General Motors and Fiat have signed a deal whereby GM will retail the Italian company's vehicles in Mexico at joint Pontiac-Fiat dealerships, writes Stephen Downer.

Sales operations will start some time within the next six weeks, when only Pontiac vehicles, already marketed in Mexico, will be available. Sales of Fiat vehicles will begin in the third quarter, both companies stated.

According to Lélio Salles Ramos, regional commercial director for Fiat Auto Latin America, the company plans to market between 6,000 and 7,000 vehicles in Mexico in its first year of business.

A GM spokeswoman said that initially there would be four dealerships. "We hope to have between nine and 11 by year's end."

As part of the accord, GM will not only sell Fiat vehicles and spare parts but also provide service and assistance to Fiat users.

Fiat says that initially it will market the Palio in Mexico in its five-door, sedan and Adventure versions.

Most of the vehicles the company plans to retail in the country will be imported from its assembly plant in Betim, near Belo Horizonte, Brazil, which assembles 400,000 units a year, according to Salles.

In an interview with several months ago, Alberto Ghiglieno, president of Fiat Auto América Latina, emphasised that the Italian company had taken advantage of a free trade agreement signed between Mexico and Brazil to use the 40% spare capacity available at the Betim plant.

"Fiat exports to Europe, Argentina and Venezuela from Brazil and I was looking for a new market," he said, adding that the Stilo and Doblo were under consideration to follow the Palio line into Mexico.

To accommodate Fiat, GM de México has reorganised its two distribution channels in the country. They were Chevrolet/Pontiac and Cadillac/Saab. Now they are Chevrolet/Cadillac/Saab and Pontiac/Fiat.

Among the other companies Fiat is believed to have approached to distribute its vehicles in Mexico is Scuderia Italia, a Mexican firm run by former Volkswagen de México president Martin Josephi, which imports new Ferraris and Maseratis into the country.