Fiat/Chrysler in China (2): raising production capacity of vehicles/engines

Plans 600K-unit scale production of finished vehicles in 2014

2012/02/06

Summary

 Fiat has not had passenger car production in China since the dissolution of the partnership with Nanjing Automobile Group in February 2008. Fiat has merely a low sales volume of imports as of January 2012. Chrysler has had a negligible volume of commissioned production at Southeast (Fujian) Motor since Fiat-owned Chrysler withdrew the joint production with BAIC Group in January 2009.

 Aiming for a 2% share in the Chinese passenger car market in 2014, Fiat-Chrysler Group will start production at the Changsha plant of GAC Fiat Motor in Hunan Province in July 2012 to establish an annual production capability of 300K to 330K units by 2014.


 As for commercial vehicles, Fiat-Chrysler Group set up a goal that it will increase production in China from total 146K of chassis and joint ventures' Chinese brand vehicles of Yuejin and Hongyan in 2010 to 235K or greater in 2014.


 According to the above production plans, Fiat-Chrysler Group will increase production volumes of passenger car engines to 300K units at the Changsha engine plant in Hunan Province, transmissions to 200K at the Changsha transmission plant of GAC Fiat Motor and 520K at the HAVECO's transmission plant.


 This Report summarizes the recent trends of Fiat-Chrysler Group regarding plans to increase production capacities of finished vehicles and engines in China.

 For the recent mid-term business plan, model plan and sales structure of Fiat-Chrysler Group in China, see Fiat-Chrysler Group in China (1): mid-term business/model plan and sales structure issued in January 2012.


Related reports:

  Chrysler: Adopting Fiat's platform and a host of fuel economy improving technologies (November 2011)

  Chrysler posts net profit in Q1 2011; Fiat to obtain 51% ownership interest before the end of 2011 (June  2011)

  Fiat's passenger car business aims for 2011 global sales of 2.2 M to 2.3 M units, up by 5 - 10% (May 2011)

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 of 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 new model 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-duty 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).