Chery to Build Fiat Group Cars

Sources at both Fiat and Chery say that an agreement for Chery to build Alfa Romeo cars in China will probably be signed next week. The Alfa Romeo 159 will be the first car built under the new agreement and the Alfa Romeo 147 will follow in short order.

Chery already has an agreement with Chrysler to build cars for Chrysler for export to the U.S. and Latin America under the Chrysler brand name, and it also has an agreement with a small Israeli company named Quantum Group to export Chery-branded cars for sale worldwide.

Alfa Romeo cars are only available in China right now on an import basis. Fiat has a joint-venture agreement with Nanjing Auto to build Fiats in China currently, but that joint-venture has been a disaster for both Fiat and Nanjing, and Fiat has been trying to extricate itself from that relationship for some time now. Both Nanjing and Fiat state that their relationship will be terminated shortly. Nanjing’s efforts in this area may be accelerated now that an intended merger between Nanjing and Shanghai Automotive has been announced as of last week.

Sources close to the Fiat deal say that initially Alfa Romeo 159 sedans will be brought in as kits and subsequently assembled at a Chery production facility. This arrangement is typical when a new model is brought into China; it gets production up and running while the foreign company scouts out the required internal suppliers in-country.

The cars to be produced by Chery are intended for the Chinese market only, and Fiat says expansion of production that would encompass more Fiat Group (Fiat, Lancia, etc.) mass-market models is likely in the future. The joint venture announcement is another public success for Chery this year as the Chinese manufacturer has been aggressive in doing deals that will both increase production, and, give much greater exposure to their product line.

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