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Fiat to Make Cars and Engines in China with GAC

The C-size Fiat Linea sedan enters production in 2011.

by on Jul.07, 2009

sergio-marchionne-and-the-fiatlinea

Under Chinese industrial policy offshore companies must have a local partner for access to what has become the world's largest vehicle market.

Fiat Group and Guangzhou Automobile Group Company Ltd. (GAC Group) signed a “Framework Agreement” yesterday to establish a 50/50 joint-venture for the production of cars and engines for the Chinese market.

The first model to be launched will be the C-size Fiat Linea sedan with 1.4-liter 120 horsepower and 150 horsepower engines.

Under Chinese industrial policy offshore companies must have a local partner for access to what has become the world’s largest vehicle market. GAC delivered more than 530,000 cars to customers in 2008 and had RMB 109.9 billion in revenues ($16 billion).

Fiat Linea

First car built will be the Fiat Linea sedan with a 1.4-liter, 120 or 150 horsepower, engine. Linea has two distinct Italian meanings: style and direction.

The plant will be located in Changsha, the capital of Hunan province, a major road and rail hub in the heart of south central China, approximately 600 kilometers north of Guangzhou.

The two cities are due to be connected within a couple of years by high-speed rail link, as China continues to spend almost two-thirds of its budget on infrastructure improvements.

In the U.S., about two-thirds of the Federal budget goes for payment on debt, $412 billion in interest alone during 2008, of which the Chinese hold significant amounts in the form of 24% of the Treasury bills outstanding.   

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The agreement was signed in Rome by Zhang Fangyou, Chairman of GAC Group, and Sergio Marchionne, CEO of Fiat Group, in the presence of the President of the People’s Republic of China, Hu Jintao, and the Prime Minister of Italy, Silvio Berlusconi.

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