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Guangzhou Auto And Fiat To Sign Strategic Alliance

The Italian business newspaper Il Sole 24 Ore is reporting that Fiat will sign a strategic alliance with Guangzhou Automobile Industry Group this week. The Italian carmaker’s chief executive Sergio Marchionne had previously signaled that a deal that goes beyond the two companies’ existing joint ventures was in the works.

Marchionne is on an expansion push, taking over  Chrysler and going after GM’s Opel division. Guangzhou Auto is one of the eight carmakers Beijing has designated for leading roles in the inevitable consolidation of the auto industry; President Hu Jintao is expected to attend the signing ceremony along with Italian President Silvio Berlusconi.

Guangzhou Auto, which also has ties to Japanese carmakers Toyota and Honda, replaces Nanjing Automotive as Fiat’s partner in the passenger car market, an alliance that broke down a couple of year’s back. It has already taken a one-third stake in Fiat’s transmission plant in Hangzhou. The pair are expected to start construction in August of a new plant in Guangzhou announced in May able to produce 140,000 vehicles (initially Fiat’s Linea) and 220,000 engines a year.

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