Fiat expanding China presence despite European overcapacity

DETRIOT (dpa) – Italian carmarker Fiat and US subsidiary Chrysler said Tuesday they were expanding their presence in China, the world’s largest car market, by strengthening an existing joint venture with Chinese partner Guangzhou Automobile Group (GAC).

The deal was signed at Chrysler’s headquarters in Auburn Hills, Michigan, on the sidelines of the North American International Auto Show in nearby Detroit.

Fiat-Chrysler’s deal with GAC will “allow the localisation in the coming years of more models from the Fiat portfolio to be introduced in the Chinese market,” the companies said.

The Fiat Viaggio saloon is already in production in China, with imported models such as the Fiat 500 and Fiat Bravo available in the Chinese market. Jeep off-roaders are also planned to go into production in China for the market there, rather than for export.

Mike Manley, Fiat chief operating officer for the Asia Pacific, said that the expanded deal “will allow us to unleash the potential of both our Fiat and Chrysler Group brands in China.”

GAC Group general manager Zeng Qinghong called it a “milestone” in the partnership that will allow the joint venture to “reach very ambitious objectives in the Chinese market”.

While expanding production in China, Fiat is still grappling with excess capacity in the European market. At the Detroit car show, Fiat boss Sergio Marchionne said Tuesday that he intends to steer through the current doldrums in the European market without closing additional factories. The company lost 920 million dollars last year in Europe.

“We are selling at ridiculously low prices,” Marchionne complained.

He foresees converting Fiat’s excess capacity in Europe to produce cars for other brands within the conglomerate. Still, the adjustments to achieve that capital-intensive shift would be “very painful,” he said.