New GAC Fiat plant to double production and build Jeeps

Attendants pose for a photo at the GAC Fiat Guangzhou plant's ground-breaking ceremony on June 18, 2014 in Guangzhou, Guangdong province. [Photo provided to chinadaily.com.cn]

GAC Fiat's second plant broke ground on Wednesday in Guangzhou, Guangdong province. The new plant is set to start producing the latest Jeep global models beginning June 2016.

The Sino-Italian joint venture will invest more than 4.23 billion yuan ($680 million) in the new plant that has an expected annual production capacity of 160,000 units.

GAC Fiat Automobiles General Manager John Burton believes the Guangzhou project will be one of the most advanced plants in the province, and the company will build the plant in accordance to Fiat Chrysler Group's global standards.

"The new plant will make highly competitive products, and all of them will be global vehicles," said Burton.

GAC Group General Manager Zeng Qinghong said the project, with world-leading techniques, technology and facilities, will show that the cooperation between GAC and Fiat Chrysler Group has moved to a higher level.

The new plant will start in 2016 with one shift production, making 45 cars an hour, and then add consecutive shifts at a later point.

GAC Fiat Automobiles was jointly incorporated on March 9, 2010 by GAC Group and Fiat Group Automobiles S.p.A.

The Chinese market is now Jeep's second largest market in the world after the US, so the new plant's first priority is to satisfy the Chinese local market.

This year the company sold 26,934 units in the first five months, out of its 28,752 units produced, and was found to be in accordance to GAC Group's monthly report filed with the Hong Kong Exchange.

In 2013, GAC Fiat had a realized revenue of 5.05 billion yuan by Dec 31, 3 billion yuan more than the 1.97 billion yuan revenue in 2012, according to GAC Group's 2013 annual report filed with the Hong Kong Exchange on April 24.

On March 20, 2014, the Board of Directors approved an additional capital contribution of 1.8 billion yuan to GAC Fiat.

Production synergy

"The Chinese market demands cannot be met by the Changsha plant alone. Considering Guangzhou has a strong demand in Jeeps, we established the second plant in Guangzhou," said GAC Fiat's Chairman of the Board Feng Xingya.

"Guangzhou has a very mature parts supply system, which has been serving GAC's joint ventures for years," Feng added.

"GAC will share the existing parts supplies, logistics, research and development with the new plant, and realize the synergy between the Chinese brand and the joint venture brands," said Zeng Qinghong.

The GAC Group established the Guangzhou Automobile Group Component Co (GACC) in 2000, and provides parts directly to Guangzhou Honda, Guangzhou Toyota and other vehicle manufactures.

The new Guangzhou plant is close to the GAC Group's manufacturing bases, so that all local supplies may help reduce costs, according to Wang Qiujing, GAC Fiat's executive deputy general manager.

The joint venture will also bring in the experience of producing and managing from the first plant in Changsha, Hunan province, according to John Burton.

Jeep's localization

GAC-Fiat's two manufacturing bases in Guangdong and Hubei provinces will help double its production volume by 2018 and meet the company's five-year plan, as they will produce both Fiat and Jeep automobiles, said Fiat Chrysler Group's Asia Pacific Senior Vice-president Franco Amadel.

The first two products set to be produced at the new plant will be the newest global models under development on Fiat Chrysler's universal platform.

"After the products flowing from the new world-class manufacturer, we hope to see the Chinese market become the first largest market for Jeep," said Burton.