Fiat-Chrysler and Volvo looking for new joint ventures to help them crack the Chinese market.
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Chrysler Sedan Image: Chrysler |
Fiat-Chrysler and Volvo are hoping to partner up with Guangzhou Automobile Group (GAG) and Zhejiang Geely Holding Group, respectively, to produce cars in the world's largest automarket. Both carmakers have big ambitions for China, but will still have to wait for government approval before they can start building.
The Fiat-Chrysler group is reportedly in intense negotiations with the GAG, with whom Fiat SpA already has a joint venture, to build Jeeps in China. According to head of Fiat-Chrysler's Asian operations, Mike Manley, there is a “huge opportunity” for growth in China and hopes to build on 2011 sales of 22,294 units. However, China is “one of the most competitive marketplaces in the world”, Manley reflects, and Fiat-Chrysler “are, to a large extent, late to the party.”
Ironically, in 1984 Jeep was the first Western automobile brand in the Middle Kingdom, when the iconic brand was still owned by American Motors Corp. However, just three years later in 1987 the partnership unravelled after the company was bought up by Chrysler. Nonetheless, Manley is convinced that the GAG partnership is “the right one” for Fiat-Chrysler, citing the Guangdong-based company's respect for the brand.
After being snapped up from Ford Motors by Zhejiang Geely in 2010, sales of the Swedish brand have gone up 54.4% to over 47,000 units sold. Despite being wholly owned by Zhejiang Geely Group, Volvo still counts as a foreign enterprise, and will therefore be subject to the same requirements as any other foreign company seeking a joint venture with a Chinese company.
In light of new government policies to limit foreign investment in China's already highly-saturated auto-sector, Volvo may find it difficult to form the new JV. Geely's chairman campaigned to have it reclassified in 2011, however the government rejected his proposal.