SHANGHAI--Italian auto manufacturer Fiat SpA (F.MI) is seeking to revive its business in the world's largest auto market with the launch of a midsize sedan that caters for the preference of local customers for more sophisticated cars.

The Viaggio, launched by its joint venture with Guangzhou Automobile Group Co. (2238.HK), is the first car made by Fiat in China since 2007, when it ended an eight-year unsuccessful alliance with Nanjing Automobile Group Corp.

Fiat, which has a 59% stake in Chrysler Group LLC, plans to sell the Viaggio across China focusing on consumers aged between 25 and 38, Robert Graczyk, director of the commerce department at GAC Fiat, told reporters on the sideline of the launch of the new model Thursday.

Viaggio, or Fei Xiang in Chinese, is built on the same production platform as that used by Chrysler as Fiat targets to cut costs and shorten the time it takes to develop new models.

"The Italian design differentiates us from the rest of our competitors. Chinese consumers are sophisticated," said Mr. Graczyk.

With a price tag of 108,800 to 158,800 yuan ($17,270 to $25,206), the Viaggio will compete against Volkswagen AG's (VLKAY) Lavida, Ford Motor Co.'s (F) Focus and Chevrolet's Cruze.

The launch comes at a time when Fiat is lagging far behind other car manufacturers in China. Last year, Fiat sold about 50,000 units a year including Chrysler brands. By contrast, General Motors Co. (GM) sold 2.55 million vehicles in China last year, and sales at Volkswagen and its Chinese partners reached 2.26 million in 2011.

At the industry level, demand for cars is weakening due to a slowing domestic economy. In the first half of this year, China's auto sales, covering both passenger and commercial vehicles, rose just 2.9% from a year earlier to 9.6 million units. That compares with a 3.4% gain in the year-earlier period and double-digit growth in previous years.

However, Fiat said it's confident about the outlook.

"The (Chinese auto) market is still growing at 10%...we are coming in the right time," said Mr. Graczyk.

"The C-segment is actually doing better than other segments of the (Chinese) auto market," he said. "China's economy is doing fine, and will continue to do fine." In China, C-segment refers to midsize cars.

To catch up with rivals, Fiat plans to boost the production capacity of its plant in Changshan in central Hunan province where the Viaggio is built to 250,000-300,000 units a year from an initial capacity of 140,000 units.

The company will also increase its dealer shops to 140 to 150 next year from 88 units now.

Write to Rose Yu at rose.yu@dowjones.com

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