Tony O'Kane | Jul 8, 2009

FIAT HAS this week signed an agreement with Guangzhou Automobile Industry Group to have some of its vehicles and powertrains manufactured in China, a deal that will hopefully reduce production costs for the Italian conglomerate and boost Guangzhou's status in the Asian automaking industry.

The joint venture between the twocompanies will see each contribute €400 million towards building a new assembly plant in Changsha, Hunan province. The plant is expected to be operational by late 2011, and inital production is estimated to be in the region of 140,000 cars and 220,000 engines per year.

Output is planned to eventually rise to 250,000 cars and 300,000 engines annually, and the Grande Punto, Bravo and Linea sedan are expected to be produced at the Chinese factory. The Linea's 1.4 litre turbocharged petrol engine is confirmed to be built at the new facility.

fiat_logoFiat hasn't produced any of its cars since 2007, when its manufacturing deal with Naijng Automotve expired and a proposed tie-up with Chery Automobile failed to take off. However, Fiat now has a powerful ally in Guangzhou Automobile, which is also partnered with Toyota and Honda and sold a whopping 530,000 cars last year.

What the newly-minted deal means for Fiat's European production facilities remains to be seen, however it's obvious that Fiat is always searching for new ways to cut costs and remain financially viable.

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