Fiat has gone back to producing cars in China as demand in Europe slows down

Article by Christian A., on June 29, 2012

As the demand in Europe has been slowing down, Fiat has gone back to producing cars in China. Last Thursday, Fiat began production of the Viaggio compact sedan with joint venture partner Guangzhou Automobile Group at their new plant in Changsha in central China. Fiat has had two previous partnerships in China but both failed.

To be more competitive and to catch up to rivals, Fiat will need to produce in China so that it could avoid the 25% import duty. Meanwhile, in Fiat’s home market in Europe, it will reduce investments by 500 million euros ($621 million) as consumer confidence fell to its lowest level in May in 15 years.

Fiat CEO Sergio Marchionne said that the automaker is already “too late” in showing up in China and so there’s much of work to be done. Marchionne didn’t give details or a timeframe but he did confirm that Fiat will build several Jeep models in China.

He said that the Changsha plant can be increased to build about 400,000 units annually, from the existing 140,000. Fiat is aiming to increase the annual sales of locally built cars to 200,000 in 2014, according to Jack Cheng, general manager of GAC Fiat Automobile, who was interviewed last April.

In 2011, Fiat only delivered 991 units in China. This is very low compared to the 2.55 million vehicles that General Motors sold in this country, earning it the title as the biggest foreign automaker in China. Volkswagen sold 2.26 million of its vehicles.

Fiat's third Chinese partner -- Guangzhou Auto – is based in the southern Guangdong province that borders Hong Kong. Fiat ended its venture with Nanjing Automobile Group Corp. after it merged with SAIC Motor Corp. in 2007. Fiat then partnered with Chery Automobile but this only lasted two years.

Topics: fiat, china

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