Fiat, Guangzhou Auto plan $626 million China JV: paper

SHANGHAI Wed May 20, 2009 9:09pm EDT

The logo of Italian car maker Fiat is pictured at a sale point in Meyrin near Geneva. REUTERS/Denis Balibouse

The logo of Italian car maker Fiat is pictured at a sale point in Meyrin near Geneva.

Credit: Reuters/Denis Balibouse

SHANGHAI (Reuters) - Fiat FIA.MI and China's Guangzhou Automobile Industry Group plan to form a car production joint venture with total investment of 4.27 billion yuan ($625.7 million), the official Shanghai Securities News said on Thursday.

The paper cited sources at the two companies saying they were still in talks, but added that the venture could receive approval as early as the first half of this year and was expected to begin production in 2011.

It would produce 140,000 automobiles and 220,000 engines annually.

The paper also cited a posting on the Chinese Ministry of Environmental Protection website in late March stating that a Fiat-Guangzhou Auto project would invest 4.27 billion yuan to build a joint passenger car project in Guangzhou, in southern China.

Spokesmen for both Fiat and Guangzhou Auto on Tuesday had declined to comment on a possible tie-up, while reiterating a previous announcement that they were in talks on possible technical cooperation.

They had been contacted for comment following news that Guangzhou Auto, a partner in China of Toyota Motor (7203.T) and Honda Motor (7267.T), had reached an initial agreement to buy into Hunan Changfeng Motor Co 600991.SS, a Chinese manufacturer of sport utility vehicles.

($1=6.824 Yuan)

(Reporting by Edmund Klamann; Editing by Jonathan Hopfner)