Chery signed a memorandum of understanding (MOU) with Italy’s Fiat Auto on Tuesday to set up a joint auto manufacturing company, the second day after it revealed a deal to supply Fiat with 100,000 engines a year.
The Chery-Fiat joint venture to be built in Wuhu, east China’s Anhui Province, will produce 175,000 vehicles of Fiat and Alfa Romeo models as well as Chery’s brands. A considerable part of the joint venture’s output would be exported, according to Chery spokesman Jin Yibo.
Chery became China’s fourth largest producer of passenger cars in 2006, with sales of 305,200 vehicles and a 7.2-percent domestic market share.
In July, Chery and U.S. Chrysler Group agreed to jointly explore the North American and European markets. Chrysler will select several models developed by Chery and launch them in North America and Europe under Chrysler Group brands after making some necessary modifications.
China’s fledgling auto industry maintained strong momentum in the first half of the year, with both vehicle output and sales rising more than 20 percent.
About 4.46 million vehicles were produced in the first six months, up 22.4 percent on the same period last year, while vehicle sales rose 23.3 percent to 4.37 million, according to figures from the China Association of Automobile Manufacturers (CAAM).
Output and sales are both expected to hit a record 8.5 million this year, said analysts.
Last year China became the world’s second largest market for new vehicles after the United States, with an output of 7.28 million and sales of 7.22 million.