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China's Guangzhou Auto looks to Fiat Chrysler for help entering US

[BEIJING] Guangzhou Automobile Group Co Ltd, whose partnership with Fiat Chrysler Automobiles NV enables the Milan-listed automaker to manufacture in China, wants Fiat Chrysler to return the favour by helping it enter the United States, a top executive told Reuters.

Chinese brands have yet to find much success abroad, generally selling small volumes in developing markets that are highly price competitive.

China exported 728,200 mostly home-brand vehicles last year, an on-year decline of 20.1 per cent as automakers struggled with instability in markets such as Russia and the Middle East as well as with currency fluctuation, according to the China Association of Automobile Manufacturers.

Guangzhou Auto's own-brand subsidiary GAC Motor declared its intention in 2015 to reach the US market by next year, where it would become the first Chinese passenger car brand sold to American consumers.

"Chrysler's development in China required our support. Now for GAC Motor's development in the US we also hope for Chrysler's support and help," said GAC Motor General Manager Wu Song on the sidelines of the Beijing auto show, which ends on May 4.

Mr Wu and representatives of GAC Motor did not elaborate on what type of support Fiat Chrysler might offer. A Fiat Chrysler spokesman declined to comment.

Foreign car makers in China are required to form joint ventures with local firms if they want to manufacture domestically and thereby avoid hefty import taxes.

Guangzhou Auto was the sixth-largest automaker in China by sales volume last year, including vehicles produced through joint ventures with Fiat Chrysler, Toyota Motor Corp, Honda Motor Co Ltd and Mitsubishi Motors Corp.

Extending cooperation beyond China is uncharted territory, though General Motors Co and China's largest automaker, SAIC Motor Corp Ltd, plan to begin joint production in Indonesia next year.

GAC Motor is in discussions with potential dealership partners in the United States and has yet to begin road tests there - the two biggest steps it must take to start sales. Mr Wu said the automaker is already doing tests in China on two of its car models against American standards.

China's auto market is slowing down and price competition is rising, but Wu said GAC Motor will keep its primary focus on the mainland rather than overseas expansion.

"Sudden price cuts have messed up the whole (Chinese) market, so at this time we have to invest a lot of energy determining the brand's next strategic steps to protect our position," he said. "We must not be distracted."

REUTERS