Fiat Group's wholly-owned FPT (Fiat Powertrain Technologies) has agreed a deal with Chrysler LLC to acquire engine manufacturing plant Tritec Motors in Campo Largo, state of Paraná.

The land, buildings, production lines and licences for producing the current engine line are included in the deal. Total investment is EUR83m, including development costs, and that is new money direct from Fiat headquarters in Turin.

Together with the buyout of one of the most advanced engine makers in the world, FPT has disclosed plans to produce a new line of midsize engines there, both petrol and flex-fuel. Development of new products will be done in an integrated way by technical centres in Brazil and Italy.

With capacity for up to 400,000 engines yearly, Tritec is essential for the Italian group in Mercosur, as General Motors' supply of 1.8-litre engines ends in 2010. Fiat has ambitious growth plans for Brazil that include investments of over $3bn.

Most of this has been generated by the Brazilian operations with help from federal and state of Minas Gerais government development bank funds.

Tritec produced three versions of its engine until mid-2007, all petrol, with 95% destined for the BMW Mini.

The buyout will generate 500 new direct and 1,500 indirect jobs.

Alfredo Altavilla, FPT's CEO, said that "buying the industrial unit will enable us to reach two important strategic objectives. Firstly, increasing the current product line in order to offer modern and competitive engines to the market. Secondly, the possibility to gain other potentially interested clients for these new products."

"The announcement is undoubtedly important news and assures a bright future for Tritec," added Chrysler's vice-chairman and president Tom LaSorda.

Fernando Calmon