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FCA Talking with Potential Partner for Second China JV

Company late to the market, seeks to make up for lost time.

by on Sep.15, 2016

Production of the new Jeep Renegade began this year in Guangzhou, China. Fiat Chrysler is looking for more growth in China.

Fiat Chrysler is contemplating a second joint venture in China, this one with BAIC Group to grow the company’s business in the country.

Discussions are early, according to Bloomberg News, but would help the automaker expand its footprint in the country. Currently it has a partnership with Guangzhou Automobile Group, which began in 2010 with the production of Fiat vehicles.

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It expanded last year as the companies opened a new plant in the Hunan province to build Jeep Cherokees. It grew again this year as FCA began making the hot-selling Jeep Renegade there as well.

Much of the talk about production changes in recent weeks has focused on Mexico and the push by automakers to build small cars there. FCA is part of that group; however, companies wanting to sell cars in China must build them there with a local partner.

International automakers are limited to two joint ventures for passenger cars; however, local companies are fee to form partner with as many companies as they like. BAIC currently produces Hyundai and Mercedes-Benz vehicles for sale in the Chinese market.

For many years, China was the hottest market on the globe with sales routinely posting large double-digit increases each month. Many automakers flocked to the country, despite the difficult rules regarding local partners.

(Ford moving all small car production to Mexico. For more, Click Here.)

However, a few – Ford and Fiat Chrysler – sat out the rush to see what would happen to the market. Much like the U.S., sedan sales are slow but the SUV market is booming and SUVs are certainly one of FCA’s strengths.

“China is and will continue to be a key market for Fiat Chrysler Automobiles,” the company said in an email, according to Bloomberg. “As one of our most important markets, it is our wish to continuously grow our business in China. In an effort to achieve this goal, FCA will investigate potential new projects as part of our ongoing business.”

Total vehicle sales for GAC Fiat Chrysler were 75,834 units through July – a four-fold increase – compared with the same period a year earlier, according to China Association of Automobile Manufacturers data.

(Click Here for details about Sergio Marchionne’s plans for FCA’s manufacturing revival.)

FCA’s Detroit competitors are also faring well in the country. General Motors set a new record in August.  GM and its joint ventures delivered 293,537 vehicles in China, which was up 18% year over year. The Cadillac, Buick, Chevrolet and Baojun brands reached all-time highs for the month, the company said.

“Our mainstream passenger car entries drove our sales momentum,” said GM Executive Vice President and GM China President Matt Tsien. “We are looking to build on our success by adding another five new and refreshed models in the final four months.”

Ford Motor Co., which is a latecomer to the Chinese market like FCA, sold its 1 millionth vehicle in Asia Pacific in 2016 in August, reaching the milestone a month ahead of last year’s pace.

(To see more about GM’s sales growth in China, Click Here.)

Ford sales in Asia Pacific continue to strengthen this year, culminating with record demand in August. Ford sold 126,834 vehicles in the Asia Pacific region in August, up 22% versus a year ago, for a total market share in the region of 4.1%, Ford’s highest share ever for any single month.

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