Fiat Auto has agreed a deal with Severstal Auto of Russia to assemble cars there.

Starting in 2007, the carmaker will assemble the Fiat Palio and Albea in Russia, using parts produced for Fiat by Tofas in Turkey , reported Italian news service ansa.

According to the report, Fiat and Severstal are "considering the possibility of expanding this co-operation to include the production in Russia of other Fiat models," including the Doblo passenger van, a model that is poular in western Europe.

Severstal Auto makes both two and four-wheeled vehicles, commercial vehicles and minivans, and its brands include UAZ and OKA.