Fiat, Chery link on cars

Italy's Fiat Group Automobiles said yesterday that it will set up an equally owned joint venture with China's Chery Automobile Co Ltd to make and market passenger cars.

The new company, located in Chery's home city of Wuhu in Anhui Province, will produce Fiats such as Alfa Romeo sedans as well as other models that carry the Chery nameplate, a statement from Italy's biggest car maker said.

The JV is expected to manufacture 175,000 cars a year when it starts production in 2009. No financial details were released yesterday.

"The two parties plan to begin immediately the process to discuss the JV contract and obtain relevant authorizations," the statement said.

The announcement dispelled market speculation that the deal might be halted after Fiat's improved relationship with its other Chinese partner, Nanjing Auto.

Nanjing Auto is holding discussions with Shanghai Automotive Industry Corp on a possible tie-up, a move that would increase its financial capability and benefit Fiat through the development of their joint venture.

"Entering the Chinese market at this stage is a key milestone in our plan to revamp and expand the Alfa Romeo business worldwide," said Sergio Marchionne, chief executive officer of Fiat Group and Fiat Group Automobiles. "The cooperation with Chery will also further development of the Fiat brand in China."

Fiat plans to sell 300,000 vehicles in China, the world's second-largest auto market, by 2010, leaping from combined sales of 44,000 Siena, Palio and Perla compact cars last year.

On Monday, Fiat finalized a deal under which Chery will supply it with 100,000 engines a year.