Nanjing Auto silent, SAIC and Chery prudent to Fiat alliance

Nanjing Automobile (Group) Corp. kept silent about the potential separation with its Italian partner Fiat, after Fiat CEO Sergio Marchionne was cited that Fiat may scrap Nanjing Auto’s partnership and team up with SAIC or Chery. However the two local companies react prudently to the possible alliance.

Fiat has long been unsatisfied with its Chinese JV partner Nanjing Auto as it falls far behind the target of selling 300,000 cars in China by 2010. Last year the Nanjing venture's annual sales was 30,668 units，with a sparse market share of 0.7%. Fiat plans to release three models of Linea, Bravo and Grande Punto on the market this year, eyeing an expansion of its Chinese output and sales.
 
Fiat CEO Sergio Marchionne told the Financial Times on Thur. that Nanjing Auto is distracted by its efforts to re-launch the MG brand. Fiat remains committed to resolve the matter with its JV partner, but he wouldn't rule out opportunities to team up with other local carmakers, e.g. Shanghai Automotive Industries Corp, or Chery Automobile Co..

Up till now, there are three Fiat joint ventures with two Chinese partners--SAIC and Nanjing Auto, Fiat holding 50 percent of the equity each.

SAIC declined to comment the possibility to form a JV with Fiat, but emphasized that it would focus on improving its core competitiveness and international dealerships. SAIC has been reportedly busy with its first own-brand model Roewe and its South Korean subsidiary Ssangyong.

On the other hand, Chery, the largest independent carmaker in China had discussed the possibility of expanding its partnership beyond the existing engine venture with Fiat. "Fiat is open to the concept of cooperation with everyone," Marchionne said. Talks already with Chery have progressed, and Chery is likely to be chosen to build Alfa-Romeo models in China. "In the relation with Chery we see the potential for a wider cooperation, both in powertrains and eventually, in other automotive sectors."

"Our cooperation with Fiat is only limited to the engine program," said Jin Gebo,Chery's vice president for sales. He also emphasized that being independent is the base line of Chery's cooperation with other automakers.

Analysts say Chery, as the flag-bearer of the Chinese home-grown automakers, would insist to make a breakthrough of the JV routine of 50 to 50 percent share-holding. SAIC has already obtained Ssangyong and Roewe, thus not in a rush or need to secure a new partner. What's more, Fiat's smooth handover of its Nanjing business is still unclear, but definitely it won't be easy.

SAIC's Roewe and Nanjing's MG are both originated from the former UK brand MG Rover, SAIC buying the rights to two Rover models and one engine series, Nanjing Auto buying the rights to the MG portfolio, as well as MG Rover's production lines and other assets.