Fiat is planning to launch onto the Mexican market. The Fiat sales will start in the first half of 2003 and the vehicles will be supplied by Fiat do Brasil.

The move is a result of the automotive bilateral trade agreement signed between Brazil and Mexico in July. Prior to the agreement, Mexican law prohibited the importation of vehicles by automakers without factories in the country. But the agreement cancelled that law.

The bilateral agreement also established a total first year's quota of 140,000 vehicles that will be levied and import tax of 1.1% (the old tax was 23%), dropping to zero in the following years.

The quota will be increased to 165,000, after 185,000 and 210,000 vehicles per year.

In the fifth year trade between the two countries will be free and without vehicle quotas.

With the aid of the bilateral agreement, Fiat do Brasil expects to export about 10,000 vehicles per year to Mexico.

The first car that Fiat will sell in Mexico will be the Siena model.

The Siena is the Palio based sedan model and is produced in the Betim plant, Minas Gerais state. In Brazil the compact sedan is available with three engine options: one-litre 16-valve, 1.3-litre 16-valve and 1.6-litre 16-valve. But to Mexico Fiat do Brasil expects to send only the 1.6-litre 16-valve engine with 106 bhp.

The Siena will compete in the Mexican market with the previous generation Ford Fiesta based sedan Ikon, Chevrolet Corsa sedan and Nissan Platina (that is the Renault Clio sedan model with the Nissan badge).

But Fiat do Brasil also plans to export other Brazilian-made vehicles to Mexico as the Palio hatch, Doblò and Stilo models.

Because of the bilateral agreement between the two countries, other makers plan to increase vehicles sales to Mexico from Brazilian plants that are subject to low rates of capacity utilisation.

The Brazilian National Automakers Association (Anfavea) expects that the agreement will mean that Brazilian carmakers ship around 700,000 vehicles to Mexico between now and 2005.