Fiat and Chery driving towards joint venture

PUBLISHED : Saturday, 19 April, 2008, 12:00am
UPDATED : Saturday, 19 April, 2008, 12:00am

Italy's Fiat, which suspended co-operation with Nanjing Automobile (Group) Corp late last year, will soon close a deal with Chery Automobile to set up a new joint venture, a source said.

Jack Cheng, vice-president and chief procurement officer for Fiat China, said his company was negotiating with Anhui-based Chery to set up a joint venture. He declined to say when the deal could be clinched.

Chery Automobile, the fourth-largest carmaker on the mainland, signed a contract to sell engines to Fiat last August. The company sees that as a way to tap the western European market.

Both companies plan to further cement their tie-up by producing and distributing Alfa Romeo, and the branded cars of Fiat and Chery.

The Italian carmaker had seen sluggish sales on the mainland over the past decade.

Some industry experts said that was due to having a relatively weak partner.

In December, Fiat terminated its tie-up with Nanjing Automobile as Shanghai Automotive Industry Corp, the largest carmaker in the country, acquired the assets of Nanjing Auto.

Fiat, which first teamed up with Nanjing Auto in the 1990s, is looking to turn around its business in the fast-growing mainland market.

Chery is one of the few mainland carmakers without a global partner. Besides the expected joint-venture deal with Fiat, Chery also signed a car assembly agreement with Chrysler in July. It is expected that Chrysler will help distribute Chery's vehicles to the US market.

Chery chairman Yin Tongyao said earlier setting up a joint venture with Chrysler was one of the options for closer cooperation for both parties.

And Philip Murtaugh, chief executive of Chrysler Asia, said the company was seeking joint-venture partners on the mainland after its split from Daimler.

Meanwhile, Mr Cheng said on the sidelines of a vehicle conference before the Beijing Car Show that the company was also looking for other joint-venture partners, such as Shanghai Auto, which was also a big cooperation partner for commercial vehicles.