Italian industrial giant Fiat Group plans to spend more than 16bn yuan ($US2.1bn; EUR1.55bn)in China in the years to 2010 to help it achieve a fivefold rise in annual sales revenue in the country.

The money will be put into sectors such as passenger cars, trucks, engines and spare parts, auto financing and tractors, Fiat (China) Business CEO Douglas Schenk told China Daily.

Schenk reportedly said the group expects to grow its China sales from more than $US1bn last year to $5.5bn in 2010, including $3bn for passenger cars, $1.5bn for trucks, $600m for engines and spare parts and $400m for other businesses.

Fiat has invested $1.5bn in China since it built its first plant locally in 1986, China Daily said.

Andrew Humberstone, chief representative of the group’s largest division, Fiat Auto, was quoted as saying the firm will produce three car models – Fiat Linea, Grande Punto and Alfa Romeo 159 – in China in the coming years to boost sales.

The carmaker aims to sell 263,000 cars a year by 2010, up from more than 30,000 units last year, Humberstone said.

“Growth potential in China’s car market is phenomenal as most customers are first-time buyers,” he said.

But Fiat Auto lags far behind many of its rivals in China in terms of sales, such as General Motors, Volkswagen, Toyota and Hyundai.

Fiat already has a car venture with Nanjing Automobile in the eastern city of Nanjing, making the Palio, Siena and Perla models and has been reported to be unhappy with Nanjing focusing on its recent acquisition of the MG, Austin-Healey and Healey brands, models and technology.

Fiat Auto has reportedly reached an agreement with another Chinese carmaker, Chery Automobile, to assemble the Alfa Romeo 159 in the small eastern city of Wuhu, China Daily noted.

Chery also has a deal with Fiat Auto to supply 100,000 petrol engines for Fiat cars built both in China and overseas.

Iveco, Fiat Group‘s commercial vehicle division, is building a 40,000-unit heavy truck plant and a 100,000-unit diesel engine factory in the western city of Chongqing with SAIC Motor and Hongyuan Motor, a local truck maker and also has a partnership with Nanjing Automobile to make wagons, the report said.

Schenk was quoted as saying Fiat Group has obtained government approval to open a vehicle financing business in China and the Shanghai-based unit will provide loans to Chinese buyers in the first half of next year.