Fiat, Guangzhou Auto agree on car venture

Fiat has signed an agreement to set up a car manufacturing venture with China's Guangzhou Automobile Industry Group, the Shanghai Securities News said on Friday, citing the Chinese automaker's general manager.

Zeng Qinghong did not disclose the size of the venture, which is still pending government approval.

The same newspaper said on Thursday the Fiat-Guangzhou Auto project would need an investment of 4.27 billion yuan ($625.7 million), citing a government document.

Guangzhou Auto, a partner of Toyota Motor and Honda Motor, sealed a deal on Thursday to take a 29 percent stake in Hunan Changfeng Motor Co (600991.SS), the newspaper said, confirming an earlier Reuters report.

It will buy the shares from Changfeng's state parent for around 1.05 billion yuan, becoming the largest shareholder of the sport utility vehicle specialist.

Under the agreement, Guangzhou Auto will invest 10 billion in Hunan province, the home base of Changfeng, in the next 5 years, increasing their joint vehicle production capacity to 500,000 units per year, it said.

Changfeng's current vehicle production capacity is 100,000 units.

Earlier in the week, Guangzhou Auto also acquired one-third of a Fiat transmisson plant in the eastern Chinese city of Hangzhou, Zeng was quoted as saying. It did not disclose financial details of the deal.

Zeng also dismissed a local media report claiming Guangzhou Auto would seek a back-door listing via Changfeng.

"Changfeng Auto is a listed company and a very good fund raising platform. But Guangzhou Auto is proceeding with our own plan to go public currently," Zeng was cited as saying.

Zeng told Reuters in April that both Shanghai and Hong Kong were ideal listing venues and the automaker had already submitted its application to China's securities regulator.