Fiat mulls second plant in China as it cuts costs in Europe
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SHANGHAI (Bloomberg) -- Fiat is considering a second car factory in China to expand in the world's largest car market as it cuts investment in crisis-hit Europe.
"In the future, we might have another manufacturing site, somewhere in the south," Jack Cheng, general manager of Fiat's joint venture in China with Guangzhou Automobile Group Co., said in an interview in Shanghai.
Fiat CEO Sergio Marchionne wants to boost sales in China to counter losses in Europe. The Turin, Italy-based manufacturer is reducing spending in its home region this year by 500 million euros to conserve cash, with demand in Europe poised to fall for a fifth straight year.
Fiat's mass-market brands lost 354 million euros in the region in the first half.
Marchionne, who has been spearheading an industrywide effort to close excess assembly lines in Europe, has said he will shut a second Italian factory unless he finds a way to export cars to the United States. Fiat will present a plan to stem losses in Europe at the end of October.
After two failed partnerships in China, the Italian manufacturer finally started sales of its first China-made vehicle, the Viaggio compact, on Sept. 16. Fiat plans to release one new model a year in the country and will introduce an SUV in 2014, Cheng said.
Duty dodge
The Viaggio's price starts at 108,800 yuan (13,234 euros), said Jiang Ping, executive deputy general manager of the joint venture, GAC Fiat Automobile Co. The venture's factory can produce up to 140,000 cars annually. The company also sells three imported models in China -- the Bravo hatchback, the Freemont SUV and the retro-styled 500 minicar.
Fiat is playing catch-up in China, where it terminated partnerships with Nanjing Automobile Group Corp. and Chery Automobile Co. The tie-up with Guangzhou Auto allows Fiat to produce cars locally and avoid paying the 25 percent duty on imports, making its cars more competitive.
GAC Fiat Automobile Co. expects to have 100 dealerships in a few weeks, up from 88 now, Robert Graczyk, commerce director at the company, said recently in Shanghai.
Last year, the Italian brand sold 991 vehicles in China, compared with 2.6 million units for General Motors Co. and 2.3 million vehicles at Volkswagen AG.
China's passenger-vehicle sales growth will probably accelerate in the second half, rising 15 percent to 8.5 million units, driven by demand from first-time buyers and a resurgent economy, the China Association of Automobile Manufacturers said in July.
Full-year deliveries may increase 11 percent to 16.1 million vehicles, the association said.
"This market is still growing at 10 percent," said Graczyk. "There's a lot of opportunity."
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