China’s Chery to Supply Engines to Fiat

31 October 2006

One of Chery’s new 1.8-liter, Euro-4 engines.

Chery Automobiles and Fiat Auto have signed a Memorandum of Understanding (MoU) according to which Chery Automobile will supply 1.6- and 1.8-liter gasoline engines for application in Fiat cars to be produced in China and outside China.

The two companies expect an annual supply exceeding 100,000 engines and anticipate signing the definitive supply agreement before year end.

Chery is a young and modern company with a solid technical background and I am glad to welcome this further step in our strategy of targeted alliances. In the relation with Chery we see the potential for a wider cooperation both in powertrains and, eventually, in other automotive sectors.

—Sergio Marchionne, CEO of Fiat and Fiat Auto

Chery Automobile Co., Ltd. was founded in 1997 in the city of Wuhu, in China’s Anhui Province. Chery has developed complete product lines, and the company’s own R&D projects have enabled the development and production of vehicles, engines, gearboxes and other core components.

Production capacity is currently 400,000 cars and 300,000 transmissions per year. In 2005, Chery achieved a sales volume of 189,100 cars with a total increase rate of 118%, and exported 18,000 cars overseas, ranking number 1 in the export of domestically made cars.

Chery launched its engine series—the ACTECO series, developed with AVL and meeting Euro 4 emissions requirements—on 31 October 2005. Chery produces many engines with displacement ranges from 0.8- to 4.0-liters, including in-line and V-type engines, and gasoline engines and diesel engines.

The company is targeting engine production capacity of up to 1 million units annually in 2007.