Fiat-Chrysler Group in China (1): mid-term business/model plan and sales structure

To achieve sales target of 300K passenger cars by 2014, local production to be increased

2012/01/17

Summary

  Upon the dissolution of the partnership with Nanjing Automobile Group, Fiat stopped production at Nanjing Fiat Automobile (the current Shanghai VW's Nanjing plant) in February 2008. Since January 2009 after Daimler spun off Chrysler into a different company, Beijing DaimlerChrysler (the current Beijing Benz), also known as Beijing DCX, has not produced Chrysler models. In addition, Fiat terminated consignment production of the Dodge Caravan at Southeast (Fujian) Motor owned by Fujian Motor Group. Of the entire Fiat Group, only the Chrysler Grand Voyager continues to be produced at Southeast (Fujian) Motor in China as of December 2011 (total ten of the models were sold from January to October in 2011).

  GAC Fiat Motor, established in March 2010, serves as a current hub in the Fiat-Chrysler Group's passenger car business in China, and will begin production in July 2012. GAC Fiat Motor set its 2014 production and sales targets at about 300K units. To achieve the targets, Fiat-Chrysler Group will launch new Fiat and Chrysler models in series from 2012 to 2015. Most of them are to be built on the Fiat Compact platform.

  The Chinese government has imposed the temporary anti-dumping and anti-aid taxation schemes on U.S.-made vehicle imports from December 2011 to December 2013 (NOTE). It is considered that these schemes will become one of the factors that urge Chrysler and Jeep brand models to consider local production because their business in China centers around the sale of U.S.-made vehicle imports.

  Fiat-Chrysler Group expects to have sales of about 150K commercial vehicles in 2011. It will primarily focus on light commercial vehicles, aiming to sell 450K to 550K units per year by 2015.

  This report will introduce Fiat-Chrysler Group's new movements in the medium-term business plan, model plan, and sales structure in China.

  In addition, the latest increase of production capacities of finished vehicles and engines in China will be reported in the next issue, Fiat-Chrysler Group in China (2): plan to increase production capacities of finished vehicles and engines, in February 2012.

  NOTE: The tax rates on Chrysler will be an 8.8% anti-damping tax and a 6.2% anti-aid tax.  

Fiat-Chrysler Group’s Business plan in China

Summary
Business
policy
・ Fiat-Chrysler Group will position the Chinese market as the most important strategic market.
  Centering around the Fiat brand, the group will deploy Chrysler (including Jeep), Alfa Romeo, and Lancia brands in the market.
・The group will promote a group-wide joint procurement in China to reduce its current average procurement cost by 30 to 40%.
  ・GAC Fiat Motor:
  Implement the multiple brand model strategy, including Fiat and Alfa Romeo.  
  Considering production of the Jeep products for Chrysler.
  Mount Fiat's cutting-edge engines and transmissions on all models to be produced.
・NAVECO (Nanjing Iveco Automobile):
  Aim to be ranked in the top five among Chinese light truck manufacturers in 2015.
  Enter into every segment of commercial vehicles, except heavy duty trucks and pickups, by 2020.
・SIH (SAIC-Iveco Hongyan Commercial Vehicle):
  Gain competitive superiority in the heavy commercial vehicle sector by 2015.
Production
/sales
target
・Fiat-Chrysler Group will aim to produce or to sell over 300K passenger cars and to achieve a 2% share in the Chinese market by 2014.
  ・GAC Fiat Motor will increase production or sales from about 300K units in 2014 to 500K units in 2015.
・Fiat-Chrysler Group will aim to increase production or sales of commercial vehicles (including affiliate brands) from 235K units in 2014 to 450K-550K units in 2015.
  ・NAVECO:

  Have production or sales volume of 150K units in 2011 (breakdown is 115K Yuejin brand vehicles and 35K Iveco vehicles) and sales of ten billion RMB.
  Have production or sales volume of 300K-400K units in 2015 (breakdown is at a minimum 250K Yuejin vehicles and 50K Iveco vehicles) and sales of 22 billion RMB.

  Have an 11% share of the Chinese light truck market.
  Establish capabilities to produce 30K green vehicles, such as EVs and HVs, per year in 2015. 
・SIH:
  Have production or sales volume of 43K-45K units and sales of ten billion RMB in 2011.
  Have sales volume of 150K units (of which more than 10K will be exported) and sales of 25 billion RMB.

・HAVECO (Hangzhou Iveco Transmission):  (NOTE)

  Aim to sell a total of 235K and 368K MTs and DDCTs (Dry Dual Clutch Transmission) respectively in 2012 and 2013.
Model
plan
・Fiat-Chrysler Group will launch new models, including the new Fiat C-Medium, in 2012. Most of these new models will be built on the Fiat Compact platform.
  ・GAC Fiat Motor:

  Establish a model lineup covering mini cars, medium high end vehicles, and SUVs.

  Launch at least one vehicle type of new models per year from 2012 to 2015.

・NAVECO:

  Expand its business centering around light commercial vehicles.

  Develop novel chassis for own brand “Yuejin” vehicles in 2011.

  Fully remodel all the existing models by 2020.

  Proactively employ Iveco's technologies, such as the Iveco Sofim diesel engine, for own brand “Yuejin” commercial vehicles as a powertrain strategy.
  In addition, likely to establish a product lineup covering medium trucks, medium high end light trucks, and low end light and mini trucks on a long-term basis. 
・SIH:
  Add slightly narrower heavy-duty trucks and vehicles with special body by 2015.

  Source: Interview by MarkLines, Press release of Fiat or Iveco (April 21, 2010), “GAC Fiat Motor’s development strategy plan (release on September 19, 2010), National Business Daily (January 19, 2011), other various media reports
NOTE: HAVECO is an onboard transmission supplier. It is equally owned by Fiat, Guangzhou Automobile Group Components (a parts supplier owned by Guangzhou Automobile Group [GAC]), and Hangzhou Qianjin Gear (a local parts supplier in Hangzhou).