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).




Model plan: Fiat-Chrysler Group to launch new models, featuring the “Fiat Compact platform”

Table: Fiat-Chrysler Group's plan for local production models in China

 
▽ Fiat brand
Model Launch year Details
2012 2013 2014 2015
New Fiat C-Medium September  The new Fiat C-Medium is the first production model of a medium high-end passenger car (C-segment) for GAC Fiat Motor. Fiat Italian Development Center developed the model for China. It plans to start production in July 2012.
  The new Fiat C-Medium is equipped with the Fire T-JET 1.4-L turbo engine and the DDCT-C635 (Dry Dual Clutch Transmission). It is built on the same Fiat Compact platform, a platform of Fiat, as those for the Alfa Romeo Giulietta/Dodge Dart. It is 4,650 mm long, 1,790 mm wide, and 1,500 mm high, and has a 2,703 mm wheelbase (the wheelbase is longer than the original Fiat Compact platform).
Fiat C-Plus within 2013  The Fiat C-Plus is the next generation, new compact crossover which will be the second production model to be introduced to the GAC Fiat Motor's Changsha plant. It employs the Fiat Compact platform.
Fiat 500's derived model 2013 or later  Fiat 500's derived model is a four-seater, A-class hatchback. The derived model will be launched in India and Brazil after 2012 before China.
 In addition, Fiat started import and sale of the hatchback Fiat 500 in September 2011 to polish its image in China. The model is 3,457 mm long, 1,627 mm wide, and 1,520 mm high, and has a 2,300 mm-long wheelbase. The price of the imported vehicle is 169.8K-228.8K RMB.
New Fiat
D-sedan
within 2014 The new Fiat D-sedan is a new sedan of the D-segment. It is built on the Fiat Compact platform.
▽ Alfa Romeo brand
Model Launch year Details
2012 2013 2014 2015
Alfa Romeo
brand model
2013 or later   At the Guangzhou Motor Show 2011, held in November 2011, Zeng Qinghong (GAC Fiat Motor CEO of the Guangzhou Automobile Group) stated that GAC Fiat Motor’s plant will take on production of the Alfa Romeo brand car, though details are under discussion, including when and which models will be introduced.
  In addition, Fiat-Chrysler Group will start import and sale of the Alfa Romeo brand cars in 2012, at the earliest, before local production.
▽ Jeep brand
Model Launch year Details
2012 2013 2014 2015
Jeep Wrangler within three years from 2013 to 2015  An off-road type SUV will be possibly produced in China. Currently, Chrysler imports and sells two versions, two-door and four-door, of the Wrangler Sahara and Wrangler Rubicon.
Jeep New C-SUV within 2014  The new C-SUV is a small SUV of the C-segment (a front wheel drive, 2WD type). Its body size is smaller than the Jeep Patriot and the Jeep Compass. This model also employs the Fiat Compact platform. Chrysler plans to produce the SUV at GAC Fiat Motor's Changsha plant.
Jeep New D-SUV within 2014  The new D-SUV is an SUV of the D-segment. Fiat-Chrysler Group is developing a platform by enlarging the Fiat Compact platform in width and length.
▽ Chrysler brand
Model Launch year Details
2012 2013 2014 2015
New
Chrysler 300
2014 or later  The new Chrysler 300 is a fully remodeled sedan.
Chrysler New
Grand Voyager
2014 or later  The new Grand Voyager is a fully remodeled MPV. The engine and other equipment will be improved.
Source: Shanghai Securities News (July 7, 2011), Fiat medium term business plan (April 21, 2010), China Business News (December 20, 2010), other various media reports

 



Sales structure: approximately 200 passenger car and 550 commercial vehicle dealers to be increased in line with local production expansion

Plan to increase dealers

・Sales channel of GAC Fiat Motor's dealers for Fiat and Alfa Romeo brands (to be included later):

 The number of dealer stores will be increased from 80 as of November 2011 to 150 to 200 by the end of 2012.

  In addition, after-the-sales services are available at some dealers of "GAC Motor" which is owned by Guangzhou Automobile Group (GAC).

・Sales channel for Chrysler brand (including Jeep and Dodge) passenger cars:

  The number of dealer stores will be increased from 127 as of June 2011 to 254 by 2016.

・Sales channel of NAVECO's dealers for light commercial vehicles, mainly of Iveco and Yuejin brands:

 There are a total of 393 dealer stores as of the end of 2010 (up by 128 over the previous year).

  Breakdown: 90 Iveco brand dealer stores (up by ten from the previous year's end) and 303 Yuejin brand dealer stores (up by 118 over the previous year)

・Sales channel of SIH dealers for Iveco and Hongyan heavy commercial vehicles:

 There are a total of 162 dealer stores as of the end of 2010 (up by 30 over the previous year), of which 60 (up by 17 over the previous year) are “4S” (Sale, Service, Survey, Spare-parts) dealer stores.

  In addition, Fiat-Chrysler Group began to establish parts supply centers in 2010, and it had a total of 12 supply centers at the end of 2010. It will have 18 parts supply centers by the end of 2011.

 

GAC Fiat Motor starts import, sales, and services for Fiat vehicles in September 2010

  GAC Fiat Motor is Fiat's distributor, and it also controls import of finished vehicles, auto parts supply, and services.
Prior to the start of operation of the Changsha joint venture plant in July 2012, a total of 20 dealer stores have been in operation since September 2010. They import, sell, and provide services for Fiat vehicles. The first import vehicle is the MY2011 Fiat Bravo with a sales price ranging from 163.9K to 207.9K RMB.
Source: Beijing Times (September 21, 2010), Beijing Morning Post (September 21, 2010), and other media reports

 



(Reference) Table: Fiat-Chrysler Group’s sales volume of China-made vehicles

 
(unit)
OEM Model 2007 2008 2009 2010 January-October 2010 January-October 2011
2011
(Plan)
Passenger car Nanjing Fiat Palio 1.3L
125
6
-
-
-
-
(Liquidated
 in 2007)
Palio 1.5L
7,438
536
-
-
-
-
Palio Weekend 1.3L
0
1
-
-
-
-
Palio Weekend 1.5L
2,042
122
-
-
-
-
Siena 1.3L
1
0
-
-
-
-
Siena 1.5L
2,834
66
-
-
-
-
Perla 3box 1.7L
3,086
408
-
-
-
-
Total
15,526
1,139
-
-
-
-
-
Former Beijing DCX
(current Beijing  Benz)
Chrysler 300
7,743
1,429
942
-
-
-
(Sales discontinued
  since 2009)
Sebring
39
6,802
2,757
-
-
-
Cherokee
318
0
-
-
-
-
Total 8,100 8,231 3,699 - - -
-
Soueast (Fujian) Motor Chrysler Grand Voyager
1,216
2,187
290
80
78
2
(Manufacturing
low-volume)
Dodge Caravan
0
776
182
1,004
917
10
(Production discontinued)
Total 1,216 2,963 472 1,084 995 12
n.a.
Total (Fiat Group)
24,842
12,333
4,171
1,084
995
12
n.a.
・Total
(Fiat brand)
15,526
1,139
-
-
-
-
n.a.
・Total (Chrysler/Dodge
brand)
(Note 1)
9,316
11,194
4,171
1,084
995
12
n.a.
Commercial vehicle SAIC-Iveco
Hongyan Commercial Vehicle (SIH)
Heavy-duty truck
21,382
20,522
18,410
31,080
25,899
26,061
 

(Note 2)

  43K-45K units
Semi-trailer
(the fifth wheel coupling bears a load of 25-40 tons)
2,220
1,626
826
1,144
922
123
Semi-trailer
(the fifth wheel coupling bears a load of 40 tons and more)
432
189
373
1,034
799
1,545

Total

(including Chassis)
24,034
22,337
19,609
33,258
27,620
27,729
43K-45K units
NAVECO
(Nanjing Iveco)
Heavy duty truck
538
1,121
123
7
0
7
150K units
Medium duty truck
2,424
1,786
93
0
0
0
Light duty truck
46,066
39,781
56,838
72,506
62,438
59,421
Medium duty bus
3,011
1,807
2,611
3,055
2,505
2,533
Light duty bus
21,123
25,077
27,432
34,531
30,066
36,958

Total

(including Chassis)
73,162
69,572
87,097
110,099
95,009
98,919
150K units
Total (Iveco/Yuejin brand)
97,196
91,909
106,706
143,357
122,629
126,648
193K-195K
units
 (Reference)
Sales volume of Chinese OEMs' independent brand vehicles based on Fiat models
(unit)
OEM Model 2007 2008 2009 2010 January
-October
2010
January
-October
2011
2011
(plan)
Passenger car Zotye Holding Group
(Hunan
Jiangnan
Automobile)
Meng Di Bo Lang (based on the second generation Multipla)
-
-
-
2,383
2,383
0
n.a.
Langyue (based on the second generation Multipla)
-
-
-
3,888
521
9,558
Langlang
(based on the Palio)
-
-
-
-
-
4,979
Langjun
(based on the Siena)
-
-
-
-
-
1,760
Total
-
-
-
6,271
2,904
16,297
n.a.
GAC Motor Chumpchi (based on the Alfa Romeo
166)
-
-
-
-
-
12,339
Target modified downward to
 20K units
from 30K units
Total
-
-
-
-
-
12,339
20K units
Total (vehicles based on Fiat Group models)
-
-
-
6,271
2,904
28,636
n.a.

NOTE 1: Chrysler’s 2010 sales volume is about 31K units in China, including imports. It set its 2011 sales target at 40K units which includes about 10K units of Jeep Compass.
NOTE 2: SIH set its 2011 sales target at 43K to 45K units which includes 14K Genylon heavy-duty trucks.

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