Following twenty four hours of media speculation that Fiat and budding Chinese carmaker Chery Automobiles were to announce a new strategic tie-up, a press release was issued this morning in Turin revealing that Fiat will source petrol engines from Chery. "Fiat Auto and Chery Automobiles today announced the signing of a Memorandum of Understanding (MoU). According to this agreement, Chery Automobile will supply 1.6 and 1.8 litre gasoline engines for application in Fiat cars to be produced in China and outside China," read the statement. "The two companies expect an annual supply exceeding 100,000 engines and are engaged to sign the definitive supply agreement before year end," it added.

In the statement Sergio Marchionne, CEO of Fiat and Fiat Auto, said, “The agreement with Chery will give us the opportunity to further increase the competitiveness of our product range on the international markets. Chery is a young and modern company with a solid technical background and I am glad to welcome this further step in our strategy of targeted alliances. In the relation with Chery we see the potential for a wider cooperation both in powertrains and, eventually, in other automotive sectors.”

Mr. Yin Tongyao, President and General Manager of Chery Automobiles, meanwhile commented that: “Fiat is a world famous auto company with a long history. The successful cooperation between Chery and Fiat Auto shows Fiat’s confidence and trust in Chery, and it is also an important step taking by Chery. The prospect of our cooperation is very promising.”

Chey Automobile has a dedicated engine and transmission division, Acteco Engine Co which was established in 1997, and now comprises of the First Engine Department (FED), Second Engine Department (SED), Products’ Engineering Department, Quality Assurance Department, Manufacturing Technology & Equipment Department, Purchasing Department, Sales Department, General Administration Department and Accounting Section.
 

Its function includes R&D, manufacture, inspection, purchase, sale, service, and so on. A PhD and a Japanese expert take in charge of R & D and field control respectively. All equipments and technologies in FED were introduced from aboard. FED produced the 1.6-ltr. SQR480 gasoline engine, which was optimized by AVL company for several times. Its emission standard reaches to Euro Ⅲ, and output more that 200,000 units. The SQR475E gasoline engine will be produced in the same line. The 0.8-ltr. SQR372 gasoline engine was also produced in FED since 2003, as well as other 72 (cylinder bore) series engines. The flexible line comprises world-class CNC machine centers and honing machine from Huller-Hiller, Heller or Gerhing company, etc. The 0.8-ltr. SQR372 gasoline engine was the first domestic independent invention about small displacement engine with 4 valves per cylinder.

All equipments in SED were supplied by world-renowned companies, such as Cross-Huller, Heller, Gerhing, Junker, Mauser, etc. Measuring instruments and inspection tools comes from HOMMEL and Marposs. The whole manufacturing process was under 100 percent quality monitoring. Each engine should go through cold-test and hot-test, and its performance date will be store. In order to ensure the quality of the prototypes and maintain the constant capacity of R&D, SED has invested RMB 30 million to build a world-class engine trial manufacturing line, on which batch-produce the prototypes in accord with design requirements for matching and reliability testing. So the line could test overall manufacturability to reducing investment risk before true production comes on.

The construction of manufacturing lines in SED divides into two phases. The products in the first phase include 1.3-ltr., 1.6-ltr., 2.0-ltr. gasoline engines and the 1.9-ltr. diesel engine. After the second phase, the products will cover twenty more types of gasoline engines and diesel engines. The emission of engines meets the requirement of EURO IV. Production capacity will reach up to 1,000,000 units annually in 2007.