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Fiat to Break Ties with Nanjing Automobile
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Italian auto giant Fiat appears certain to terminate its joint venture partnership with Nanjing Automobile Corp. (NAC) after the Chinese company failed to make its promised investment in the project, the Shanghai Securities News reported on Saturday.

"The delayed reciprocal investment and inaction by NAC has been intolerable to Fiat", Fiat China president Franco Amadei was quoted as saying.

The report quoted Fiat chief executive Sergio Marchionne as saying Fiat will no longer put new models into production at Nanjing Fiat, a joint venture established in 1999 between NAC and Fiat.

Fiat will also quit from the joint venture's management team, said Marchionne.

Fiat had previously planned to invest 500 million euros in the joint venture over five years in a drive toward meeting the company's 2010 sales goal of 300,000 vehicles in China.

Nanjing Fiat sold only 30,668 vehicles last year and NAC has no plans for additional investment in the Fiat joint venture as it concentrates of developing auto brands it owns, said the report.

In 2005, NAC outbid China's biggest automaker, Shanghai Automotive Industrial Corp., to acquire the bankrupt British carmaker MG Rover Group and its engine producer, Power Train Ltd, for 53 million pounds.

NAC has spent enormous amounts of human and financial resources on its MG project, said the report.

NAC general manager Yu Jianwei said earlier this year that his company would need more than three billion yuan (US$390 million) over the long term to boost MG project.

Amadei said delaying the reciprocal investment in the Fiat joint venture for two years may give NAC's MG project some breathing room but by then the Fiat brand will have already lost out on the Chinese market.

Fiat had also decided not to let Nanjing Fiat produce the D 200 sedan and would "make separate arrangements" for production of the Alfa Romeo in China, said an insider.

The Italian auto giant is considering Chery as a new partner, which would produce both the D 200 and Alfa Romeo, said the report.

NAC unveiled its MG 7 series in Nanjing in March this year, announcing it would become the first Chinese automaker to manufacture in the United States by building the MG in Oklahoma from May 2008.

(Xinhua News Agency June 17, 2007)

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