On July 6th, the Fiat and Guangzhou Auto joint venture deal was finally signed and agreed on. Fiat has been out of the Chinese market place for two years since the Najing-Fiat joint venture died.

The deal was signed under the watchful eyes of both Chinese Chairman Hu Jintao and Italian Premier Silvio Berlusconi, both of whom are planning to attend the G8 group of nations meeting in Italy this week.

The JV will produce the Fiat Linea to start with in a brand new 700,000 square meter factory in Changsha city, Hunan Province. Fiat is set to invest 556 million USD into the joint venture, and the Chinese government is expected to offer subsidies to promote the development of southern interior provinces. The factory will be able to produce 140,000 cars, and 220,000 engines in the first year of production, although it will be able to produce a maximum of 250,000 and 300,000 at peak times.

Guangzhou Auto currently has joint ventures with the two Japanese automotive giants, Honda, and Toyota, and also plans to launch its own branded cars in China over the next 12 months. The first car is expected to be a small car based on the Alfa Romeo 159 platform that Fiat previously sold to Guangzhou Auto.