China-based Chery automobiles will be made in Thailand as a local motor company and the country's biggest agro-industrial conglomerate wrapped up a major deal last week. An industry source confirmed that China's fourth-largest carmaker and its largest homegrown automobile manufacturer, Chery Automobile Co, signed an agreement last Friday with Thai Chery Yarnyon to assemble Chery vehicles in Thailand.The agreement was signed by Chery president Yin Tongyao and Thai Chery Yarnyon senior executive Vithit Leenutaphong in Shanghai.

Both partners agreed to invest at least one billion baht in the automobile production project in Thailand.

Chery QQ compact cars and Tiggo sport utility vehicles (SUVs) are expected to be initially assembled from semi-knocked-down kits at about 5,000 units per year for domestic and Asean markets.

The source declined to say when production would begin and whether a new assembly plant would be built, or if it would use the two existing plants at Lat Krabang in Bangkok belonging to Yontrakit Corporation. Both plants are inactive after BMW shifted production to Rayong and other European brands halted assembly.

Thai Chery Yarnyon was jointly established by Thai Yarnyon Co and the agro-industrial conglomerate Charoen Pokphand Group. Thai Yarnyon is run by Mr Vithit, the local distributor of Volkswagen and a BMW dealer.

"Thai Yarnyon held discussions with Chery a year ago before wrapping up the deal recently," said the source.

Mr Vithit was earlier part of Yontrakit Group, which looked after several European and Korean car brands, but restructuring of the group run by the Leenutaphong siblings gave Mr Vithit complete control of distributing Volkswagen. The restructuring was aimed at clearly defining the brands to be managed by each family member.

The agreement with the Chinese car producer was the first move by Mr Vithit after the restructuring two years ago.