Italian automaker Fiat SpA and China based Chery Automobile Company will form a joint venture to produce Alfa Romeo and Fiat brand cars for the Chinese market. The deal clearly highlights a strategy budge for Fiat. The duo is set to start production at a plant in Wuhu, Anhui province in 2009 and expect to turn out around 175,000 Fiat and Alfa Romeo cars a year.
The news has just come a day after Fiat said it would buy 100,000 engines a year from Chery. Fiat SpA, parent to Fiat Group Autos, currently has six joint ventures and nine wholly foreign owned enterprises in China. These enterprises manufacture and distribute cars, commercial vehicles, agricultural and construction equipment and auto components.
Fiat’s business plan target is to sell 300,000 cars in China in 2010. Fiat said the two cohorts will immediately start the actions for defining a joint venture contract and attaining authorizations.
According to Fiat CEO Serigo Marchionne, the launch of the upmarket Alfa Romeo in China is a ‘fundamental step’ in expanding this brand worldwide. Chery president and CEO Yin Tongyao understood that Fiat and Alfa branded cars will enrich Chery’s range and improve its competitive capacity worldwide.
Fiat revealed, Wuhu site is one of the major auto production sites in China, selling a range of brands equipped with Chery motors. Fiat officials were unable to give any detail on the planned investment and the models to be produced. The company showed no signs about the break-down of the production target between brands.
Fiat Chief Executive Sergio Marchionne cited:
Entering the Chinese market at this stage is a key milestone of our plan to revamp and expand Alfa Romeo business worldwide. At the same time, the cooperation with Chery will also materially benefit Fiat brand’s further development in China.
The market in China has become incredibly competitive. Fiat itself has been finding it harder to gain share after a late start with Nanjing in 1999. Its partnership with the Chinese auto maker has been running into trouble with slowing sales and the new trickle of contracts with Chery could signal a new approach. Since Fiat lacks the identity in China, it would be interesting to watch how the domestically flooded Chinese market accepts a giant as versatile as Fiat.
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[Source :Forbes]
