fiat.jpgFiat 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
five years.

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
year.

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.
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