while also capturing savings by exporting the same parts to assembly plants in overseas markets.
ArvinMeritor is looking for export sales opportunities for the shock absorbers it builds in China, since the part is small enough so that shipping costs do not outweigh the savings on labor, Martens said.
In a parallel development, ArvinMeritor is looking at opportunities to use India as a hub for global production of a compact new door-latch for automakers, he said.
