ITALIAN car maker Fiat SpA is spending 1.8 billion yuan (US$265 million) to build an engine plant in China's Chongqing Municipality, hoping to rev up its slow development in the world's second-largest auto market.
A statement from the Chongqing Development and Reform Commission on its Website said the engine plant will produce 100,000 units of light diesel engines annually. About 70 percent of the production will be exported, the statement added, without giving other details.
Fiat has lost its competitiveness in China because of an unsuccessful partnership with Nanjing Automobile over the past five years. Last year, it quit the money-losing venture and signed a memorandum of understanding with another Chinese maker, Chery Automobile Co, in hopes of rebuilding its output and brand in China. Fiat hopes to make its Alfa Romeo 159 sedan with Chery.
The long-expected venture, due to start operations in 2009, will have an annual capacity of 175,000 units.
But progress has been moving slowly in first gear without any tangible result over the past one year and Fiat China said negotiations are still ongoing, without giving other information.
Yesterday, Fiat started domestic sales of its imported Bravo, Linea and Grande Punto sedans in China through 30 dealerships nationwide after a delay of about half a year from its original plan.
Fiat is hoping that the imported car business might be the first step in luring Chinese buyers as it aims to boost sales to 300,000 units by 2010. In 2006, Fiat managed to sell only 44,000 units in China.
The Italian car maker's truck division Iveco has a joint venture with SAIC Motor Corp in Chongqing.