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November 7, 2005

ITALY/GERMANY: Fiat and Ford to jointly develop small cars

The automobile sector of Fiat Group (aka Fiat Auto) and Ford on Monday said they have signed an agreement to jointly develop and build two small (European sub-B class) car models.

The automobile sector of Fiat Group (aka Fiat Auto) and Ford on Monday said they have signed an agreement to jointly develop and build two small (European sub-B class) car models.

“The outcome of this exciting project will be the delivery to market of two highly differentiated vehicles, small cars with exterior and interior design that are true to the individual parents’ brand identities,” the two car makers said in a statement.

The two new vehicles are a new Fiat 500 – replacing a popular model that went out of production in the early 1970s – and a redesigned Ford Ka.

They will go on sale in 2007-08. Projected annual volume is around 240,000 units, split evenly between the two brands. The key markets will be in Europe though the current Ka is sold in many countries apart from the US, and Fiat is currently expanding passenger car sales in Asia-Pacific markets, including Australia.

“Fiat and Ford are highly experienced in the development of successful small cars in Europe. By working together, [they] will benefit substantially from reduced development costs and economies of scale in manufacturing and component sourcing. The result will lead to better value and increased quality for customers, while retaining the brand characteristics of each vehicle,” the statement added.

Fiat and Ford are already working on the new vehicles. Fiat’s current, and relatively new, Panda platform will be the basis for the development of the city cars, which will be manufactured at Fiat’s Tychy facility in Poland. The vehicles will use Fiat powertrains built in Poland and Italy.

“The strategic cooperative agreement with Ford represents another milestone in our strategy that calls for targeted alliances aimed at sharing financial and industrial resources on new products and platforms,” said Sergio Marchionne, CEO of Fiat Group and Fiat Auto.

“It is consistent with successful ventures, established with major partners including PSA Peugeot Citroën and Suzuki, and current discussions with the Indian group Tata Motors.

“As far as Fiat is concerned, the partnership with Ford is relevant fourfold: the decision to manufacture the new cars at Tychy is a clear vote of confidence and trust in our Polish plant… The much awaited future Fiat 500 will further enhance our brand identity as it represents both an icon in the history of our company, and of the motor industry.”

“We fully intend to replace the Ka with a similarly iconic model,” said Ford of Europe president and CEO John Fleming. “This vehicle will retain the fundamental character of the original and embody key elements of our new ‘kinetic’ design language.”

Styling for the Ka replacement will be led by Ford of Europe executive design director Martin Smith.

Fleming added: “Ford of Europe has amassed considerable expertise in the development of small cars, and is recognised for its class-leading driving dynamics.

“Fiat is the ideal partner for us in this particular project, as they are acknowledged as having been for many years one of the world’s leading manufacturers of small cars. The decision to combine forces with Fiat in this highly competitive area gives us the opportunity to minimise unit costs, while developing highly competitive products which will be true to our respective brand values.”

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