Great Wall To Build Cars in Bulgaria

LOVECH, Bulgaria — Chinese automaker Great Wall Motors plans to start production of its cars in Bulgaria early in 2011 at its Lovech plant, which was constructed by the Chinese company in cooperation with local automaker Litex Motors. The company plans to build an SUV, a truck and two sedan models that are expected to be sold in European Union countries.

The factory has a production capacity of 50,000 cars per year. The first 1,000 cars are expected to be produced at the plant in February 2011.

Great Wall expects that the launch of production in Bulgaria will provide it wide access to the EU market. The new cars are expected to receive a "Made in the EU" label and, without aggravating duties and taxes, will be available for export to each of the other 26 EU countries.

The initial investment is estimated at $119 million and at a later stage may exceed $420 million. The plant will employ up to 1,800 people, of which 400 are highly specialized professionals from China, South Korea, Japan, Germany and Italy.

According to analysts at the Bulgarian business paper News.bg, the deal can be considered a great opportunity for Bulgaria to show that business conditions in the country are suitable for large foreign investments.

It may also be a last chance for the local automotive industry after the failure of a cooperation arrangement with Rover. In 1995, the British company opened a factory in Varna, which held 51 percent of the shares, while the remaining 49 percent were owned by the Bulgarian company Group Daru. However on April 4, 1996, production at the Varna plant was terminated, after it had produced only 2,200 cars. Among the main reasons of this were poor marketing strategy, uncompetitive prices and the presence of a strong competitor, the Skoda Felicia.

Inside Line says: At least for now, this seems like a win-win situation for Great Wall and for Bulgaria. — Evgeniy Vorotnikov, Correspondent