Citing the global economic downturn that has seen new car sales plunging, Chery Automobile and Fiat Group Automobiles have revealed today that they have put on ice a proposed joint venture that was centred around starting up production of the Fiat (bottom: Fiat Bravo) and Alfa Romeo (top: Alfa 159) brands in China.

Citing the global economic downturn that has seen new car sales plunging, Chery Automobile and Fiat Group Automobiles have revealed today that they have put on ice a proposed joint venture that was centred around starting up production of the Fiat and Alfa Romeo brands in China, bringing a halt for the time being negotiations between the two that have dragged on for a year and a half with very little progress being made during that time.

"Foreign automakers are affected by the financial crisis, and any additional investment will be difficult for them at a time like this," Chery Automobile Chairman Yin Tongyao told reporters this morning. "We have slowed down the JV project with Fiat and production will not start this year as previously planned. But we have not shelved the project," he added.

Chery has grown very rapidly to become one of the biggest and most ambitious automakers in China. In August 2007 its signed a 'Memorandum of Understanding' with Fiat Group Automobiles that called for the establishment of a passenger car joint venture, split 50-50. Located in Wuhu, Anhui province the JV would have produced and distributed Alfa Romeo and Fiat cars with an initial target of 175,000 cars per year. The start of full production was planned for this year. The first model proposed under the MoU was the Alfa romeo 159 sedan and 159 Sportwagon which would have been fitted with the new 1.6 and 1.8 litre petrol engines drawn from the Chinese firm's Chery Engine Company division which is also located in Wuhu Economic and Technological Development Area.

Chery, based in Wuhu, Anhui Province, is one of China's most successful car makers and currently sells a wide range of models under its own brand name, including the Eastar, Tiggo, A5, Cowin, V5, and the QQ. They are fitted with Chery CAC and ACTECO series engines. The company currently is also China's leading car exporter. Also in 2007, Chery reached an agreement with Chrysler LLC, now the subject of proposed equity and technology swap deal with Fiat, to build small urban cars from sale by Chrysler in the United States; however this deal was abandoned when a similar agreement was reached with Japan's Nissan. the Chrysler-Nissan deal has also recently been put on hold due to worsening market conditions.