Manufacturing News

JV relaunches Fiat auto output in China

Fiat S.p.A., in the wake of two failed partnerships in China, relaunched auto production in China Thursday as its joint venture began producing the Viaggio compact car.

Fiat has opened a new factory in the central China city of Changsha with its joint venture partner, Guangzhou Automobile Group Co. The Italian automaker must produce vehicles in China to avoid the 25 percent import duty.

"We are showing up too late," Fiat CEO Sergio Marchionne said in a briefing at the plant. "We have a lot of work to do."

Fiat will manufacture some Jeep models in China, Marchionne said, without providing more details. The Changsha plant can be expanded to produce about 400,000 units a year, from the current 140,000, he said, without giving a time frame.

The automaker wants to boost annual sales of locally built cars to 200,000 in 2014, said Jack Cheng, general manager of the joint venture, GAC Fiat Automobile Co., said in an interview in April.

The Italian brand delivered just 991 vehicles in China in 2011.

Guangzhou Auto, headquartered in the southern Guangdong province that borders Hong Kong, is Fiat's third Chinese partner. Fiat terminated its venture with Nanjing Automobile Group Corp. after its 2007 merger with SAIC Motor Corp. The Italian carmaker then had a partnership with Chery Automobile Co., which fell apart after two years.

"Fiat wouldn't choose to start production in China at such a late time if they had a choice," said Han Weiqi, a Shanghai-based analyst with CSC International Holdings Ltd. "Fiat's brand recognition in China is far behind the market leaders such as Volkswagen, GM and Toyota, and they will need to compete on value-for-money."

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