8 July 2009

Fiat signs pact with China carmaker

Fiat is on a roll. First it inks a pact with Chrysler to grow in the U.S., and now it signs a deal with China’s Guangzhou Automobile Group Co. (GAC) to produce cars in a joint venture beginning in the second half of 2011.

The joint venture plans to produce the Linea sedan as well as two types of engines in a new 700,000-square meter plant to go up in Changsha, the capital of Hunan province and a major road and rail hub 600 kilometers (400 miles) north of Guangzhou, Fiat officials said.

Investment in the joint venture will be $556 million (€400 million), Fiat said, noting the industrial project is eligible to receive support from the Chinese government under a new development plan to promote investment in six central China provinces.

The plant initially will produce 140,000 cars and 220,000 engines a year, with the potential to increase to a maximum 250,000 cars and 300,000 engines a year, Fiat said.

Fiat just signed on taking a 20% stake in the U.S. automaker Chrysler, as Fiat Group Chief Executive Sergio Marchionne seeks to create a global auto powerhouse.

Fiat and GAC have been collaborating since 1998 on technology for development of the first vehicle to come out under the GAC brand.

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