Fiat, Guangzhou Near Deal to Build Jeeps in China -Report

DETROIT--Italy's Fiat SpA (F.MI) is set to sign a new contract with Guangzhou Automobile Group Co. Ltd. (22238.HK, GNZUF) to produce Jeep vehicles for China, one of several markets harboring strong demand for sport-utility vehicles, the Italian daily Corriere della Sera reports Sunday, without citing any sources.

Guangzhou, which already makes cars for the Fiat brand, would use one of its plants for the Jeep vehicles, which would be for the domestic market and not for export, the daily reports, adding that the models to be made hadn't been defined.

The contract wouldn't impede on any of Jeep's operations in the U.S., it says.

Fiat and Chrysler declined to comment on the report ahead of the motor show in Detroit this week.

Jeep, which belongs to Fiat's U.S. partner, Chrysler Group LLC, has embarked on an expansion drive to meet demand for SUVs in emerging markets such as China.

Russia is another market, where Fiat has entered into an agreement with Russian state bank OAO Sberbank (SBER.RS) to build Jeep models.

Jeep and Fiat's Alfa Romeo are the two brands identified by Fiat and Chrysler to have global potential.

In 2012, Jeep sold a record 701,626 units, up 19% from the prior year, thanks to a near doubling of sales in Asia.

First launched in China in 1983, Jeep aims to increase the number of dealers in the country to about 200 from 150 by the end of 2013.

It sells three models in China: the Grand Cherokee, Wrangler and Compass. All of them are imported.

Newspaper website: www.corriere.it

Write to Gilles Castonguay at [e-mail]; Twitter: @GRCastonguay

(Giovanni Legorano in Milan and Christian Rogers in Detroit contributed to this article.)