Fiat has decided that China is not the great opportunity it once appeared. China's Chery Automobile is reportedly in talks to buy the Italian carmaker's stake in Nanjing Fiat Automobile, its JV with Nanjing Automobile.
A local newspaper said that Fiat intends to give up its shares in
Nanjing Fiat because the venture has been losing money for years.
The move is surprising because last year Fiat said it was committed
to the JV for the long term and planned to invest €500m over the next
State media reported earlier this year that Chery Auto is
considering expanding co-operation with Fiat. In October last year,
Chery signed an agreement to supply Fiat cars with 100,000 engines per
Fiat has big problems back home in Italy and so the decision will
please long-suffering shareholders. It probably It makes sense for Fiat
to concentrate on markets where the Fiat brand actually means
something, rather than trying to compete with much larger western and
Asian carmakers in building a brand from scratch in China.
Elsewhere on the Chery front:
Chery will open a car plant
in Uruguay, the first such investment by a Chinese carmaker in Latin
America. Chery will hold 51% of the JV with Argentina`s SOCMA Group
holding the remainder. The first model to be assembled is the Chery
designed SUV Tiggo with a production target of 25,000 by the end of
2008. It will be be sold mainly in Argentina, Brazil and Uruguay.
Last month, Chery became the first domestic car maker to beat
the foreign JVs in monthly vehicle sales. In March it sold just over
44,500 vehicles, a year-on-year increase of 69%. Shanghai GM dropped to
second post with 40,500 vehicles sold, 12% up on the year, while
Volkswagen sold 38,600 units and FAW-Volkswagen Automotive sold 37,000.
Shanghai GM was still leader for aggregate sales in the first three
months of 2007.