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Fiat touts Italian style in China car challenge

Italian car maker Fiat is returning to China five years after a failed joint venture, but now faces entrenched competition and slowing growth in the world's biggest auto market.

Fiat, the world's seventh largest car maker after taking a majority stake in Chrysler when the troubled US firm emerged from bankruptcy in 2009, has been conspicuous by its absence from the critical Chinese market.

But the first sales of its new Viaggio, a compact produced at a $790 million joint venture plant in Changsha city, come as China's economy stumbles and cities slap limits on vehicles over pollution and congestion.

Fiat-Chrysler's very presence in China also set off a political storm in the recent US presidential election, after Republican candidate Mitt Romney ran an attack ad implying that it would export American jobs.

But the company says future plans to build Jeep brand sport utility vehicles in China are an expansion, not a transfer of operations.

In the first 10 months of this year, China's passenger car sales rose 6.9 percent from a year earlier, to 12.57 million vehicles.

The increase was a far cry from the 33 percent rise in the whole of 2010, although slightly up on last year. Consultancy McKinsey on Wednesday forecast average growth of eight percent a year until 2020 -- down from a 24 percent average over 2005-2011.

AFP