The Auto Writer

You got to give Fiat/Chrysler CEO Sergio Marchionne much credit when it comes to acquiring car companies with other people’s money. When Chrysler’s financial condition went from dire to dead on arrival, Marchionne became the white knight who promised to preserve jobs while keeping plants humming with Fiat platform derived vehicles. Upon exiting bankruptcy, the federal government immediately awarded Fiat with a 20% stake in Chrysler with eventual controlling interest in the now much smaller automaker possible.

Even as Marchionne was busy negotiating his deal for Chrysler, he put in a play for GM’s Opel unit although no money was being offered for that bid either. Last week, Fiat announced that it gained a toehold in China having come to terms with Guangzhou Automobile Group to establish a joint venture there. The newly formed entity will begin to build cars starting in May 2011.

Paying Money For Its China Venture

Unlike the Chrysler deal, Fiat will be ponying up some 400 million euros as part of its China investment. Once it is up and running, the plant will have the capacity to build 140,000 vehicles annually which can then be expanded to 250,000 vehicles if needed. The Changsha factory will build a C-segment Linea sedan (pictured) powered by 1.4L I4 engines yielding 120 hp and 150 hp respectively.

Up until now, Fiat had been shut out of the fastest growing automotive market in the world. The Guangzhou Automotive Group is already experienced working with ‘foreign’ manufacturers as it currently partners with both Toyota and Honda to turn out cars at other factories.

Marchionne Continues To Work Toward His Selling Threshold

Last fall, Marchionne made the statement that car manufacturers needed to produce a minimum of 5.5 million vehicles annually in order to be profitable. At that time Fiat was building just over 2 million vehicles annually which meant that Fiat was looking to partner with or acquire other manufacturers to help it reach that threshold. With Chrysler in the fold, a plant coming online in China and other alliances possible, Fiat could soon reach its goal whether additional money is put on the table or not.