When Fiat officially joined GAC in 2009, it announced that it would invest 400 million euros in the venture and plans to begin production in Hunan province this year. The facility will initially have the capacity to make 140,000 cars and 220,000 engines per year, and may later increase to maximum of 250,000 cars and 300,000 engines per year.

Meanwhile back in the Chinese capital, Beijing Automotive Group (BAC), which has joint ventures with Mercedes-Benz and Hyundai, sold 1.5 million vehicles last year - a year-on-year increase of 75 percent. It aims to expand the production capacity to 4 million by the end of 2015.

It is planning to build a new Mercedes-Benz factory in Beijing with a yearly capacity of 300,000 vehicles, but BAC president Wang Dazong says the company will also expand outside the Chinese capital to help reduce costs.

"Beijing is not a paradise for every industry since the cost is high; so we will leave high value-added series, and mid-to-high level vehicles production in Beijing, and shift other models to other bases," he says.

"We are building bases across the country with distinct functions: a Shunyi factory in Beijing to manufacture SUVs, Zhuzhou in Central China's Hunan province focusing on high-end passenger cars, Chongqing to produce economical cars, while Guangzhou targeting the southern China market."