(Yicai Global) Nov. 14 -- Brilliance Auto Group Holdings has signed a deal with Lifan Industry Group that will enable the Chinese state-backed carmaker to get around import duties on vehicles it sells in South America.

Under the agreement, Brilliance Auto will use Lifan's Uruguay plant to produce 18,000 vehicles over the next three years, Chongqing Daily reported today.

Shenyang-based Brilliance Auto pays a 35 percent tariff on cars it sells into Brazil, its main South American market. That would not apply if the vehicles were made in Uruguay because of a free-trade agreement between the two nations.

Chongqing-based Lifan makes cars in Uruguay to sell them duty-free to Brazil and Argentina and then on to other South American markets. The automaker started building the factory in 2012.

Editor: Emmi Laine