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Fiat finds new China partner after previous car venture fails
Published on: 2009-07-07
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Fiat SpA, Italy’s biggest manufacturer, agreed to build cars in China with Guangzhou Automobile Group Co., signaling an end to a two-year car making hiatus in the world’s fastest growing major auto market.
The two carmakers will invest “more than 400 million euros” ($559 million) in the venture, Turin, Italy-based Fiat said in a statement yesterday. Production will start in the second half of 2011.
The deal is another step in Chief Executive Officer Sergio Marchionne’s bid to turn Fiat into a global automaker, following the acquisition of Chrysler Group LLC and a bid for General Motors Corp.’s European unit earlier this year. Fiat has lacked a car making partner in China since 2007, when Nanjing Automobile Group Corp. pulled out of a venture amid plunging sales, locking Fiat out of a market that has grown 21 percent this year.
“Fiat has to return to China’s car market if it wants to be a global player,” said Ricon Xia, a Daiwa Institute of Research (H.K.) analyst. “Still, it will have to do a lot of work to beef up its brand awareness.”
The venture, which will operate a new factory in Hunan province, will initially make compact cars and have a production capacity of 140,000. The project is eligible for development aid from the Chinese government, Fiat said in the statement.
Lu Sa, board secretary of Guangzhou Auto, confirmed the deal, without elaboration. The company also has partnerships with Honda Motor Co. and Toyota Motor Corp.
Fiat agreed a car-making deal with Chery Automobile Co., China’s largest maker of own-brand cars, in 2007. The deal was put on hold earlier this year amid the global financial crisis. Fiat’s Iveco unit makes commercial vehicles in China with SAIC Motor Corp.
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