Fiat to Produce Cars, Engines

ST. PETERSBURG -- Italian automaker Fiat and Sollers on Saturday announced joint-venture agreements for producing Fiat cars and diesel engines in Russia.

Fiat CEO Sergio Marchionne said his company wanted to boost its presence in Russia to counter the slumping car markets in Europe and North America.

"Fiat is going to be here in Russia, and it will be here in a significant way," Marchionne said.

Western Europe will be a "zero-growth market" by 2010, Marchionne said. "Anybody who is interested in building volume and expanding" has to be in Russia, he said. "We need to be here and to be here quickly."

The agreements were signed by Marchionne and Vadim Shvetsov, CEO of Sollers, at the St. Petersburg forum.

Sollers, formerly Severstal-Avto, already assembles the Fiat Ducato in Russia. The new agreement calls for increasing the output at its Tatarstan plant to make up to 50,000 Fiat Linea sedans. Production is to start this year.

In the other deal, Fiat Powertrain Technologies and Sollers will each hold a 50 percent stake in the production of 90,000 engines a year. The engines will be used in the Ducato and the UAZ off-road vehicle that Sollers manufactures.

"Our partnership with Sollers starts a key chapter within the framework of a strategic alliance that is already benefiting from the strengths of the two partners in one of the world's fastest growing automotive markets," Marchionne said in a statement.

AP, Bloomberg