July 6, 2009

Fiat signs major deal in China

Italian automaker Fiat said Monday it had signed a deal with Guangzhou Automobile Group -- known as GAC -- to build an assembly plant in south-central China.

The joint venture, worth about $556 million, expands on a partnership Fiat formed with state-owned GAC to share power train technology in 2008, MarketWatch reported Monday.

The new plant is designed to produce 250,000 cars and 300,000 engines a year. Production should begin by the second half of 2011, with initial production expected to be 140,000 cars and 220,000 engines a year, Fiat said.

I think this is very important news for Fiat as they have been looking for a reliable partner to make cars in China for a while, said industry analyst Pier Luigi Bellini at IHS Global Insight.

Asia is Fiat's weak point, so it's a good sign they're doing something about the region.

Fiat has made several attempts recently to expand capacity into new markets, most notably its takeover of Chrysler LLC, which fell into bankruptcy this spring.