SHANGHAI: Fiat SpA, close to announcing a production alliance with Chery Automobile, may mend -its troubled relationship with Nanjing Automobile after the local government interceded, sources familiar with the matter said.
Fiat CEO Sergio Marchionne said in May that he was unhappy with Nanjing Auto — which has been busy relaunching the MG brand in global markets — and was considering scrapping its 50-percent owned alliance with the Chinese auto maker.
But sources told Reuters that a divorce is unlikely as Fiat — which has explored chances of extending its engine tie-up with Chery into a full-fledged vehicle venture — failed to win government support for a split.
“After months of discussions, Fiat and Nanjing Auto are close to an agreement to mend their ties,” one source told Reuters. “The local government had played a big role.”
While General Motors and other auto companies are making big profits in the fast-growing China market, Fiat has been struggling with Nanjing Fiat. The joint venture’s 2006 sales were less than a tenth of what Volkswagen AG achieved in the first nine months. reuters