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 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:
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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.
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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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