Recently, Chervon Auto’s wholly-owned subsidiary increased its investment in the European production base for intelligent manufacturing of auto parts.
Chervon Automobile held the eighth meeting of the second board of directors on October 19, 2020, reviewed and approved the “Proposal on Establishing a Wholly-owned Subsidiary and New European Production Base for Intelligent Manufacturing of Auto Parts”, and agreed to set up a wholly-owned subsidiary in Hungary. Subsidiary Chervon Auto Precision Technology (Europe) Ltd (hereinafter referred to as “Chervon Europe”) in relation to the new European production base project (Phase 1) in Miskolc, Hungary with a consideration of not more than 60 million euros.
During the progress of the project, according to business expansion and orders obtained, Cherfeng Europe plans to increase the investment of about 60 million euros for the construction of the European production base project for intelligent manufacturing of auto parts (Phase II).
Details of the projects with increased investment this time:
Project Name: European Production Base Project for Intelligent Manufacturing of Auto Parts
Construction scale: The current total planning of the project is estimated to be 30,000 square meters, of which the total construction area of the second phase of the project is about 15,000 square meters (subject to the final actual completion).
Construction content: Construction of production-related building facilities such as die-casting workshop, machining workshop, automatic storage and so on.
Product plan: This project is mainly engaged in the production and sales of new energy vehicle parts, including motor housings, inverter housings, battery trays and other products. After the completion of this project, it is expected that the annual production capacity will increase by about 1.35 million pieces.
Total investment composition: It is planned to increase the investment of 60 million euros this time, and the total investment is expected to be 120 million euros after the increase. The board of directors authorizes the management to make adjustments to the project details such as equipment procurement, planning and design, within the scope of the quota, according to the actual implementation of the project and the results of business negotiations.
Implementation progress: Cherfeng Europe has obtained relevant certificates such as land ownership, environmental impact assessment, and building permit, and has carried out equipment inquiry and procurement, personnel recruitment and training in an orderly manner. The first phase of the project has entered the official construction state, and the second phase of the planning and construction period is 12 months (finally, the actual construction situation shall prevail).
Chervon Automobile said: In the short term, it will take a certain period of time for Chervon Europe to realize the expected benefits after the completion of the project, and within a period of time after the project is completed and put into production, it may face the risk of affecting the profitability of the company’s consolidated statements due to the increase in the depreciation of fixed assets. ; But in the long run, this increase in investment will help the company to accelerate the expansion of the European market, better provide quality services to overseas customers, enhance the company’s international competitiveness and profitability, and improve the company’s business layout and medium and long-term strategic development planning, It has a positive impact on the long-term development of the company.