Fiat Shifts China Strategy

Fiat SpA's joint venture in China on Friday named a Chinese chief executive, in an apparent shift in the Italian auto maker's strategy to boost sales in China.

The shuffle signals that Nanjing Automobile Corp., Fiat's local partner, whose parent is in alliance talks with Shanghai Automotive Industry Corp. (Group), or SAIC, is gaining more power in deciding Nanjing Fiat Inc.'s future, analysts say.

Nanjing Fiat is a 50-50 joint venture between Nanjing Auto and Fiat.

Yu Jiufeng, who serves as director for purchasing and manufacturing at the joint venture, was named chief executive, succeeding Andrew Humberstone, who will assume the role of vice chairman, Fiat China said in a statement.

"The changes in management structure have been decided by Nanjing Automobile Corp. and Fiat to prepare and adapt the [joint venture] to its next phase of operation and development," the statement said. It didn't disclose any details.

Zheng Xiaoli, the public-relations manager for Fiat China, said the shareholders of both sides also reached other agreements during negotiations after Fiat expressed dissatisfaction about the venture's performance.

Fiat Chief Executive Sergio Marchionne said in May that the Italian auto maker was seeking to resolve problems with its troubled production joint venture with Nanjing Auto.

Fiat hopes to sell 300,000 cars in China by 2010. But its Nanjing joint venture last year produced just a bit more than 30,000 cars.

Officials at Nanjing Auto weren't immediately available for comment.

The shuffle came after Yuejin Motor Group, the parent of Nanjing Auto, signed a letter of intent with SAIC for "full cooperation" in late July. SAIC is an influential auto maker whose joint ventures with General Motors Corp. and Volkswagen AG have stayed in the top two rankings in national auto sales in China for years.

Fu Shundong, an auto analyst with CSM Worldwide, said picking a Chinese citizen as the top manager would give Fiat's Nanjing venture more flexibility to fit into the local market.

He said Fiat seems to be now biased toward adopting a "more diversified" business method by taking a dual bet in China through its tie-up with both Nanjing Auto and Chery Automobile Co., a fast-rising local car maker based in central Anhui province.

Earlier this month, Fiat and Chery signed an agreement for a joint venture to produce cars for the Chinese market, marking an important step in vastly improving Fiat's prospects in a key future market.

The deal has since added uncertainty about whether the partnership between Fiat and Nanjing Auto will continue.