Fiat in Talks to Tie-Up with Guangzhou Auto

SHANGHAI - August 20, 2008: Italian carmaker Fiat is set to restart its China sales network tomorrow, which will sell the imported Bravo and Linea models first. Meanwhile, the talks about locally making the two Fiat models in China are also going on quietly, and the potential Chinese partner this time is Guangzhou Auto Group, not Chery Auto who signed a memo of understanding with Fiat 13 months ago, said xinhuanet.com today.

"Guangzhou Auto is not a bad partner," said an insider familiar with Fiat. "Although its capacity and sales are smaller than those of FAW and SAIC, the profit-making capabilities of Guangzhou Auto are extraordinary." In addition, Guangzhou Auto also needs compact vehicle models to expand its product portfolio for larger market share, and Fiat's Bravo and Linea models can fill this gap in Guangzhou Auto's vehicle lineup.

Fiat also boasts the sophisticated technology of some core auto-parts such as engines and the emission control, which may as well help Guangzhou Auto create its own-brand vehicles. "The two sides are also discussing the possibility of OEM projects," said the sources, adding that Fiat has been in contact with Guangzhou Auto for about three months.

Paolo Arpellino, chief representative of Fiat's China office, has strictly controlled the details of the talks, but industry analysts said that it is impossible to make Fiat cars on the production lines of Guangzhou Honda or Guangzhou Toyota, and that the Linea is unlikely to be locally made in China by 2009 because construction of Guangzhou Auto's new manufacturing facility only kicked off in November 2007.

For more information about the burgeoning auto industry in China please visit http://www.gasgoo.com/Autobiz/list/7/China-News.html