Fiat Group and Guangzhou Automobile Group Creating JV for Chinese Market

7 July 2009

The agreement was signed in Rome by Zhang Fangyou, Chairman of GAC Group, and Sergio Marchionne, CEO of Fiat Group, in the presence of the President of the People’s Republic of China, Hu Jintao, and the Prime Minister of Italy, Silvio Berlusconi. Click to enlarge.

Fiat Group and Guangzhou Automobile Group Co. Ltd. (GAC Group) signed a Framework Agreement to establish a 50/50 joint venture for the production of cars and engines for the Chinese market.

The models produced will be equipped with the latest in engine and transmission technology in response to the Chinese government’s requirement to develop fuel-efficient, low-emission vehicles. The first model to be launched will be the C-segment Linea sedan. The first engines will be the Fire 1.4L 120 hp and 150 hp T-Jet.

The Fiat Linea. Click to enlarge.

The Linea made its debut at the Istanbul Motor Show in October 2006. The car was developed by Tofas A.S., the 50/50 joint venture between Fiat Auto and Koç Holding. The Fiat Linea was first manufactured in the joint venture’s Bursa plant in Turkey (at an annual production of 60,000 units) and marketed in a number of European and non-European countries starting in the second half of 2007.

The new joint venture plans call for the construction of a plant with a more than 700,000 square meter (7.5 million square feet) production area and total investment by the joint venture of more than €400 million (US$559 million).

Upon completion of the first phase of development, the joint venture will have production capacity of 140,000 cars and 220,000 engines per year. Plant capacity could subsequently be increased to a maximum of 250,000 cars and 300,000 engines per year.

Production is scheduled to commence in the second half of 2011.

The plant will be located in Changsha, the capital of Hunan province, a major road and rail hub in the heart of south central China, approximately 600 kilometers north of Guangzhou to which it will be connected within a couple of years by high-speed rail link.

This industrial project is also eligible to receive support from the development plan recently established by the Chinese government to promote new investment in six provinces in central China.