Fiat re-launched its Chinese dealer network in late last August importing models including the Grande Punto (top) and Bravo (bottom) seen here at last years Auto China motor show in Beijing. If a deal with Fiat is signed then GAIC will be building on several automotive joint ventures it already operates. It has car making JV's with Honda (which includes the Fit and Jazz models, above) and Toyota.

According to local media reports Guangzhou Automobile Industry Group Co (GAIC) has firmed up outline plans for a joint manufacturing venture with Fiat in China. A report in the Beijing Times yesterday, quoting unnamed sources familiar with the negotiations, claims that all the groundwork for a 50:50 joint venture between the two companies is in place and that three Fiat models will be the initial focus of the new project.

The Beijing Times reported that several senior executives have already been selected. Jiang Ping, who most recently was deputy general manager at GAIC's Honda joint venture as well as being deputy general manager at GAIC would be placed in charge, while Yan Jianming, the deputy marketing director at Guagzhou Honda would become the new project's marketing director. No Fiat executives names were mentioned by the source. Initial plans are to centre around manufacturing the Palio, Grande Punto and Linea in China; all three models are currently imported by Fiat's dealer network.

Guangzhou Automobile Industry Group Co., Ltd. was founded on June 8th, 2000. It is authorized by Guangzhou Municipal Government to operate state-owned assets. Benefiting from the sustainable and fast development of Chinese automotive industry, in 2007 GAIG realised a sales volume of 510,000 vehicles and 890,000 motorcycles with a sales income of 108.8 billion RMB and a tax and profit of 21.9 billion RMB, Thus, GAIG has become the four biggest large-scale automotive enterprise group in China that has exceeded 100 billion RMB both in gross industrial output value and sales income after FAW, Dongfeng and SAIC. In 2008, GAIG ranked 40th in "China Top 500 Enterprises".

Fiat has struggled to find a serious partner in China ever since the termination of its joint venture with Nanjing Auto in 2007. That partnership failed to make any impact in China after almost a decade leaving Fiat with a lot of ground to now make up on its European rivals, most of which have established a solid foothold in this rapidly growing market. Last summer Fiat announced plans to build a diesel engine manufacturing facility at Chongqing, which is also home to Changan Auto and Lifan Auto. Changan Auto, which has an on-going joint venture with Suzuki, is expected to build the Suzuki SX4-based Sedici on behalf of Fiat in China.

The Italian carmaker, which re-launched its Chinese dealer network in late last August (importing the Palio, Grande Punto, Bravo and Linea), has for sometime been exploring joint venture opportunities with Chery Automobile and although a Memorandum of Understanding was signed the talks have failed to progress.

If a deal with Fiat is signed then GAIC will be building on several automotive joint ventures it already operates. It has car making JV's with Honda and Toyota, built for domestic consumption, and a bus manufacturing JV with Izuzu. This though will be its first JV with a European carmaker.

In October last year, GAIC became interested in purchasing several redundant Fiat Group Automobiles platforms, including the former Nanjing Fiat lines that produced the Fiat Palio as well as the Mirafori, Italy-built Alfa Romeo 166, to underpin and speed up the development of its own branded models. Those talks quickly turned into discussions on a full joint venture as Fiat was desperately casting around for a new Chinese partner. In late January a Fiat executive in China said that a joint venture with GAIC was likely during a newspaper interview with Guangzhou Daily and just last week GAIC general manager Zeng Qinghong told the local media that a joint venture between itself and Fiat was a distinct possibility.