Fiat takes on China's Chery

China's largest domestic brand automaker, Chery has signed a deal to assemble cars for Fiat.

The joint venture will assemble Alfa Romeo and Fiat brand cars, as well as Chery cars, according to Fiat. Both companies expect volume will reach 175,000 cars annually.

Fiat says production in China for other Fiat Group interests such as Lancia is also likely in the future.

The deal is shared 50-50 between Chery and Fiat, with production expected to begin in 2009. Chery has already agreed to produce 1.6 and 1.8-litre engines, set at 100,000 units per annum, for Fiat for export.

The first model to be assembled will be the Alfa Romeo 159 sedan, followed by the Alfa Romeo 147 sedan. Both Chery-Fiat built Alfa models are intended for the China market.

The Alfa Romeo 159 will initially be imported as a kit and assembled at Chery, says a Fiat source. This follows common practice in China where foreign automakers bringing a new model into the country commonly start by assembling from imported kits before they find appropriate local suppliers.

Fiat also produces cars with Nanjing Automobile Corp but it is expected the troubled partnership which began in 1999 will be terminated this year.

The deal with Fiat follows Chery's agreement in July with the 'new' Chrysler (more here) to build cars for the U.S and South American markets.

Qin Lihong, vice president of Chery Autos sales, told China View: "Many Chinese auto brands, including Chery, are upgrading their products and vigorously seeking to expand their presence in European countries and other developed nations."

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