Fiat seeks new China partners as auto sales slide

Italian automaker Fiat said on Thursday it is struggling to meet its China sales target and is in talks with potential new partners as it tries to offset sluggish European sales.

Fiat's problems in China come as data showed a sharp slowdown in the world's second largest auto market last month due to the Beijing Olympics and sliding consumer confidence.

Fiat Chief Executive Sergio Machionne told Reuters the company's goal of selling 300,000 units in China by 2010 was under threat.

"We have had a number of issues.. we have to firm up other partners, so we may push the timing, " Marchionne said on the sidelines of an auto conference in New Delhi.

Fiat had an initial agreement with Chery Automobile Co, China's fourth largest car maker, to set up a joint venture in the world's second-largest car market, which was scheduled to start production in 2009.

Asked if Fiat was talking to Guangzhou Automobile Industry Group Co, the state parent of Denway Motors, Marchionne said it may be one of a number of potential partners the company was in discussions with.

Last month, Fiat's chief of China operations was quoted as saying they had discussed technical cooperation with Guangzhou Automobile.

Sales in other emerging sales were strong, Marchionne said.

"We are handling the weakness in Europe with strong performance in the BRIC economies," Marchionne said, adding the company was sticking to its earlier earnings' forecasts for 2008 and 2009 despite weak European sales.

"For Italy, 2008 will be a painful year, 2009 will be better...the rest of Europe won't see a stellar performance in 2008," Marchionne said.

Sales in Fiat's home Italian market fell 26.4 percent in August, according to data earlier this week.