2007 is a crunch year for Fiat’s operations in China. According to China Automotive Review (CAR), Nanjing Fiat Automobile Co. Ltd., has been in crisis for some time. Established in 1999 with a capacity of 100,000 vehicles, sales peaked at 36,739 units in 2003, and have remained around the 30,000 units mark each year since then.
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Nanjing Fiat has been loss-making since 2003, despite a surge in demand and strong growth by almost all other vehicle manufacturers present in the country.
The main reason is a lack of new products. It currently offers four models, the Palio, Siena, Palio Weekend and Perla, but all are essentially versions of the Palio. The Perla was launched last year and was developed locally, but is still based on Palio technology.
Wang Haoling, chairman of Nanjing Automotive Group Corporation (NAC), the Chinese parent of the joint venture, is quoted as saying: “I don’t think Fiat has a good understanding of the Chinese market. Our provincial governor and mayor have discussed product development strategies with Fiat’s people and expressed the hope that it would introduce medium- to high-end models to the Chinese market. Studies have also been conducted on the possibility of introducing Alfa Romeo or Lancia models, or the Fiat Panda, for production in Nanjing. But the Italian side is not willing to do so. The result is that Nanjing-Fiat does not offer enough models to customers.”
Another problem is the lack of leadership. Since the joint venture was established seven years ago it has been run by four CEOs, Mao Xiaoming, Su Tongchang, Paolo Massi and now Andrew J. Humberstone. There have been frequent personnel changes elsewhere in the business, including in marketing. A dealer notes that the reason for the high staff turnover is that there is a cool relationship between the two partners. “Neither seems to have a good opinion of the other,” he said.
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By GlobalDataOne of the reasons for a lack of trust may be NAC’s acquisition of Rover and its plans to develop its own brand. Fiat dislikes the competition, but also the joint venture may have suffered from a lack of attention from NAC management, according to the CAR report. On the other hand Fiat has entered into an engine supply agreement with Chery and there have been rumours that this may result in a joint venture.
Last year Nanjing-Fiat set a 300,000 unit sales target for 2010, but the CAR article is not optimistic that this target will be reached. Instead it concludes with comments by industry observers that the companies need to improve their understanding of one another, and foster mutual trust and respect.
