Italy's largest manufacturer, the Fiat Group and China's Guangzhou Automobile Group (GAC) have signed an agreement for the establishment of a 50/50 joint venture that will produce cars and engines for the Chinese market beginning from the second half of 2011. According to the plan, the two parties will invest more than €400 million (about $560 million US) for the construction of a new, 700,000 square metre plant in Changsha, the capital of Hunan province in south-central China. 
The Chinese plant will have an initial production capacity of 140,000 cars and 220,000 engines per year but Fiat said that capacity could be increased to a maximum of 250,000 cars and 300,000 engines annually.
The first model to be launched by the joint venture will be Fiat's C-segment Linea sedan while the first engines to come out of the factory will be the Italian firm's 1.4-liter four-cylinder gasoline engine in naturally aspirated and turbocharged forms producing 120HP and 150HP respectively.
Fiat said that the industrial project is qualified to receive support from the development plan recently established by the Chinese government to promote new investment in six provinces in central China.
