Italian auto maker Fiat said Monday it had signed an agreement with the Chinese firm Guangzhou Automobile Industry Group (GAC) to build a factory in China. The deal, signed during a visit here of Chinese President Hu Jintao, calls for an investment of more than 400 million euros (556 million dollars) to build a plant of more than 700,000 square meters (7.5 million square feet).
A Fiat statement said the joint venture would turn out engines and vehicles for the Chinese market, with production starting in the second half of 2011. The facility will have an initial output capacity of 140,000 cars and 220,000 engines a year, with capacity potentially increasing to 250,000 vehicles and 300,000 engines a year.
"It's an important step with a strong partner in the process of Fiat's internationalisation and technological development," said Fiat chairman Luca Cordero Montezemolo, quoted by the Ansa news agency. Fiat a month ago forged an alliance with Chrysler, taking a 20 percent stake in the struggling US auto manufacturer. This could rise progressively to 35 percent and Fiat could eventually take control of Chrysler. The US and Canadian governments will have respective stakes of 8.0 and 2.0 percent and the United Auto Workers union 55 percent.
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