China's Chery Automobile Co Ltd has appointed Malaysia's Alado Corp to produce and sell Chery cars in the country and in Southeast Asia, reports said today.

Alado will invest RM135 million to set up operations to import, assemble, manufacture and distribute Chery cars, the New Straits Times said.

Alado's chairman Soh Thiam Hong said Malaysia has been chosen by Chery Automobile as its regional distribution hub from where its cars would be sold throughout the Association of Southeast Asian Nations (Asean) Free Trade Area (Afta).

Alado plans to launch six Chery models in Malaysia within the next two years, with the first, the mini Chery QQ model, targeted for the end of 2004, he added.

The Chery QQ is expected to be priced at less than RM40,000, providing competition to other mini-cars such as the Kancil and Kelisa models made by second national carmaker Perodua, and the Inokom Atos, officials said.

Under Afta, import tariffs for most vehicles in the region were cut to below five percent in the past year but Malaysia, one of the largest passenger car markets in Asean, obtained a two-year reprieve for its auto industry until 2005.