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Partners on road to producing China Fiat

By Li Fangfang (China Daily)
Updated: 2009-07-07 07:53

Italy's largest carmaker, Fiat Automobiles SpA, and Chinese auto producer Guangzhou Automobile Group Co Ltd (GAC) are forming a 50-50 joint venture to produce cars and engines starting in the second half of 2011.

The agreement was signed in Rome Monday during President Hu Jintao's visit to Italy and came as China overtook the US as the world's largest car market.

The two companies will invest more than 400 million euros ($556 million) on the venture, according to a statement from Fiat.

Upon completion of the first phase of the venture, the partners will be able to churn out 140,000 cars and 220,000 engines each year. Plant capacity can be ramped up to produce a maximum of 250,000 cars and 300,000 engines per year.

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The China-made cars will be equipped with the latest engine and transmission technology in response to the Chinese government's requirement for fuel-efficient, low-emission vehicles, the statement said.

The first model will be the C-segment Linea sedan.

Fiat and GAC started technological cooperation last year.

The venture will be located in Changsha, where Hunan Changfeng Motors Co is headquartered. GAC is the largest single shareholder in Hunan Changfeng Motors Co.

GAC has also forged partnerships with Japanese giants Toyota and Honda.

Fiat, which recently acquired a 20 percent stake in ailing US automaker Chrysler, has thirsted for Chinese partners for some time as it has sought to grab market share in China through the local production of Fiat cars.

The Italian automaker struck a deal last year with China's Chery Automobile Co to form a 50-50 venture in Wuhu, Anhui province. That venture is expected to produce 175,000 vehicles a year.