Rome, Italy – Fiat Group has signed a framework agreement with Guangzhou Automobile Group (GAC) to establish a 50/50 joint venture for the production of cars and engines for the Chinese market.

GAC is a large state-owned holding enterprise and one of the principal automotive groups in China, covering the design and manufacture of vehicles and components, sale and distribution of vehicles, car finance, insurance, and auto-related services. Its investments include Honda Motor (China), GAC Hino Motors, and GAC Toyota Engine Company.

Plans for the joint venture include construction of a new plant in Changsha with more than 700,000 square metres of production area, and a total investment of more than €400 million by the joint venture. Upon completion of the first phase of development, the venture will have production capacity of 140,000 cars and 220,000 engines per year, with a subsequent plant capacity expansion of up to 250,000 cars and 300,000 engines per year. Production is scheduled to commence in the second half of 2011. The project is eligible to receive support through a development plan recently established by the Chinese government to promote new investment in six provinces in central China.

The first model to be launched will be the C-segment Linea sedan, and the first engines will be 120- and 150-horsepower 1.4-litre units.

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