Fiat’s components unit Magneti Marelli has signed a memorandum of understanding to set up a joint venture with Chery Automobile Co. Ltd. of China in the latest sign of growing links between the two companies.
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In a statement, Fiat said the joint venture will be operative by spring 2008, supplying Chery and other auto makers with parts to be used in vehicles with automatic transmission.
Under terms of the accord, Magneti Marelli will have an unspecified majority stake in the joint venture. Financial terms of the deal weren’t disclosed.
Last month, Fiat and Chery signed an agreement for a joint venture to produce cars for the Chinese market, marking an important step in improving Fiat’s prospects in a key future market.
Fiat hopes to sell 300,000 cars a year in China by 2010, but has expressed dissatisfaction with an existing tie-up with Chinese auto maker Nanjing Automobile Corp. Last year, its Nanjing joint venture produced just over 30,000 cars.
