On the evening of July 6th, witnessed by Chinese President Hu Jintao and Italian Prime Minister Silvio Berlusconi, Guangqi Group Chairman Zhang Fangyou and Fiat Group CEO Malccione signed an agreement in Rome, Italy to jointly invest US$570 million to establish a company in China. A 50:50 joint venture company. This is the only complete vehicle project signed by a foreign multinational auto giant in China in recent years. It is also the good fruit that Fiat and Nanqi have sought after many years after they broke up.
Fiat has been reborn
In the eyes of the Chinese, Fiat is not a successful multinational company in China. Nanjing Iveco has been established for many years, but sales have been modest. Nanjing Fiat had been unsustainable for several years and had to disperse. Many consumers who bought a Fiat brand car have been worried about how to do after-sales service. Now that Fiat is once again in a joint venture with Guangzhou Auto, is there still a chance to make a comeback in the Chinese market?
Indeed, in the past few years, the Fiat Group suffered serious losses, was on the verge of bankruptcy, and was self-servicing. It had to take care of China's business.
In 2005, the accountant Malchoney took over as CEO of the Fiat Group and began to manage Fiat, who is in a difficult situation. After he took office, he made drastic changes to make Fiat fresh. He reshaped the image of Fiat "car king" and the group's profits have also risen sharply. In 2006, the Fiat Group achieved a profit of 1.951 billion euros, and in 2007 it surged to 3.233 billion euros. With the global financial crisis beginning to hit the real economy, Fiat’s turnover in 2008 still reached the highest historical record of 59.4 billion euros, and its profit reached 3.362 billion euros.
Financial Tsunami Gives Proof of Opportunity
The financial tsunami that swept the world gave Fiat an opportunity to prove himself. In June this year, with the support of the U.S. government, Fiat and its partners completed the acquisition of Chrysler's assets and formed the world's sixth-largest automobile manufacturing company. Malchone served as Chrysler’s CEO. Malchonet believes that the future global automobile group must achieve annual sales of 5.5 million to 6 million vehicles to achieve profitability.
After Fiat took control of Chrysler, it became a car trust with brands such as Fiat, Alfa Romeo, Maserati, Ferrari, and Chrysler with annual sales of more than 6 million cars and turnover of over 100 billion euros.
Fiat's all-powerful Chinese business in the world has become a short board. Working together with GAC to once again achieve localized production in China is a major strategic step for Fiat to occupy the Chinese market.
In the first half of this year, the global auto market continued to decline, and the Chinese auto market rose in a contrarian direction. In the first half of the year, sales exceeded 6 million vehicles, which exceeded the number of 4.8 million vehicles in the world’s first automobile market in the United States. Faced with China's huge market prospects, Fiat chose GAC as its partner to enter the Chinese market again.
An authoritative analyst in the Chinese automotive industry said that unlike other multinational car companies, Fiat did earn a lot of money in these two years. Just because he had earned the money, Fiat was emboldened and dared to conduct mergers and acquisitions globally in the downturn.
Fiat is known as "car king" and has many unique advantages in energy-saving and environmentally friendly small-displacement cars and advanced small car engines. This is why the US government wants to invite Fiat to reorganize Chrysler and give 20% of the shares, not a penny, just asking Fiat to introduce small car and engine technology to Chrysler.
Fiat cautiously chooses partners
The Chinese government's plan for the adjustment and revitalization of automobiles is closely linked with energy conservation and emission reduction. The advantages of Fiat's small and medium sized cars and engines are the trend of China's automobile development in the future. The GAC Fiat project is undergoing normal approval procedures, and it is expected that the new plant will start construction soon and will be put into operation in the second half of 2011. In less than 24 months, a modern automobile factory including the four major processes of stamping, welding, painting and assembly will be built. The first model launched at the new plant will use Fiat's latest engine and transmission technology, and it also meets the requirements of the Chinese government to develop high-efficiency and low-fuel consumption products. According to the plan, the production capacity for the first phase will be an annual output of 140,000 cars and 220,000 engines, and will gradually increase to an annual output of 250,000 cars and 300,000 engines.
Fiat believes that the new factory is located in Changsha. On the one hand, it responds to the Chinese government's call to accelerate the development of China's central and western regions. In addition, the Chinese government has many preferential policies for investing in the central and western regions, and local labor costs are relatively lower than those in the coastal areas.
Fiat chose GAC instead of other Chinese companies, such as Chery Automobile. One of the most important reasons is that both parties have previously experienced failures in joint ventures and there are many common language. Be more cautious when choosing a partner.
Although it is a bit late but there is still an opportunity
Some people questioned that the disintegration of Nanjing Fiat has now been a year and a half ago. The new domestic Fiat car will only be available two years later. For three and a half years, Fiat has no locally produced cars in the Chinese market. This period of time is the time for the rapid development of the Chinese auto market. In particular, the Chinese government has introduced policies to encourage small-displacement vehicles, and a large number of foreign brands and small-size cars with independent brands have entered the market. Fiat will return to the Chinese market, will not miss the opportunity?
According to Fiat China Chairman Meng Feiyu, Fiat has never left the Chinese market. After Nanjing Fiat disbanded, in 2008 Fiat introduced three models of Fiat Bo Yue, Lead Ya and Peng Du to China. Fiat's Maserati and Ferrari continue to sell in the Chinese market. Fiat continues to produce light commercial vehicles and light buses in Nanjing Iveco, while SAIC Iveco Hongyan in Chongqing produces heavy vehicles. Fiat Power Technologies’ two joint ventures in China have been producing car engines, and some communists have produced auto parts in China. Fiat just temporarily has no local production of passenger cars in China.
Yate believes that with the continuous development of new auto consumption areas and new consumer groups, the Chinese auto market will maintain rapid growth for a long period of time, and the development potential is enormous. No one multinational automobile company will despise the Chinese market, and Fiat will never give up the Chinese market.
Fiat's investment in China will focus on long-term development and it is a strategic investment. Prior to the joint venture with Guangzhou Automobile, Fiat conducted an in-depth market research. The survey shows that although Fiat is a bit late in China, it still has great opportunities.
With the many advantages of Fiat, there is great hope for success in the Chinese market and a resurgence. The views of the Chinese people on Fiat also need to change. On the third day, do not look at each other.
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