Chery-Fiat JV goes for a toss, at least for now

The slowing down market and global economic conditions have forced China’s Chery Automobile to postpone its proposed car joint venture project with Italy’s Fiat SpA.

The recessionary effect on automotive players around the globe has made any new investment tougher than ever. In this context the Chinese car maker has slammed the brakes on the JV project with Fiat. It may be recalled that Fiat had inked an agreement with Chery to set up a joint venture in China and had mulled over kicking off production this year.

This means that the plans have gone awry and production will not start this year as had been planned previously. Meanwhile, Chery has reiterated that the project will resume later on and that it has definitely not been shelved.

It may be seen that for Chery, which is one of China’s 10 largest auto makers, the postponement of the joint venture comes as a slowdown bolt  as it sees its hopes being shattered at least for the time being.

The car maker had been planning to make good inroads into the foreighn marketplaces through this joint venture. The venture would have also helped the China company to boost its technical capability to be a major player in the European and North American car markets.

This is not the first time that Chery is being forced to stay on the back foot. Only last year, Chery saw a set back when its efforts to break into overseas markets failed after being forced to end a joint project with Chrysler LLC to make small cars in China for sale around the world. The latest comes as a serious blow to Chery’s global hopes.

Besides, the postponement brings to the fore baddas for Fiat too as it had been trying unsuccessfully to make big inroads into the Chinese auto market. Though it had earlier been making passenger cars in partnership with Nanjing Auto, the venture plunged into huge losses and Fiat had to call it quits after Nanjing Auto was merged into another Chinese player SAIC Motor Corp.