Fiat staged a comeback to the mainland's car market yesterday with a new compact car, five years after the Italian brand dissolved its first Chinese joint venture.

GAC Fiat Automobiles, a 50-50 venture between the Italian carmaker and Guangzhou Automobile Group, unveiled a made-for-China model, the Fiat Viaggio, in Shanghai. The 1.4-litre car is aiming for a share of the mainland's compact-car market, where sales are estimated to reach 7 million units this year. The compact-car segment is the fastest-growing of the mainland's vehicle market.

The car's key rivals include the Ford Focus, the Chevrolet Cruze and Volkswagen's Lavida, all of which cost between 120,000 (HK$147,000) and 150,000 yuan.

The launch of the Viaggio comes as the mainland's vehicle sector is slowing, but the Italian brand, which also owns Chrysler, believes the world's largest car market still holds big potential.

"Timing is just right for us," said Bob Graczyk, commerce director of GAC Fiat. "There is plenty of room for Viaggio to sell what it can sell."

Fiat and Guangzhou Automobile set up the joint venture in March 2010, three years after it divorced from its first local partner, Nanjing Automobile (Group).

The 5 billion yuan venture produces cars in Changsha. It now has the capacity to produce 140,000 cars annually. But Graczyk conceded that initially it would be difficult to sell 140,000 cars a year, given that the company needed to do a lot of marketing first.

GAC Fiat now has contracts with 88 dealers to sell the Viaggio and the number could increase to 150 next year. The new model with a turbo-charged engine targets the mainland's younger drivers between the ages of 25 and 38.

"It's going to be the platform for the future," said Jack Cheng, general manager of GAC Fiat. "If we don't get it right, we don't have the future."

Global business advisory firm AlixPartners recently forecast 8 to 12 per cent annualised growth for the mainland's car market in the next four years. But it said fiercer competition would force some weak brands out of the market.

"It's a major investment for us," said Graczyk. "We think we can compete. We have plans to grow."

This article appeared in the South China Morning Post print edition as: Fiat returns to mainland with new compact car

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